Actual damage to the insured item from internal rather than external causes. It features in some engineering insurance policies.

Hiring out of vehicles for short periods allowing customers to drive. The self-drive policy defines acceptability in terms of both vehicles and drivers. See WAIVER OF DAMAGE.

The investment of the asset of an occupational pension scheme approved under Chapter I in employerrelated investment. A 5 per cent limit is imposed by PA95 and the IR imposes separate restrictions on self-investment by small self-administered schemes.

Earmarked schemes where the policies are linked to an investment fund. The investment fund is normally selected by the employer or trustees but held in the name of the insurance company.

Personal pensions that allow the individual to select where his contributions, within limits, should be invested. The investment opportunities include stocks and shares, unit and investment trusts, insurance company funds, deposit accounts and commercial property. Certain investments (e.g. works of art) are prohibited. Individuals must have net relevant earnings and will receive tax relief on contributions at the highest marginal rate. Group arrangements are common. SIPPs are offered by insurance companies and stockbrokers. See SELFINVESTMENT.

Policy effected by a seller of cargo to protect his contingency interest in the event that the buyer’s policy fails to respond to a loss. See QUANTUM OF INTEREST.

Treaty under which only one of the parties has an obligation. The cedant may be obliged to offer all risks of the given class but the reinsurer will not be bound to accept them (obligatory-facultative). Conversely, the reinsurer may obliged to accept all risks that the cedant chooses to offer (facultative-obligatory).

A captive insurer that has developed into a normal insurer taking risks from the market generally.

Occurs when sound cargo is sold at a reduced price because of an unfavourable association with goods, part of the same cargo (e.g. tea), damaged by an insured peril. The ‘sentimental’ loss on the sound goods is uninsured.
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The loss of property which has favorable associations (e.g., an engagement ring) may cause suffering disproportionate to the monetary value of the object lost. Conversely property with unfavorable associations (e.g., cargo which, though undamaged, has been involved in a shipwreck) may lose value as a result of such associations. Insurances are considered not to cover sentimental losses.

The value that a person attaches to property based on feelings of emotion and affection not monetary values. Such values cannot be expressed in financial terms and cannot therefore be insured.