Differs from third party motor only in that it covers damage to the vehicle if caused by fire or theft or attempt at theft. See MOTOR INSURANCE COMPREHENSIVE COVER.

Synonymous with public liability, it distinguishes cover from a policy covering liability to employees. In aviation insurance the term third party insurance distinguishes general third party cover from legal liability to passengers in the insured’s own aircraft. A captive company in the open market also uses term in connection with the insurance business for parties other than its parent company. Marine third party liability is the primary business of Protection and Indemnity Clubs.

Covers liability for third party injury and property damage, including emergency treatment, and liability for accidents caused by passengers. The policy exceeds the level of cover required under Road Traffic Act compulsory requirements that require cover only in connection with vehicles used on a road or other public place. The normal third party policy is not so restricted.

Process by which the defendant in a civil action may obtain a court order to include a third party in the proceedings because he seeks a remedy or indemnity from that party. A retailer faced with a product liability claim might seek to join the manufacturer in the action, perhaps prompted by the insurer in pursuing subrogation rights. This avoids the costs of a separate action. See THIRD PARTY 2.

Market agreement between participating motor insurers. Where two motorists are involved in an incident and third parties are injured, the insurers agree not to apportion blame but share third party claims equally. Any injury to the driver of either vehicle or any injury to any employee of the insured is excluded by the agreement.

Lloyd’s system whereby an underwriting year is not closed until the end of the third year following inception of the underwriting year and all premiums and claims for that year are accounted to that year. An account opened on 1 January 2003 will be open until 31 December 2005. A reserve for outstanding claims liability is then carried forward to the next open year by a reinsurance to close. Lloyd’s is now moving to ‘annual accounting, the approach used by insurance companies.

Minimum conditions that a firm must satisfy to gain and retain FSA authorisation to undertake regulated activities. The conditions relate to: legal status; office location; claims representative; sources; suitability. re

A payment per unit of deviation recorded in a weather index. For example, £2,500 per Heating Degree Day is the tick, meaning a payout based on £2,500 times the number of HDDs in excess of the strike. See WEATHER DERIVATIVES.

Option to use the proceeds of a pension plan to buy an annuity from the insurer concerned at its current market rate as an alternative to taking the guaranteed annuity option. See also OPEN MARKET OPTION.

a form of reinsurance that includes a timing risk, that is the risk that the reinsurer might become liable before sufficient funds had accumulated to meet the liability; an early form of financial reinsurance and arguably not insurance at all.