Insurance Pooling

Insurance is about spreading of risk. Insurance works only because many policyholders pool their risks of loss and transfer portions of those risks to an insurance company. The insurance company, having accepted potential losses from many policyholders, is able to charge an affordable premium to each policyholder based on the probability that only a few of the potential losses will occur and must be paid. Thus, by pooling risks together through an insurance company, insureds can insure their risks at a reasonable price, which would otherwise not be possible if the risks of all insureds had not been pooled together through an insurance company.


An insurance policy is said to be voidable where circumstances exist that entitle either one of the parties to “avoid the contract”. It is usually the Insurer who finds himself in this position when there has been a breach of ‘utmost good faith’ by the Insured.


A term used in commercial general liability insurance to designate that three hazards exist for the classification under review. Those three hazards are explosion, collapse and underground. The current CGL includes those coverages automatically in the basic form, but they may be deleted by endorsement.






A policy which provides cover for yachts (pleasure craft) in respect of own damage and third party liabilities. The terms of cover are usually based upon the Institute Yacht Clauses which are published by the Institute of London Underwriters.


The practice of removing goods from a cargo container; sometimes termed ‘stripping a container’.


Insurance contracts are one of a limited class that requires the parties (insurer and insured) to exercise the utmost good faith in their dealings with each other. Specifically, the proposer of an insurance must disclose all material facts which would influence a prudent insurer in deciding whether to accept the insurance, and if so on what terms.


Used synonymously with malicious mischief; willful physical damage to property.


Estimation of the value of an item, usually by appraisal.