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Insurance Glossary

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Gainful Employment
A term used in connection with the Permanent Total Disablement condition under a personal accident insurance policy. The disablement is of permanent and irrecoverable nature and is absolutely total, in the sense that the insured person is prevented from engaging in any employment, which would gain him financial benefits. (Ex. Paralysis)

Garbling Clause
The clause, in relation to marine/transit insurance of commodities like tobacco, coffee beans or grain, provides that the insurer will pay the cost of garbling (sifting and cleansing to separate sound from the whole), as such an exercise prevents further damage and reduces the claim.

General Average
A loss, which arises in consequence of extraordinary sacrifices made, or expenses incurred for the preservation of the ship and cargo in time of common peril comes within General Average and must be borne proportionally by all those interested in the adventure. The principle of General Average forms part of Maritime law and is applicable whether or not the parties to a maritime adventure are insured.

General Average contribution
The monetary contribution required of ship owners and cargo owners in respect of general average expenditures and general average sacrifices.

The underwriter is liable for the general average contribution paid or payable by the assured when the general average act is performed to prevent loss from an insured peril. Such liability however is limited to the proportionate amount of the contribution payable by the insured, if the contributory value of the interest is more than the insured value.

General Average Counter Guarantee
When the ship owner declares General Average, he insists on production of an unlimited guarantee to be provided by underwriters. The underwriters issue unlimited guarantee against the assureds counter guarantee whereby he commits to reimburse the underwriters the overpayment resulting from underinsurance. When the Adjustment is completed, the insurers first pay the contribution payable by the insured interest. If the contributory value of the insured interest happens to be more than the sum insured, the counter guarantee is invoked by the insurers and the insured is asked to pay back the excess amount paid on his behalf.

General average Deposit
In the absence of any acceptable form of guarantee, the receiver of the cargo will be required to pay a deposit into the general average fund before taking delivery of the cargo. The amount to be paid as a general average deposit is usually slightly higher than the estimated contribution. A deposit receipt is issued against the money thus deposited and the deposit earns interest. When the adjustment is completed, the holder of the deposit receipt is paid the difference between the deposit plus accrued interest, and the contribution.
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