Insurance glossary

Abandonment

The policyholder's surrender of all rights to the insured property to the insurer in exchange for the full sum insured. Used mainly in marine insurance, for example when a vessel goes missing or repair is impossible or uneconomical.

Accident

A sudden external event that occurs against a person's will and results in injury, disability or death, such as a fall, road accident, burn or poisoning. Illnesses are generally not considered accidents.

Actuary

A specialist who uses mathematics and statistics to calculate insurance rates and reserves and to assess an insurer's financial stability. Actuarial work in Russia is governed by Federal Law No. 293-FZ "On Actuarial Activity in the Russian Federation", and insurers must undergo an actuarial valuation every year.

Addendum (endorsement)

A written amendment to an insurance or reinsurance contract by which the parties change its terms, such as the sum insured, the insured object, the term or the list of risks. It may result in an additional or return premium.

Agent's commission

The fee paid to an insurance agent or broker for arranging insurance contracts. Usually calculated as a percentage of the premium and included in the loading of the rate.

Aggregate sum insured

A sum insured that is reduced by each payment, so after several claims the remaining cover may be much lower than at the start.

Annuity

Regular payments by the insurer to the insured for a fixed period or for life. Used in pension and annuity insurance.

Armed robbery (assault with intent to steal)

An attack with intent to steal property, involving violence dangerous to life or health or the threat of such violence (Article 162 of the Russian Criminal Code).

Assistance company

A service company that, under a contract with the insurer, arranges help for the insured: a doctor's visit, hospitalization, evacuation or roadside assistance. In travel insurance, the insured should first call the assistance company at the number shown on the policy.

Average adjuster

A general average specialist in marine insurance who prepares the average adjustment, the calculation that apportions general average expenses and losses between the ship, cargo and freight.

Average agent (on-site claims assessor)

An expert who, on behalf of the insurer or the parties involved, attends the scene of an incident and records its circumstances, cause and extent of damage. Most often works in motor and cargo insurance.

Beneficiary

The person who receives the insurance payment, even without having paid the premium, for example the lending bank under a mortgage policy or an heir under life insurance. Designated by the policyholder and, in personal insurance, with the insured person's consent.

Business interruption

Insurance of lost gross profit and fixed costs while a business recovers from a property loss such as a fire, breakdown or natural disaster.

Cancellation of an insurance contract

Early termination of the contract. If the possibility of an insured event has ceased to exist, the insurer keeps premium in proportion to the elapsed term; if the policyholder voluntarily cancels, the premium is generally not refunded, except during the cooling-off period and in cases provided by law or the contract (Article 958 of the Civil Code).

Cargo insurance

Insurance of goods in transit by any mode of transport against destruction, loss and damage. Terms are usually based on international clauses, and an open (general) policy is arranged for regular shipments.

CASCO (motor own-damage insurance)

Voluntary insurance of a vehicle against damage, theft and total loss regardless of who caused the damage. It does not replace OSAGO: CASCO protects your own car, while OSAGO covers your liability to others.

Civil (third-party) liability insurance

Insurance of the risk of liability for harm caused to the life, health or property of third parties (Article 931 of the Civil Code). The payment goes to the injured party.

Claims adjuster

A claims specialist who receives the notice of loss, verifies the circumstances, arranges the damage assessment and prepares the decision on payment.

Class (line) of insurance

Insurance of specific objects against specific risks under uniform rules, such as OSAGO, CASCO, property insurance or voluntary health insurance. The list of classes for which the Bank of Russia issues licences is set out in Article 32.9 of Law No. 4015-1.

Co-insurance

Insurance of one object by several insurers under one contract, each for its own share (Article 953 of the Civil Code). Used for large risks; one of the insurers usually acts as the leader.

Combined ratio

The sum of the loss ratio and the insurer's expense ratio. If it exceeds 100%, insurance operations are unprofitable before investment income.

Compensation payment

A payment made by the RSA instead of the OSAGO insurer if the insurer's licence has been revoked or it has been declared bankrupt, and in cases of harm to life and health when the person at fault is unknown or uninsured.

Compulsory insurance

Insurance that the law requires to be taken out, such as OSAGO, OSOPO and OSGOP. Terms, limits and rates are set by law and by Bank of Russia regulations.

Conditional (franchise) deductible

A damage threshold: if the loss is below it, the insurer pays nothing; if it exceeds it, the insurer pays the loss in full without deducting the threshold. Less common than the unconditional deductible.

Cooling-off period

A period of 14 calendar days from the conclusion of a voluntary contract during which an individual may cancel the insurance and get the premium back, in full if cover has not yet started or less the portion for elapsed days. Set by the Bank of Russia, with exceptions such as travel insurance.

Critical illness insurance

Insurance that pays the sum insured or covers treatment when a serious illness on the list, such as cancer, heart attack or stroke, is first diagnosed.

Currency of insurance

The currency in which the sum insured, premium and claim payment are expressed. Between Russian residents, payments are generally made in rubles, but the sum insured may be linked to a foreign currency and paid in rubles at the exchange rate; in travel insurance, amounts are often stated in euros or dollars.

Cyber insurance

Insurance of a company's losses from cyberattacks and data breaches: investigation and system restoration costs, business interruption and liability to customers.

D&O insurance

Directors' and officers' liability insurance: it covers losses and defence costs arising from claims against a company's managers for management errors.

Damage

The monetary value of losses from damage to or destruction of property, or harm to life and health. Actual damage includes restoration costs; lost profit is compensated only if it is insured.

Deductible

The part of a loss that the policyholder pays itself. It is set in rubles or as a percentage of the sum insured and may be conditional or unconditional, or dynamic, increasing with each subsequent claim. It reduces the price of cover.

Depreciation (wear and tear)

The reduction in value of property or parts over time. Under OSAGO, when a claim is paid in cash, the cost of parts is calculated with depreciation, capped at 50%.

DIA (Deposit Insurance Agency)

The Deposit Insurance Agency (ASV) is a state corporation that insures bank deposits and, from 1 January 2027 (Law No. 477-FZ of 26 December 2024), will also guarantee payments under life insurance contracts if the insurer's licence is revoked — up to RUB 10 million for death-related payouts and up to RUB 2.8 million for other payouts.

Direct loss settlement

An OSAGO procedure under which the victim claims from their own insurer rather than from the insurer of the person at fault. It applies when only vehicles were damaged in the accident and the parties have OSAGO policies.

Disability

A persistent limitation of life activities due to impaired health, established by a medical and social assessment that assigns disability group I, II or III. It can be an insured risk in life and accident insurance.

DMS (voluntary health insurance)

Voluntary medical insurance that pays for treatment at clinics included in the policy programme: outpatient care, hospital, dentistry, home visits. Bought by individuals or by employers for staff; it supplements compulsory medical insurance (OMS).

Double insurance

Insurance of the same object against the same risks with several insurers for a total exceeding its insurable value. Each insurer is liable in proportion to its sum insured, and total compensation cannot exceed the actual loss (Article 951 of the Civil Code).

Duty to mitigate loss

When an insured event occurs, the policyholder must take reasonable steps to reduce the damage and notify the insurer. The costs of doing so are reimbursed, and if such steps were deliberately not taken, the insurer does not pay the part of the loss that resulted (Article 962 of the Civil Code).

Electronic OSAGO policy

An OSAGO policy bought online on the insurer's website, with the same force as a paper one. Its details go straight into the OSAGO database, and traffic police check the policy against it.

Emergency medical care

Care for sudden acute conditions that threaten life. In Russia it is provided free of charge; in travel insurance it is the main item of expense.

Europrotocol (simplified accident report)

Registering a road accident without calling the traffic police: the drivers fill in the accident notice themselves. The OSAGO payout limit is RUB 100,000, or up to RUB 400,000 if the accident is recorded via Gosuslugi Avto or the DTP.Europrotocol app. Available when two vehicles are involved, nobody is injured and both drivers have OSAGO.

Exclusions

Events and circumstances in which the insurer does not pay even though there is damage, such as the policyholder's intent, drunk driving, wear and tear or hostilities. They are listed in the insurance rules and the contract.

Financial ombudsman

An ombudsman who handles individuals' disputes with insurers free of charge before court (Federal Law No. 123-FZ). For claims up to RUB 500,000 and for OSAGO, applying to the ombudsman is mandatory before going to court, and the decision is binding on the insurer.

First loss basis

A condition under which a loss is paid in full up to the sum insured, without proportional reduction for underinsurance.

Force majeure

Extraordinary and unavoidable circumstances such as natural disasters, hostilities or civil unrest. Unless the contract provides otherwise, the insurer is released from paying for losses caused by a nuclear explosion, radiation, hostilities or civil war (Article 964 of the Civil Code).

GAP insurance

Insurance of the difference between the CASCO payment for theft or total loss of a car and its purchase price or the outstanding car loan. Short for guaranteed asset protection.

General average

Losses and expenses incurred intentionally and reasonably to save the ship, cargo and freight from a common danger, such as jettisoning part of the cargo. They are shared among all parties to the voyage in proportion to the value of their property.

Green Card

An international motor third-party liability insurance system operating in member countries. The policy is needed to drive abroad, since OSAGO is valid only in Russia; before a trip, check whether the policy is accepted in the destination country.

Gross rate

The full insurance rate at which the premium is paid. It consists of the net rate, which covers expected claims, and the loading, which covers the insurer's expenses, contributions and profit.

Group insurance

Insurance of several people under a single contract, for example a company's employees under voluntary health or accident insurance. Usually cheaper than individual cover thanks to volume and simplified underwriting.

Illness

An impairment of health not caused by injury, with objective signs and a diagnosis made by a doctor. In insurance it matters whether the illness first arose during the policy period or existed before it.

Injury

Damage to body tissues or organs caused by an external impact, such as a fracture, dislocation, burn or wound. In accident insurance, the injury payment is set by a table.

Insurable interest

A person's financial interest in the preservation of the insured object. A property insurance contract concluded without such an interest is invalid (Article 930 of the Civil Code).

Insurable value

The actual value of property at its location on the day the insurance contract is concluded (Article 947 of the Civil Code). The sum insured may not exceed it.

Insurance agent

An individual, sole trader or company that sells insurance products on behalf of and as instructed by an insurer. Insurers disclose information about their agents on their websites.

Insurance broker

A company or sole trader that helps clients choose an insurer and conclude insurance or reinsurance contracts in the client's interest. Brokers are licensed by the Bank of Russia.

Insurance contract

An agreement under which the policyholder pays a premium and the insurer undertakes to make a payment if an insured event occurs. It must be in writing, including as a policy or an electronic document (Articles 929, 934 and 940 of the Civil Code).

Insurance licence

Permission from the Bank of Russia to carry out insurance, reinsurance or intermediary activity in specific classes. Operating without a licence is prohibited; valid licences are listed in the register of insurance market participants.

Insurance payment (claim payment)

The money or other benefit the insurer must provide when an insured event occurs. In property insurance it is called indemnity; in personal insurance it is the sum insured or part of it.

Insurance policy

A document confirming that an insurance contract has been concluded; it can be on paper or electronic (Article 940 of the Civil Code).

Insurance premium

The price of insurance, paid by the policyholder as a lump sum or in instalments (Article 954 of the Civil Code). It is calculated from the sum insured and the rate, adjusted by coefficients.

Insurance rate

The premium rate per unit of sum insured or per insured object, reflecting the nature of the risk. For compulsory classes, rates or rate corridors are set by the Bank of Russia.

Insurance rules (policy wording)

The insurer's standard terms for a class of insurance: risks, exclusions and procedures for concluding the contract and paying claims. They bind the policyholder if the contract refers to them and they have been handed over (Article 943 of the Civil Code).

Insurance supervision

Oversight of compliance with insurance law. In Russia it is carried out by the Bank of Russia, which issues and revokes licences, sets requirements for reserves and financial stability, and handles complaints.

Insurance valuation

Determining the actual value of property to set the sum insured. Once the value is agreed in the contract, the insurer cannot later dispute it unless it was deliberately misled (Article 948 of the Civil Code).

Insured event

An event that has occurred and is provided for by the contract or by law, upon which the insurer must make a payment (Article 9 of Law No. 4015-1).

Insured person

The person whose life, health or liability is insured. They may differ from the policyholder, for example when an employer insures its staff under voluntary health insurance.

Insured risk

A possible event against which insurance is taken out. It must be probable and random (Article 9 of Law No. 4015-1).

Insurer

An insurance company licensed by the Bank of Russia that accepts risks under insurance contracts and pays claims.

ISZh (investment-linked life insurance)

Investment life insurance: a contract in which part of the premiums is invested and any additional return depends on investment performance. The return is not guaranteed, and on early termination the policyholder may get back less than was paid in.

Joyriding (unlawful taking of a vehicle)

Unlawfully taking possession of a car or other vehicle without intent to steal it (Article 166 of the Russian Criminal Code). In CASCO, the risks of unlawful taking and theft are usually combined.

KBM (bonus-malus coefficient)

The OSAGO bonus-malus coefficient: it lowers the policy price for accident-free driving and raises it after at-fault accidents. It is determined from the driver's insurance history in the OSAGO database.

KM (engine power coefficient)

The OSAGO engine power coefficient: the more powerful the passenger car, the more expensive the policy.

KO (driver restriction coefficient)

The OSAGO coefficient that depends on whether the list of permitted drivers is restricted. For a policy with no restriction on the number of drivers it is 3.16 for individuals (1.97 for organisations), which noticeably increases the price.

KS (seasonal use coefficient)

The OSAGO seasonal coefficient that lets an individual buy a policy for the period the car is actually used, from three months, rather than for the whole year. The shorter the period, the lower the price.

KT (OSAGO territorial coefficient)

The OSAGO territorial coefficient: for cars owned by individuals it depends on the owner's place of residence and is higher in large cities than in small towns.

KVS (age and experience coefficient)

The OSAGO coefficient based on the driver's age and driving experience: young and inexperienced drivers pay more.

Life insurance

Insurance against the death of the insured and/or their survival to a certain age or date. It may be pure risk (protection only), savings-based or investment-linked. From 1 January 2027, life insurance payments will be guaranteed by the Deposit Insurance Agency (ASV) if the insurer's licence is revoked (Law No. 477-FZ).

Limit of liability

The maximum amount the insurer will pay under a contract, per event or per type of expense. In OSAGO the limits are set by law: RUB 400,000 for property damage and RUB 500,000 for the life and health of each victim.

Loading

The part of the gross rate above the net rate: administrative expenses, intermediary commissions, contributions and the insurer's profit.

Loss (claim)

Damage the insurer must compensate under an insured event. In practice the term also refers to the reported case itself, as in "report a loss" or "loss settlement".

Loss ratio

The ratio of claims to earned premiums for a period, usually as a percentage. The main indicator of the profitability of a class or portfolio.

Loss reserves

The reserve for reported but unsettled claims and the reserve for incurred but not reported claims (IBNR). They reflect the insurer's obligations for events that have already occurred.

Marine insurance

Insurance of ships, cargo, freight and shipowners' liability against maritime risks. In Russia it is governed by the Merchant Shipping Code and the Civil Code.

Mortgage insurance

With a mortgage, insurance of the mortgaged property against destruction and damage is compulsory (Article 31 of Federal Law No. 102-FZ "On Mortgage"). Insurance of the borrower's life and of title is voluntary, but the bank may take it into account when setting the interest rate.

Mutual insurance society

A non-profit organization whose members insure one another, being both policyholders and members at the same time. Governed by Federal Law No. 286-FZ "On Mutual Insurance".

Net rate

The part of the rate intended to fund claim payments. An actuary calculates it from the probability of an insured event and the average loss size, and it may include a risk loading.

NSZh (endowment life insurance)

Savings life insurance: a long-term contract that combines protection against death or disability with savings. The sum insured is paid at the end of the term; on early termination, only the surrender value is paid.

OMS (compulsory medical insurance)

Compulsory medical insurance, the state system that guarantees free medical care under the basic programme. It operates under Federal Law No. 326-FZ, with funds held by the federal and regional compulsory medical insurance funds.

OMS policy

The document confirming the right to free medical care under the compulsory medical insurance programme throughout Russia. Since December 2022 the policy exists in digital form, and an extract from the unified register of insured persons is issued instead of a paper form.

Open (general) policy

A contract that insures different consignments of similar property, usually cargo, on similar terms throughout its term; the policyholder reports each consignment to the insurer (Article 941 of the Civil Code).

OSAGO (compulsory motor third-party liability insurance)

Compulsory motor third-party liability insurance (Federal Law No. 40-FZ). It covers harm caused to other parties in a road accident: up to RUB 400,000 for property and up to RUB 500,000 for the life and health of each victim. Driving without a policy is prohibited.

OSAGO AIS (motor insurance database)

The automated information system for compulsory motor insurance, to which insurers report data on OSAGO policies, drivers and claims. It is used to determine the bonus-malus coefficient and to verify that a policy is valid. The system is operated by NSIS (National Insurance Information System).

OSGOP (carrier liability to passengers)

Compulsory insurance of a carrier's liability for harm to the life, health and property of passengers (Federal Law No. 67-FZ). It applies to passenger transport by bus, rail, water and air, with exceptions listed in the law.

OSOPO (hazardous facility liability insurance)

Compulsory liability insurance for owners of hazardous facilities for harm caused by an accident (Federal Law No. 225-FZ). It applies to filling stations, boiler houses, gas facilities, lifts, hydraulic structures and other hazardous facilities.

Over-insurance

A situation where the sum insured exceeds the actual value of the property. The contract is void to the extent of the excess, and if the overstatement resulted from the policyholder's fraud, the insurer may have the whole contract declared invalid (Article 951 of the Civil Code).

Personal accident insurance

A payment in case of injury, disability or death of the insured as a result of an accident. The amount is usually set by a table as a percentage of the sum insured.

Personal insurance

Insurance of a person's life, health and ability to work: life insurance, accident and sickness insurance, medical insurance.

Personal insurance contract

A contract insuring a person's life, health and ability to work: life, accident or medical insurance. The sum insured is paid regardless of payments under other contracts and of compensation from the person at fault.

Policyholder

The individual or organization that concludes the insurance contract with the insurer and pays the premium.

Pre-trial claim letter

A written demand to the insurer sent before applying to the financial ombudsman or the court. Under OSAGO it is mandatory, and the insurer must respond within the period set by law.

Professional liability insurance

Covers claims by clients against a professional or company arising from professional errors: doctors, appraisers, notaries, insolvency practitioners, designers, IT companies. Compulsory by law for some professions.

Property and casualty insurance

Insurance of property interests: property (against loss, destruction or damage), civil liability and business risk (Article 929 of the Civil Code).

Property and casualty insurance contract

A contract insuring property interests: property, civil liability or business risk. Compensation may not exceed the actual loss.

Property insurance

A type of property and casualty insurance that compensates for the destruction, loss or damage of an apartment, house, equipment or goods. Typical risks are fire, water damage, natural disasters, theft and unlawful acts of third parties.

Quotation

An insurer's offer of price and terms for insuring a specific risk. It is usually valid for a limited time and may change after an inspection of the object.

Recourse

The insurer's right to recover a payment from the person who caused the harm in cases expressly provided by law. Under OSAGO, for example, if the driver at fault was drunk, fled the scene or was not listed on the policy (Article 14 of Law No. 40-FZ).

Reduced paid-up sum insured

A reduced sum insured under a life policy when the policyholder stops paying premiums but the contract is not terminated, so cover continues at a lower level.

Renewal

Extending an insurance contract for a new term, often on the same conditions. Some insurers offer a discount for renewal without a break in cover.

Repair in kind

A form of claim settlement in which the insurer pays for repairs at a service station instead of paying cash. Under OSAGO, repair is the priority form of settlement for passenger cars owned by individuals.

Robbery (open theft)

The open theft of another person's property (Article 161 of the Russian Criminal Code); unlike burglary or theft, it is committed in the owner's presence. Usually covered under the "unlawful acts of third parties" risk.

RSA (Russian Union of Motor Insurers)

The Russian Union of Motor Insurers, the association of OSAGO insurers. It monitors members' compliance with OSAGO rules, makes compensation payments and maintains reference prices for parts and labour used to calculate damage.

Salvage

Parts and units of a damaged car that can still be used or sold. In a total loss, their value is deducted from the payment if the owner keeps them.

SMR (construction and erection all risks)

Construction and erection all risks insurance: it covers the project under construction, materials, construction machinery and third-party liability during construction, installation and commissioning.

Solvency margin

A measure of an insurer's financial buffer: the excess of its own funds over the required level. With the move to risk-based regulation, the Bank of Russia assesses it through the ratio of own funds (capital) to assumed obligations.

State-supported agricultural insurance

Insurance of crops, perennial plantings and farm animals under Federal Law No. 260-FZ, where the state subsidizes part of the premium.

STOA (partner repair shop)

A car service station that has a contract with the insurer to repair clients' vehicles under OSAGO or CASCO.

Subject matter of insurance

The property interests being insured: those related to life and health, to owning and using property, to liability and to business activity (Article 4 of Law No. 4015-1).

Subrogation

The transfer to an insurer that has paid a claim of the policyholder's right to recover from the person who caused the damage, up to the amount paid (Article 965 of the Civil Code). For example, after paying a CASCO claim the insurer recovers the money from the at-fault driver's OSAGO insurer or from the driver.

Sum insured

The amount up to which the insurer must pay claims. It is set by the contract and, in property insurance, may not exceed the actual value of the property (Article 947 of the Civil Code).

Surrender value

The amount the policyholder receives on early termination of an endowment or investment-linked life insurance contract. It is usually lower than the premiums paid, especially in the first years; a table of surrender values is included in the contract.

Surveyor

An independent expert who inspects property before insurance and assesses its risks and condition, and in marine and cargo insurance also the circumstances and amount of a loss.

TB (OSAGO base rate)

The OSAGO base rate, which each insurer chooses within a corridor set by the Bank of Russia. For passenger cars owned by individuals it ranges from RUB 1,399 to RUB 8,665. The final price is TB×KT×KBM×KVS×KO×KM×KS.

Technical (insurance) reserves

Funds an insurer must set aside for future claims: the unearned premium reserve, loss reserves and, in life insurance, the mathematical reserve. The procedure is set by the Bank of Russia.

Temporary disability

A condition in which a person is temporarily unable to work due to illness or injury, confirmed by a sick-leave certificate. It can be an insured risk in accident and sickness insurance.

Theft

The secret taking of another person's property (Article 158 of the Russian Criminal Code). Policies often distinguish burglary from simple theft and cover it together with robbery.

Title insurance

Protection against losing ownership of real estate if a transaction is challenged or declared invalid, for example due to third-party rights or errors in earlier transactions.

Total loss

A situation where a car cannot be repaired or the repair cost equals or exceeds the car's value; under CASCO the threshold is set by the insurance rules. The insurer pays the car's value minus the salvage, or the full amount if the salvage is handed over to it.

Unconditional (straight) deductible

A part of the loss that is always deducted from the payment. For example, with a RUB 15,000 deductible and damage of RUB 100,000 the insurer pays RUB 85,000, and with damage of RUB 10,000 it pays nothing. It makes the policy cheaper.

Underinsurance

The sum insured is lower than the insurable value of the property. Unless the contract provides otherwise, the payment is reduced proportionally: if property is insured for half its value, half of the loss is paid (Article 949 of the Civil Code).

Underwriter

An insurer's specialist who assesses a risk and decides whether to accept it, on what terms and at what rate.

Underwriting

The process of assessing a risk and setting insurance terms: analysis of the object, the application form, the loss history and survey results. Based on it, the insurer accepts the risk, changes the terms or declines.

Unearned premium reserve

The part of written premium that relates to the unexpired term of contracts. It funds claims that may occur during the remaining period.

UTS (diminished value)

Loss of market value of a car after an accident and repair, even a high-quality one. Under OSAGO it is treated as actual damage and compensated; under CASCO only if the contract provides for it.

Voluntary insurance

Insurance taken out by choice of the parties, with terms set by the contract and the insurer's insurance rules. Examples include CASCO, voluntary health insurance and home insurance.

VZR (travel insurance)

Insurance for people travelling abroad: it pays for medical care outside Russia and, optionally, trip cancellation, baggage, personal accident and liability. For a Schengen visa, medical expense cover must be at least 30,000 euros.