A glossary of commonly used general insurance and risk management terms.

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MALPRACTICE INSURANCE – Coverage for liability for acts of professionals, e.g., physicians, dentists, druggists. See also Professional Liability Insurance.

MARGIN CLAUSE – Under a blanket policy with one aggregate sum insured, the margin clause limits the maximum amount payable on any one item by a specified percentage of the declared value of the particular item, i.e. a 10% margin clause limits the maximum payable on a particular item to 110% of the declared value of the item.

MARKET VALUE – The price for which something would sell, especially the value of certain types of assets, such as stocks and bonds. It is based on what they would sell for under current market conditions. For example, common stock market value would be the price of the stock as of a specified date.

MATERIAL MISREPRESENTATION – The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

MORAL HAZARD – A condition of morals or habits that increase the probability of a loss from a peril.

MORTGAGEE – The creditor to whom a mortgage is given and who lends money on the security of the value of the property mortgaged.

MORTGAGOR – The debtor who receives money and in turn grants a mortgage on his property as security for a loan.

MORTGAGE CLAUSE – A clause in an insurance policy which stipulates the rights and obligations of the insurer and the mortgagee. The main characteristics of this clause are that the mortgagee is granted protection in the event a loss is denied due to the actions of the insured (provided that the mortgagee was not aware of the insured’s wrongful action) and, in return, the mortgagee accepts responsibility to advise the insurer of any misrepresentation or change in risk of which the mortgagee is aware. The clause also warrants that a mortgagee will receive notice of any cancellation of, or material change in, the policy.

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