Insurance seems to have more industry jargon than most. Here’s our jargon buster list with straight forward explanations, which hopefully will make things a tad clearer.
ADDITIONAL PREMIUM An extra premium payable due to a mid-term change to the cover or sums insured.
ALL RISKS Cover for damage or loss to property, unless specifically excluded.
AVERAGE Applied in the event of under-insurance. A claim is reduced proportionately in line with the under-insurance.
CANCELLATION Termination of a policy mid-term before the renewal or expiry date
CLAIMS Loss, damage or liability incurred, which is insured under a policy.
CONSEQUENTIAL LOSS Additional losses, costs or expenses as a result of the damage or loss incurred.
DEDUCTIBLE Another word for excess.
ENDORSEMENT A specific change to the cover or policy wording, generally detailed on the schedule..
EXCESS The specified amount deducted from a claim settlement.
EXCLUSION A provision which excludes cover or liability under the policy.
EX-GRATIA PAYMENT A goodwill gesture payment from the insurer to the insured, which under the terms of the policy the insurer is not obligated to make.
HAZARD A physical or moral element that increases the likelihood of a claim.
INCEPTION DATE The original start date of the insurance.
INDEMNITY The act of the insurer confirming cover for damage, loss or liability under the policy.
INSURABLE INTEREST The policyholder must have an interest in the object of the insurance, which is recognised in law and means that without cover in place the policyholder would be wholly or partly responsible for the damage, loss or liability.
INSURANCE BROKER/INTERMEDIARY An insurance professional acting on behalf of his clients by placing cover with insurers.
FINANCIAL OMBUDSMAN SERVICE A body set up by major insurers to investigate complaints made by policyholders with a personal policy with an insurer. The decision is binding on insurers signed up to this service, but a policyholder can apply to a civil court if not satisfied with the outcome.
INSURANCE PREMIUM TAX A Government tax applied to most general insurance in the United Kingdom since 1994.
INSURED The named person or company who has the benefit of the policy indemnity.
INSURER The company who accepts the premium in return for the insurance
LAPSE The non-renewal leading to the expiry of the policy.
LIMIT The maximum limit of cover, usually the liability section.
LLOYD’S (OF LONDON) A Society under Act of Parliament of 1871 where the Lloyd’s market carries out insurance.
LOSS A term for a claim.
LOSS ADJUSTER Although instructed and paid a fee by insurers, they remain impartial and are used to investigate and conclude complex and larger claims.
MATERIAL FACT A fact which would influence the insurer in accepting or declining a risk and the setting of the premium, terms and conditions.
NEGLIGENCE An act or omission that is not considered reasonable given the circumstances, which leads to blame for the consequences.
NEW FOR OLD Commonly used in home insurance, where an insurer settles a claim without deduction for wear and tear and depreciation of the original item.
NO CLAIMS DISCOUNT Also known as a no claims bonus. Discount off the premium for being claim free. Usually a year or more claim free.
NON-DISCLOSURE The failure of the insured or his or her representative to advise the insurer of a fact that may influence the acceptance, premium, terms or conditions of a risk.
PERIL A physical happening detailed as insured within the policy wording, such as a fire, flood.
POLICY A document detailing the terms and conditions applicable to an insurance contract and constituting legal evidence of the agreement to insure. It is issued by an insurer or his representative for the first period of risk. On renewal a new policy may
POLICYHOLDER Another word for insured.
PREMIUM The consideration required by the insurer in return for providing insurance cover.
PROPOSAL FORM A form sent by the insurer which sets out all the facts relating to the risk that the proposer of the insurance has to complete, sign, date and return.
QUOTE An estimate of the premium after all the risk details have been provided.
REINSTATEMENT Can refer to a claim, for example the reinstatement of a building following damage or loss. This term can also refer to the cover.
RENEWAL To include an existing policy by paying for and extending with another period of insurance.
RISK The peril of which is insured or the exposure to a potential claim.
SCHEDULE A document issued by an insurer or authorised representative for the insured, which details the agreed cover. This document should be read in conjunction with the policy wording.
STATEMENT OF FACT Issued as an alternative to the more traditional proposal form. In addition to the risk details, the statement of fact may also include the terms and conditions. The insured does not have to sign and return this document.
SUBJECT TO SURVEY Initial acceptance of a risk, which is subject to a site/premises survey after the cover inception date. Further requirements may be needed once the insurer is in receipt of the survey and it’s findings.
SUM INSURED The maximum amount an insurer will be liable for in the event of a claim.
THIRD PARTY A person claiming against an insurer, who is not the insured. Usually liability claims.
UNDERWRITER A skilled person working for or authorised by an insurer to accept or decline risks and impose terms and conditions dependant on the details.
UTMOST GOOD FAITH Insurance contracts are contracts of utmost good faith, meaning that both parties entered into the contract have a duty to disclose, clearly and accurately all material facts relating to the insurance. A breach of duty by the proposer could result in the insurer refusing indemnity.
WARRANTY A strict condition of the insurance, which failure to comply could result in cover not being provided by the insurer.
WEAR AND TEAR For home insurances only usually applied against clothing and linen due to general short span of usefulness. A deduction made due to the age and worn element of an item.