INSURANCE TERMINOLOGY/JARGON
Brunsdon Westinsure Ltd appreciate that alot of insurance terminology/jargon is used in the industry. We have put together a brief description of the most commonly used terms/phrases which we hope will be beneficial to you.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
ABI:
Association of British Insurers. A trade organisation for Insurance Companies that represents the collective interests of the UK’s insurance industry. They speak out on issues of common interest and advise on public policy issues as well as setting industry standards and codes of practice.
Act of God:
The clause "Act of God" refers to natural events that cannot be foreseen or predicted. Insurance policies can exclude Acts of God, War and/or Terrorism, although they will cover natural disasters such as floods.
Additional Premium:
Also called A/P. This terms means a further premium is payable by the insured as a result of policy amendment such as adding drivers to motor policies or increasing the sums insured under household policies.
All Risks:
This is the widest cover available under a policy and provides cover against All Risks in respect of loss or damage except for those specifically excluded such as wear and tear, damage by vermin and dry rot.
Any Licensed Driver:
A policy that allows anyone to drive a vehicle with the owners permission within the terms of the policy. The insurers normally state that drivers with certain convictions or those who have held a license for less than 12 months must be referred to the insurer before they can drive under the policy.
Breakdown Cover:
This terms either refers to a policy that provides road-side recovery/assistance or home repair services or a policy that provides cover for breakdown of equipment.
Buildings Insurance:
A policy that covers the fabric of a building against damage from risks such as fire, flood, subsidence and accidental damage. The insurers will pay to either repair or rebuild a property.
Business Equipment:
This terms normally refers to office equipment but can mean anything which is used for business purposes. Household insurance policies normally provide little or no cover for business equipment as standard but most policies can be upgraded to include business equipment if required.
Cancellation:
The termination of a policy before it is due to expire. Policies can be cancelled by either the policyholder or the insurer.
Certificate:
Normally refers to either a Certificate of Motor Insurance or an Employers Liability Certificate and is issued by an insurer to certify that insurance is in force.
Claim:
A term used to describe the process of getting an insurance company to make a payment under the policy for loss or damage caused by an incident covered under the policy.
Combined Policy:
Refers to a policy which provides cover against a combination of risks such as a household policy which provides cover for the buildings and the contents.
Common law:
A type of Law which is based on past cases.
Contract:
A contract is a "promise" or an "agreement" made of a set of promises. Contracts and breach of contracts are recognised by Law.
Consequential Loss:
This terms refers to financial loss following physical damage such as loss of profits/reduction in gross revenue.
Contents Insurance:
Cover provided by insurers for anything that can be moved such as stock, machinery, plant etc against damage from risks such as fire, flood, subsidence and accidental damage.
Comprehensive Cover:
Highest level of cover available under a motor insurance policy and includes cover for a claim from a third party for property damage or injury and cover for the vehicle itself.
COV:
Means change of vehicle under a motor policy.
Cover Note:
A legal document issued to the policyholder confirming details of the insurance cover in force.
Days of Grace:
Means a period of time after renewal during which insurers are prepared to accept the premium and effectively renew the policy without a break in cover.
Employers Liability Insurance:
Also referred to as EL cover. It is a policy which cover the legal liability of employers in respect of their liability to employees for injury, disease or death to employees arising from their employment. With some exemptions this insurance is compulsory in Great Britain, and can only be provided by an authorised insurer.
Endorsement:
A document issued by an insurer as evidence of a change in the wording of or cover offered by an existing policy.
Excess:
Also referred to as the "Policyholders Retained Liability" and is the amount of a claim a policyholder agrees to pay they suffer a loss. An excess is often standard on insurance policies, but there are some exceptions such as Employers Liability Cover.
Exclusion:
A provision in a policy that excludes the insurer’s liability to pay a claim in certain circumstances or for specified types of loss.
Ex-Gratia Payment:
A payment made by an insurer to a policyholder where there is no liability under a policy for the insurer to pay.
FSA:
Financial Services Authority. The FSA is an independent non-departmental public body which currently regulates the General Insurance, Life Assurance, Banking and Investment Industry.
Green Card:
A document issued to those motoring abroad as evidence that they have the legal minimum insurance cover required. It is not essential for European travel because minimum legal cover is automatically included in UK policies.
Inception Date:
The date from which an insurer is deemed to be providing cover under the terms of the policy.
Indemnity:
The principle by which policyholders are put in the same financial position after a loss as they were immediately before it (less any excess payable).
Insurance Premium Tax (IPT):
A tax levied by the Government. Insurance Premium Tax (IPT) is a tax on general insurance premiums. There are two rates, a standard rate of 5 per cent and a higher rate of 17.5 per cent for travel insurance and some insurance for vehicles and domestic/electrical appliances. The amount is charged as a percentage of insurance premiums.
Knock for Knock:
An agreement between insurance companies to cut down on paperwork and legal action. The insurers agree to pay for the costs of claims for their own customers, rather than claiming the money from the other party. This agreement is normally used where both parties are blaming the other for the incident and no independent witness can verify who was at fault.
Lapse:
The non-renewal of a policy.
Legal Expenses Insurance:
Insurance that covers the costs of private legal action such as recovery of an excess following a non fault accident. Cover is also available for businesses and provides wider cover.
Liability:
This refers to your legal obligation to pay compensation to somebody injured or who have had property damaged either by you or something for which you are responsible.
Limit of Indemnity:
This is the insurer’s maximum liability under an insurance policy. This can be expressed ‘Per Accident’, ‘Per Event’, ‘Per Occurrence’, ‘Per Annum’, etc.
Lloyd’s of London:
An insurance market organised into syndicates which underwrites most types of risks.
Loss:
Another term for a claim.
Loss Adjuster:
An insurance specialist who looks into and reports on insurance claims. The loss adjuster works on behalf of the insurance company. His or her job is to check that claims are legitimate and are settled for the correct amount.
Loss Assessor:
A person who negotiates claims on behalf of policyholders as opposed to a Loss Adjustor, who negotiates claims on behalf of the insurer.
Material Fact:
Any information which would affect an insurance companies decision to accept a risk or the premium it would charge. Failing to disclose a material fact could invalidate a policy.
Mid-Term Adjustment (MTA):
A change made to the policy during the period of cover such as a change of vehicle or address.
Minimum & Deposit:
This means there is no refund of premium in the event of cancellation.
Minimum Premium:
The lowest premium that an insurer will charge for a particular risk.
Named Driver:
A driver specified on an insurance policy who is not the vehicle’s owner.
New for Old:
A term which means that anything anything lost or destroyed is replaced with a brand new item, with no deduction for wear and tear. Also known as "Replacement as New".
No Claims Bonus:
A discount that increases for each year without a claim, but decreases following a claim. No claims bonuses are most common with motor insurance policies.
Non-Disclosure:
The failure to disclose a material fact. This can be fraudulent or accidental.
Personal Possessions Cover:
Insurance for Personal Items such as money, jewellery and clothing whilst away from the home.
Policy:
A document which details the terms of a contract between the insurer and the policyholder.
Policyholder:
Person or Business to whom the insurer issues the policy.
Products Liability Insurance:
Provides cover for the insured’s legal liability for bodily injury to persons, or loss of or damage to property caused by defects in goods sold, supplied, erected, installed, repaired, treated, manufactured, and/or tested by the insured.
Professional Indemnity Insurance:
Provides cover for a professional against their legal liability towards third parties for injury, loss, or damage, arising from their own professional negligence or that of their employees.
Proposal Form:
A form sent by an insurer to a person requiring insurance so as to obtain sufficient information to allow the insurer to decide whether or not to accept a risk and what conditions to apply if it is accepted.
Public Liability Policy:
Covers your legal liability to pay damages to companies or members of the public who hold you responsible for injury to them or damage to their property as a result of your business activities. It also covers legal fees, costs and expenses such as representation at any inquest or court hearing.
Quote:
A statement provided by an insurer detailing the premium and terms required for a particular risk.
Renewal:
The process of continuing an insurance policy from one period to another without a break in cover.
Return Premium:
Also called R/P. This terms means a refund of premium is payable back to the insured as a result of policy amendment such as deleting drivers under motor policies or decreasing the sums insured under household policies.
Road Risks:
Term used for Motor Trade policies and refers to cover provided by insurers for vehicles driven on the road.
Schedule:
The part of a policy containing information relative to a particular risk. The greater part of a policy is likely to be identical for all risks within a class of business covered by the same insurer and the schedule is added to personalise the policy to the person/business being covered.
Settlement:
When an insurer pays a claim. Also used to describe the amount being paid.
Statement of Fact (SOF):
The Statement of Fact has replaced the Proposal Form for alot of policies. The Statement of Fact forms the basis of the contract between the policyholder(s) and the Insurance Company and should be kept as record of the contract. The SOF contains the relevant information which forms the basis of the contract.
Sum Insured:
This is the total amount for which the risk is insured. It is important to insure accurately otherwise you risk under insurance and your insurance company might not pay out in full in event of a claim.
Trade Price:
The value an item can be bought for in a particular trade.
Under Insurance: When a customer takes out too little insurance (such as insuring buildings for an inadequate amount) and therefore pays a smaller premium than they should. Insurance companies take a dim view on under-insurance, and they could scale down a claim as a result.
Underwriter:
Person employed by an insurance company who decides whether to accept a risk and calculates the premium to be charged and terms to apply.
Write-Off:
A damaged vehicle which is not repairable, or one which would cost more to repair than the car was worth before the damage occurred. Also known as ‘total loss’.