Don’t be confused by unfamiliar insurance wording and terms. We hope that this list of commonly used words helps you.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W

A

ABI: The Association of British Insurers. This is a trade organisation for Insurance companies that aims to represent the industry and set industry standards and codes of practice.

Act of God: Less miraculous than it sounds. The clause Act of God covers natural events that can’t be foreseen or predicted. Insurance policies often exclude acts of God, war or terrorism, although they will cover natural disasters such as floods.

Additional Premium: A further premium payable by the insured as a result of policy endorsement, that may have increased the risk or amended the policy conditions or sum insured.

All Risks: An insurance policy that covers all risks – except those listed under its exclusions.

Annual Policy: An insurance policy that applies for a period of one year and is then renewable for another year.

Any Driver: Insurance that allows anyone to drive a vehicle, not just the owner. But any driver policies only cover drivers if they have permission to use the car.

B

Breakdown Cover: A policy that provides road-side recovery or home repair services.

Broker: An independent intermediary who sells policies from several insurance companies.

Buildings Insurance: A policy that covers the fabric of a building against damage from hazards such as flood, fire or subsidence. A policy will pay to rebuild or repair the property.

Business Equipment: Normally used to describe business office equipment. Anything used for a business is normally excluded from a standard home insurance policy. This can cover valuable items such as faxes and computers. If you work from home, it pays to check the exact conditions of a policy to make sure you are covered.

C

Cancellation: Termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the condition under which the policy may be cancelled by notice. The period of notice could be anything from 48 hours to 3 months.

Certificate: A document issued by an insurer to certify that insurance is in force.

Claim: The term used to describe the process of getting an insurance company to pay out on the policy you bought from them.

Combined Policy: A policy that covers a combination of risks eg on a motor trade policy, this can be road risks, liability, contents and often premises.

Common law: Based on past cases.

Contract: An agreement between 2 or more people which has legal effect.

Consequential Loss: Insurance of financial loss following physical damage e.g. loss of profits; loss of use insurance.

Contents Insurance: As a rule, contents cover insures anything that can be moved ( like stock, machinery, plant) while buildings cover insures anything that can’t.

Cover Note: A document issued to the insured confirming details of the insurance cover placed. Some cover notes are a legal requirement e.g. motor.

D

Days of Grace: Period of time after renewal during which insurers are prepared to accept the premium and consider that there has been no break in cover.

E

Employers Liability Insurance: Insurance by employers in respect of their liability to employees for death, injury or disease arising out of and in the course of their employment. With some exemptions this insurance is compulsory in Great Britain, and can only be provided by an authorised insurer.

Endorsement: Documentary evidence of a change in the wording of or cover offered by an existing policy or qualification of wording if the policy is written on restricted terms.

Excess: The amount of a claim a policyholder agrees to pay if he or she suffers a loss. An excess is often standard with some policies such as car insurance.

Exclusion: A provision in a policy that excludes the insurer’s liability 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 the policy so to pay.

F

FSA: Financial Services Authority. The FSA are the regulators of the life assurance, banking and investment industry and will soon take over regulation of general insurance also.

Fully Comprehensive: For motor insurance, a policy that covers damage to the owner’s vehicle, as well as third party damage and injury.

G

GISC: The General Insurance Standards Council currently regulates the general insurance industry.

Green Card: A document issued to those motoring abroad as evidence that they have the legal minimum insurance cover required. Not essential for European travel, because minimum legal cover is automatically included in UK policies.

H

I

Inception Date: The date from which, under the terms of a policy, an insurer is deemed to be at risk.

Indemnity: The principle by which insurance policyholders are put in the same financial position after a loss as they were immediately before it.

Insurance Premium Tax (IPT): A Government tax charged as a percentage of insurance premiums.

J

K

Knock for Knock: An agreement between insurance companies to cut down on paperwork and legal action. Insurers pay for the costs of claims for their own customers, rather than claiming the money from the other party.

L

Lapse: The non-renewal of a policy for any reason.

Legal Expenses Insurance: Insurance that covers the costs of private legal action, for example disputes with neighbours or trades people. Also available for businesses.

Liability: This refers to your legal obligation to somebody injured or damaged either by you or something for which you are responsible.

Limit: The insurer’s maximum liability under an insurance which may 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 policy.

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 all they seem and are settled for the right amount.

Loss Assessor: A person who negotiates claims on behalf of policyholders. Not to be confused with the Loss Adjustor, whose aim is precisely the opposite.

M

Material Fact: Information that would affect an insurance company’s willingness to accept a policy, or the premium it would charge. Failing to disclose a material fact could invalidate a policy. Typical examples include previous driving convictions.

Mechanical Breakdown Insurance: MBI policies are better known as extended warranties for cars. They are not really warranties at all, but insurance policies that pay out if certain faults arise with a car.

Mid-Term Adjustment (MTA): A change made to the detail of the policy during the period of cover, as opposed to at inception or renewal.

Minimum premium: The lowest premium that an insurer charges.

Misrepresentation: A false statement of fact (can be innocent or fraudulent).

N

Named Driver: A driver specified on an insurance policy who is not the vehicle’s owner.

New for Old: Cover for property where anything lost or destroyed is replaced with a brand new item, with no deduction for wear and tear. Also called ‘replacement as new’.

No Claims Bonus: A discount that grows for every year without a claim. No claims bonuses are most common with motor insurance.

Non-disclosure: The with-holding of a material fact.

O

P

Personal Accident and Sickness Insurance: Insurance for fixed benefits in the event of death or loss of limbs or sight by accident and/or disablement by accident or sickness. Accident and sickness may be insured together or separately.

Personal Possessions Cover: Insurance for personal items such as money, jewellery and luggage.

Policy: The document that details the contract between the insurer and the policyholder.

Policyholder: Person to whom the insurer issues the policy. Normally this is the person who benefits from an insurance policy.

Premium: This term refers to the yearly charge paid by the policyholder in order to ensure their protection from the insurer.

Products Liability Insurance: These policies cover 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: This policy protects 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 legal liability for injury or damage caused to others.

Q

Quote: A statement by an insurer of the premium and terms he will require for a particular insurance.

R

Renewal: The process of continuing an insurance from one period of risk to a succeeding one.

Roadside Rescue: See breakdown cover.

Road Risks: A policy that provides motoring/on the road motor insurance for businesses, particularly in the motor trade. Available as either: Third Party Only (TPO), Third Party Fire & Theft (TPFT) or Comprehensive (Comp).

S

Schedule: The part of a policy containing information peculiar to that 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 and Additional Drivers Form. The SOF 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 underinsurance and your insurance company might not pay out in full in event of a claim.

T

Third Party: A basic form of motor insurance. Third party covers liability for injury to others and for damage to others’ cars, but not to your own.

Trade Values: All motor trade policies are based on trade values.

U

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.

V

Values: All motor trade policies are based on trade values.

W

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’.