Insurance Glossary

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Natural event which causes a loss without any human intervention and could not have been prevented by reasonable foresight or planning.

Cover against most events, including accidental damage, other than those specifically excluded in the policy wording.

Insurance to replace someones income if they are unable to work due to an accident, sickness or involuntary redundancy. See MPPI.

A common clause in an insurance policy. The principle is that in the case of underinsurance the same proportion of the claim will be paid as the sum insured forms of the total value of the insured item, ie. if you insure for a ring for £50 which you should have insured for £100 (its' true value), if the ring is stolen you will only receive £25.

Cover to reimburse the owner if the building becomes damaged through a host of insured perils including storm, flood, fire, explosion, impact, earth quake, or subsidence (see your own policy wording).

A package of both buildings insurance and contents insurance from the same company, usually offered with a discount over buying the two insurances separately.

Document which proves insurance cover is in place on the dates specified and often includes details of the risk and the risk address.

Event which causes injury or loss which makes the insurer liable under the terms of the contract issued.

The splitting of a risk between several insurers. This may be either different insurers taking responsibility for different parts of a policy or by each insurer contributing to the overall payments in the case of a claim.

Part of the premium paid for an insurance policy which goes to the agent, broker or intermediary who set up the policy on your behalf, normally in replacement of any fees waived.

Monetary losses incurred after an insured event which caused a direct loss of revenue or income, often called loss of profits insurance.

Home insurance to reinstate a policyholder back to the position they were in prior to an insured peril, such as fire, flood, theft, impact or explosion.

Where there is more than one insurer covering the same risk, the contribution clause in a policy entitles each insurer to equally share any loss.

A temporary insurance document which can be issued to prove cover is in place before the full documentation is issued.

A risk which an insurer will not cover as it is too likely to suffer a loss.

An extra clause on an insurance policy above and beyond the standard wording, usually because of a high risk which is not sufficient to decline.

The first part of a claim which the insurer will not pay for and must therefore be paid by the policyholder.

The first period of a claim during which the insurer will not pay benefit.

A specific item or event which is not covered by an insurance policy.

The regulatory body responsible for insurance.

An insurance policy is often called 'High Net Worth' if the property to be the subject of the insurance is worth £250,000 or above, or the contents sum insured is over £75,000.

The process of putting someone in the same position they were before a loss.

You must have an insurable interest to insure any risk, including life insurance.

The provider of insurance cover.

Tax levied by the government on most insurances.

A motor insurance terminology in connection with claims.

A policy specially designed to provide cover for legal expeses such as employment disputes, disputes with third parties etc.

An exposure to negligent liability after the occurence of a certain event.

The oldest insurance institution in the world.

Extra premium added for high risk cases.

Person who investigates and judges the amount to be paid in settlement as a result of complex and sometimes large losses. Loss Adjusters are not always independent from both the insurer and the insured.

Person who decides the cause and value of damage following a loss. This may include establishing whether a loss is insured or not. Loss assessors are not always independent from both the insurer and the insured.

Any information which may affect the underwriters' decision as to whether they will accept a risk and the terms and rates offered. Material Facts must be declared from the outset and during the period of insurance by the insured.

The payment received each month in the event of an ongoing claim, normally as part of an ASU, MPPI or income protection policy.

Insurance to pay someones mortgage if they are unable to work due to an accident, sickness or involuntary unemployment. Can also cover additional associated expenses. See ASU.

An insurance which will replace items with brand new equivalents in the case of a loss, rather than taking into account depreciation.

A discount on premiums which is given if you have held the same type of insurance previously but have not made a claim.

The formal document outlining the cover provided by the insurance purchased, showing the cover, conditions, date of risk, sums insured, exclusions and person(s) insured.

The person or firm who formed the contract of insurance with the insurer.

The cost of the insurance product if you wish to take out cover.

Form used to collect the material facts the underwriter needs to decide a premium for an insurance policy.

The person requesting insurance, normally using a proposal form.

A percentage used to find a cost for a risk.

A letter or notice issued near the end of a period of insurance to notify the insured that cover will cease, normally offering a new contract with an unchanged or similar premium.

A property owned by a person or firm who is not the occupier, but lets the property to a third party to occupy.

A document, forming the basis of the contract attached to a policy, which details the cover levels provided by the insurance.

The process whereby the insurer agrees to meet a claim for an amount stated.

The process whereby the insurer pays a claim on behalf of another person or insurer and may then try to reclaim the costs from those originally liable.

The maximum amount the insurer will pay in the event of an insured peril occuring.

Any person or organisation which is not insured under an insurance contract.

The situation of purchasing insurance where the cover level is not enough to indemnify the insured in the case of a total loss.

Person who decides whether a risk is acceptable on behalf of the insurer, based on the probabilities produced by the actuaries.

Losses incurred which are not covered as part of the insurance in force at the time.

Insurance contracts are based on Utmost Good Faith whereby all parties involved (normally the proposer and the insurer) must disclose all material facts which could be deemed relevant to the proposed insurance. The insurer may be able to deny liability if the proposer does not do so.

Normally used with ASU and MPPI insurance. This is the minimum duration for an event to become the subject of a claim, then payment will then be made as if the claim was valid from the first day of the event.

Normally a motor insurance term meaning that a vehicle has been damaged to the extent that the repairs would cost close to, or more than the market value of the vehicle. In such cases, sometimes the insurer buys the wreckage from the insured at the estimated value before the loss.