Insurance Glossary

Addendum A document setting out agreed alterations to an insurance contract. (See also endorsement).
Additional premium A further premium payable by the insured as a result of policy amendment, that may have increased the risk or changed the policy conditions or sum insured.
Adjuster One who investigates and assesses claims on behalf of insurers (claims adjuster or loss adjuster).
Accidental Damage Damage to your goods or property as a result of an accident such as putting your foot through the loft ceiling or spilling paint across a carpet.
Accidental damage excess Excess specifically relating to accidental damage claims.
Act of God An event which is not the fault of any person, such as lightning strike.  These may or may not be insurable, depending on your policy.
Agreed Value The value of the insured items is agreed by you and the underwriters at the start of the period of insurance. This value then applies at the time of a claim.
All risks All risks cover provides the broadest form of insurance cover. Such policies do not name the risks covered but list the exclusions and all unnamed risks are automatically covered.
Aggregate limit of indemnity The maximum amount an insurer will pay under a policy in respect of all accumulated claims arising within a specified period of insurance.
Amendment A change to your original policy.
Annual premium The amount paid by the policy holder on an annual basis to cover the cost of the insurance policy.
Average A clause in insurance policies whereby, in the event of under-insurance, the claim paid out by the insurer is restricted to the same proportion of the loss as the sum insured under the policy bears to the total value of the insured item.
Broker An independent intermediary that arranges and sells insurance on behalf of different insurance companies.
Buildings Insurance or cover Buildings insurance covers the fabric of the actual building and the cost of damage to the structure of your property. This includes the roof, walls, ceilings, floors, doors and windows. Outdoor structures such as garages and fences are also included.
Business equipment Equipment such as computers, keyboards, printers, photocopiers located at your home office.
Cancellation Ending your insurance policy.  You might be charged if you cancel before your policy is due to end.  Your policy documentation will have details of these charges.
Certificate of insurance A certificate or document insurance companies issue to prove that insurance is in force.
Claim Any report of an incident in which the policy holder requests a payout or indemnity from the insurer under the conditions of the policy.
Claims history Insurance companies will look at how many claims you have made and what you have claimed for when deciding what to charge you for your insurance premium.
Combined cover A term used when you have your buildings and contents covered under the same policy.
Compulsory excess A set amount determined by your policy that you are responsible for paying in the event of a claim.
Completion The completion of sale on a property, if you have not insured the buildings from exchange, it would be recommended to insure the buildings from completion of purchase as you now have a sole financial interest in the property.
Concealment Deliberate suppression by a proposer for insurance of a material fact relating to the risk, usually making the contract null and void.
Contents Insurance or cover Covers the items in your home which are not fitted to the main structure of the building such as clothes, appliances, furniture, jewellery and other items of value. If you were to turn your house upside down, anything that fell out would be classed as 'contents'.
Cover note A cover note is a temporary form of certificate, usually valid for 30 days only.
Current market value The current market value is the price which your property would sell for on the open market.
Damage Loss or harm to a person or property.
Depreciation If you file an insurance claim, you may receive less from the insurance company that you were expecting due to depreciation - a deduction for wear and tear of your possessions.
Duty of disclosure If you make any changes which affect your insurance policy, then you need to let your insurer know straight away.  This can include changing address or name.
Endorsements An endorsement refers to any variation or addition to the terms of your policy. These are shown on your policy document.
Escape of water excess An excess that applies specifically when damage arises following escape of water.
Excess Usually a policy will have an excess applied to it. This indicates the initial amount of any claim that you will pay. Excesses can often be increased or decreased to affect the premium (the amount you pay for your insurance). Increasing your excess will often result in a lower premium as the insurance company decreases the potential payout in the event of a claim.
Exchange Insurers would recommend to insure the buildings of a property from exchange of purchase, where the new owner and current vendor both have a joint financial interest in the property.
Exclusions Insurance companies won't pay out for certain risks or types of loss or damage.  These exclusions will be set out in your policy terms and conditions.
Family legal protection An add-on product which provides assistance with Legal disputes for you or your family.
Financial Conduct Authority The UK's financial watchdog.  The FCA regulates financial services companies, including insurance brokers and insurance companies.
Financial interest A legal share of ownership, if you have a financial interest in the buildings and or contents of a property you should be noted on the insurance policy.
Financial Ombudsman Service A bureau established by major insurance companies to oversee the interests of policyholders whose complaints remain unsolved through normal company channels of communication. The service is available to all those holding personal cover with the insurers who have joined the scheme. The decision of the Ombudsman is binding on the insurer, although the insured may appeal to the court if he so wishes.
Fixtures and fittings An asset which has been attached to a property in such a way as to be part of the premises and its removal would do harm to the building.
FLEA cover A basic form of insurance, restricted to cover against Fire, Lightning, Earthquake and Aircraft.
FLEE cover A basic form of insurance, restricted to cover against Fire, Lightning, Earthquake and Explosion.
Freezer cover Insures against the loss of freezer contents as a result of a power cut or freezer breakdown.
Gap in cover A period of time a client has not had insurance in place and therefore has not accrued any no claims bonus.
Garden cover Some policies include cover for items in the garden such as fences, hedges, patios, trees and plants.
General conditions Conditions which apply to all sections of the policy. These must be read in conjunction with other sections.
Good state of repair A property without structural problems such as dry rot, damp or faulty wiring.
Hazard A physical or moral feature that introduces or increases the risk.
Heave The upward movement of the ground supporting your property. The removal of large trees can cause heave.
High risk items Items that are most frequently stolen from homes when burgled such as antiques, jewellery, laptops and audio and visual equipment.
Home emergency cover Cover for emergency repairs on your property including problems with plumbing, internal electrics, pest control, drains, gas supply, boiler and heating and security.
Home entertainment equipment All computer equipment, television sets, games consoles and audio equipment in your home.
Home/property The private dwelling in which you live (including any garages and outbuildings).
Inception of insurance The day your insurance policy starts
Indemnity Under a business interruption insurance the period during which cover is proved for disruption to the business following the occurrence of an insured peril.
Index linking Index linking ensures that the sum you insure your building or property for is updated to reflect economic variations. This means your insurance value is increasing in line with inflation.
Insurable interest For a contract of insurance to be valid the policyholder must have an interest in the insured item that is recognised at law whereby he benefits from its safety, well being or freedom from liability and would be prejudiced by its damage or the existence of liability. This is called the insurable interest and must exist at the time the policy is taken out and at the time of the loss.
Insurance Premium Tax A government tax which is included in the price of your insurance.
Insurer A person or company that insures something or someone against loss or damage.
Joint proposer If there are two people wanting to insure a property such as a husband and wife, then both parties must be noted on the insurance policy.
Laid up cover Cover for a vehicle that does not include road risks. Vehicles covered by this type of policy cannot be driven on the public highway or any other area to which the public have access. Often used for winter storage.
Landslip When the ground around your property slides downwards. Often caused as a result of excessive rain causing soil or rock slip.
Lapse The non-renewal of a policy for any reason.
Limited mileage The term given to a motor policy that restricts the maximum mileage you are allowed to cover, in return for a reduced premium.
Limit The insurer’s maximum liability under an insurance, which may be expressed ‘per accident’, ‘per event’, ‘per occurrence’, ‘per annum’, etc
Listed buildings A building of historical or architectural interest that can only be altered in ways approved by the historical buildings authorities.
Lloyds of London A Society, incorporated under Act of Parliament of 1871 and known as the Corporation of Lloyd’s, which provides the premises a wide variety of services, administrative staff and other facilities to enable the Lloyds market to carry on insurance business efficiently.
Lloyd's broker A broker approved by the Council of Lloyd’s and thereby entitled to enter the underwriting room at Lloyd’s and place business direct with underwriters. Lloyd’s brokers must meet the Council of Lloyd’s stringent requirements as to integrity and financial stability. They have to file annually with the Council of Lloyd’s a special accountant’s report concerning their financial position.
Locks The mechanisms used to secure windows and doors. The type and number of locks on your property may affect your policy.
Loss Another term for a claim.
Loss adjuster Independent qualified loss adjusters are used by Insurers for their experience and expertise necessary to carry out detailed and in some instances prolonged investigations of complex and large losses. Although the adjuster’s fees are invariably paid by the insurers he is an impartial professional person and makes his judgement on the amount to be paid in settlement solely on the basis of established market practice. It is his task to negotiate a settlement which is within the terms of the policy and equitable to both insured and insurer. Should he himself not be an expert in a particular discipline which is necessary or desirable to pursue his negotiations, he will consult or employ such an expert.
Material fact Any information which might influence either an insurer's decision to offer you cover or the premium they charge for it.  You need to tell your insurer all the relevant facts as they will base their decision on this information.  If you don't your policy may not be valid.
MID The Motor Insurance Database is an independently operated database of all insured cars in the UK. It is accessible by the police, and insurers are required by law to supply certain data to the MID within a maximum of 14 days from inception of insurance cover.
Minimum Security Protection (MSP) Normally this is a requirement for approved key-operated window locks to all accessible windows and approved door locks to all final exit doors.
Negligence Perhaps the most common formof tort. In Blyth v Birmingham Waterworks Co. (1856) it was defined as ‘the omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do’. Gives rise to civil liability.
New for old New for old policies mean that no deduction is made for wear and tear and that a full replacement is provided for items lost, stolen or damaged.
No claims bonus/discount A reward for people who don't make a claim on their policy. The discount is applied to the premium at new business and renewal.
Non-disclosure The failure by the insured or his broker to disclose a material fact or circumstance to the underwriter before acceptance of the risk.
Non-specified items Non-specific items are not described on the insurance certificate and it is the property owner's responsibility to check the sum placed against the total of non-specific items is sufficient.
Non-standard Refers to a risk that may be outside the insurer's usual limit of acceptance and often refers to a modification made to your insured items.
Non standard construction Any property which includes an element of construction which causes the property to require specialist cover. Examples include; thatched roofs, steel framed houses, timber framed houses and flat roofed houses.
Occupier's liability As occupier (irrespective of whether you own the property) you carry a duty of care to protect your safety and the safety of other occupants of the property. It is your responsibility to ensure that the premises are reasonably safe and free from danger.
Optional Extras Additional policy benefits which can be purchased to run alongside the main policy.
Overseas use Use of insured items outside of the UK and Northern Ireland.
Peril A chance event, which may be covered or excluded by a policy of insurance.
Period of cover The period of time covered by the policy as shown in the policy schedule.
Personal possessions Any items worn or carried on you such as clothing or luggage. Often referred to as personal belongings.
Policy Policy is the name sometimes given to your contract of insurance. It refers to the level of cover that you have agreed with your insurer, outlines the terms, and details any particular conditions that you need to be made aware of, or that you need to make your insurer aware of.
Policyholder The person who takes out the insurance policy.
Premises The household which requires cover under the policy. This will be detailed in the policy schedule.
Premium The insurance premium is the amount you pay for your insurance, normally on an annual basis (or by instalments).
Proposal form The basis of the contract between you and insurer. An insurance contract is based on utmost good faith, which means you are duty bound to answer all questions correctly to the best of your knowledge. Failure to do so may void your cover.
Quote The premium and terms offered by a potential insurance company to insure your property for the cover you require.
Rebuilding cost Buildings insurance covers the cost of rebuilding your property as it stands, not in new condition, or the value of the land on which the property stands. This is a different valuation than the current market value of your home which is the price you would sell your property for. Outbuildings including sheds, garages, swimming pools, tennis courts, terraces and patios should be taken into consideration when deciding on the rebuild value of your property.
Reinstatement Making good. Where insured property is damaged, it is usual for settlement to be effected through the payment of a sum of money, but a policy may give either the insured or insurer the option to restore or rebuild instead.
Renewal The point at which you are invited to renew your insurance policy for another year.
Repudiated claim A claim that is not covered under the terms and conditions of your policy.
Risk Insurance underwriters consider how likely you are to make a claim and how costly this claim is likely to be. This enables the underwriters to calculate what premium you should pay.
Sanitary fittings Washbasins and pedestals, bathroom and kitchen sinks, lavatory pans and cisterns, shower trays and shower screen, baths and bath panels. Excludes swimming pools.
Schedule The document which identifies the policyholder and sets out details of the cover the policy provides.
Settlement The settlement is the payout you receive at the resolution of a claim, and in line with the stipulations of your policy. A settlement is affected by the excess you choose, and is dependent on you supplying your insurer with accurate and up-to-date information.
Single article limit (SAL) This is the maximum payment for any one article under a section of a policy. Items over this value need to be disclosed to the insurer so that an appropriate rate can be calculated.
Specified items Items which are specifically named on your policy and normally exceed the value of the specified amount shown in your schedule.
Structural survey A thorough examination of the property usually carried out by a qualified surveyor, who will check that the interior and exterior match the minimum requirements for a lender to make a mortgage offer.
Subsidence Subsidence refers to movements in the earth caused by geological or man-made factors. Subsidence occurs when the soil beneath the building's foundations is essentially unstable and unable to support it. The movement is unconnected with the weight of the building. If your house is a subsidence risk it can make it harder to insure.
Subsidence excess An excess applied specifically in relations to claims arising from subsidence.
Sum insured The maximum amount for which you are covered under your policy.
Tenure A person's relationship to their home e.g. if you own and live in your house, your tenure is owner occupier.
Third party A person claiming against an insured. In insurance terminology the first party is the insurer and the second party is the insured.
Third party liability Liability of the insured to persons who are not parties to the contract of insurance and are not employees of the insured.
Trace and access Covers the cost of removing and replacing any part of your home to locate the source of escaping water.
Total Loss The situation where the repair cost versus the item's value renders repairs uneconomic, thus 'writing off' the property as a total loss.
ULR Stands for uninsured loss recovery. The process by which your uninsured losses in the event of a no-fault accident are recovered for you. For example, your excess is an uninsured loss and you would not wish to have to forfeit this if the accident was not your fault.
Underinsurance When the sum insured on the property isn't sufficient to cover the full cost of replacing all your contents or building work.
Underlying insurance The primary insurance as distinct from excess insurance.
Underwriter The company or person providing the insurance cover under your policy.
Underwriting Underwriting is the process that insurers go through when assessing any new risk for insurance cover.
Uninsured losses Uninsured losses are those items of expense which are not covered by your own insurance policy.
Unoccupied Not lived in, or regularly slept in by you or any person with your permission.
Valuables High value items such as jewellery, works of art and antiques.
Vacant possession If your holiday property specifies vacant possession, it simply means that it will be unoccupied on, or before the sale completion date, ready for you to move in.
Voidance Where a policy is cancelled with effect from the original start date, as if the policy had never been in force.
Voluntary excess You can usually choose to pay more towards the cost of a claim.  This generally reduces the price of your premium.
Warranty A policy condition that must be complied with to the letter, for example, a garaging warranty, whereby the vehicle must be in a locked garage between the hours of 2200 and 0600 unless in the course of a journey. No cover would operate if this strict warranty was not complied with.
Wear and tear This is the amount deducted from claims payments to allow for any depreciation in the property insured which is caused by its usage.
Year of build The original year the property being insured was built, if there has been a conversion, the year of build will be the age of the original dwelling, even if there is only one brick left.