Our Insurance Glossary

The world of insurance can be tricky enough without knowing all the right jargon, here’s a list of some common phrases that’ll help you get a better understanding.

Word Definition
Act of God An unpreventable and unpredictable event, which could cause loss or damage to buildings, land, vehicles, etc. Insurance policies often exclude acts of God or acts of war, although they will usually cover natural disasters such as floods.
Arbitration clause This is a clause in your insurance policy which states that if neither you nor your insurer can agree on an 'appropriate claim settlement' you both hire a mutually agreed appraiser to settle the dispute. The appraiser elects an independent mediator and is neutral to both parties. A majority decision will decide the amount of the claim.
Average Average is a policy condition contained in property damage-based insurances to protect the insurer against under insurance by the insured.
Bona fide sub-contractors A bona fide subcontractor normally works under their own direction and supplies their own tools and materials. Usually paid on a fixed price for the job in question.
Broker An insurance broker facilitates deals and transactions between insurers and customers. They will help to find the ideal insurance policy for their client, ensuring that an agreement is in place to cover everything their customer needs.
Commission Commission is the monies that is paid to a 3rd party. It is usually a broker or introducer who has matched a customer with the correct insurance providers.
Condition The circumstances under which insurance coverage id provided and excluded in an insurance policy. If the insured experiences Aa loss due to an excluded peril or one that exceeds the coverage limit, the insurer is not responsible for covering the loss or paying beyond the policy limit.
Declared value Declared value is sometimes called “day one value” and simply reflects the cost of rebuilding or replacing your property on the first day of your insurance policy. This term shouldn’t be confused with the declared market value.
Endorsement A policy wording that extends or restricts the cover provided, or that requires compliance with stated conditions. Appears on a Policy Schedule.
Excess The first portion of a loss or claim which is borne by the insured. An excess can be either voluntary to obtain premium benefit or imposed for underwriting reasons.
FLEA Cover FLEA stands for ‘fire, lightning, explosion and aircraft impact’. This covers your property from these elements only.
Good state of repair A property in a good state of repair is one without structural problems. Your property is not considered to be in a good state of repair if it has dry rot, rot or infestation requiring timber or window replacement, damp, roof or chimney stack damage, faulty wiring or incomplete construction.
High risk items High risk items are those items that are most frequently stolen from our homes when they are burgled.
HMO (House in Multiple Occupancy) A house in multiple occupancy (HMO), refers to residential properties where 'common areas' exist and are shared by more than one person.
Indemnity In insurance terms it means being put back in the same state or financial position you were in prior to a loss. It is protection or security against damage or loss.
Index Linking A mechanism used by an insurer to ensure an assets insurance value is adjusted in line with inflation, deflation, cost of living. It provides a buffer and helps to avoid underinsurance.
Labour Only sub-contractors A labour-only subcontractor normally just supplies their labour and works under the direction of their employer. Usually paid on an hourly or daily rate.
Loss adjustor Loss adjusters are independently employed by insurance companies for their expertise in carrying out detailed investigations into large insurance claims. Loss adjusters will investigate the losses and usually the adjusters’ fees are paid for by the insurers as they are an impartial person. A loss adjuster makes decisions on an amount to be paid in settlement solely on a basis of market practice guidelines.
Malicious Damage by Tenant This refers to damage caused on purpose by tenants who intend to do harm such as breaking furniture, vandalism, smashing window or arson.
Material Fact Any fact which would influence the insurer in accepting or declining a risk or in fixing the premium or terms and conditions of the contract is material and must be disclosed by a proposer, or by the insurer to the insured. It can include things you may have forgotten to mention at point of sale e.g., previous directorships ending in receivership/liquidation, past or ongoing IVAs.
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.
Policy Summary / Summary of Cover This document is provided by your insurer and summarises all available cover. This document should be used in conjunction with your policy schedule. You may have not selected all the available covers; therefore, you may find it useful to consider further sections to your current policy.
Policy Wording This document details FULL terms and conditions the insurer has set out. All the applicable insurer warranties can be found in this document. A warranty can be described as a promise made by the you to the insurer relating to a fact or the performance of a business. These warranties must be strictly adhered to; therefore, you MUST read this document to understand what warranties and promises you have with insurer.
Rate increase This refers to premium or deductible increases. It evaluates the changes in rate adequacy of policies.
Rating Insurance companies base the price of their policies on several rating factors. In the case of property this could include occupancy, exposure and construction that contribute to how the risk is rated.
Rebuilding cost The rebuilding cost is the total cost of rebuilding your property if it was destroyed. It includes the cost of all professional fees, materials and labour, plus the cost of demolishing and clearing the old building. This is distinct from sale price or market values.
Schedule This gives policy details of how much cover you have (the sum insured), the discount you qualify for (if any), the period of insurance, the premium you must pay and the sections that apply. With some policies you may get a new schedule when you renew the policy or whenever you change any policy details.
Statement of Fact Records information provided to the insurer by the proposer, which has been relied upon to offer a quotation, and its price and terms. It is the information we have used to present your risk to insurers and they in turn offer policy cover. This document should be used in conjunction with your policy schedule. It shows the details we have captured reflect your business and its activities correctly.
Sum insured The maximum amount payable in the event of a claim under the contract of insurance.
Tenure The conditions of which property, land, or buildings are occupied and held.
Terms of Business These are provided by us, and will document our business practices amongst other information, it will also state our fees and any applicable cancellation fees. You should familiarise yourself with these procedures and contact us if you have any queries.
Under insured When the sum insured on your policy is not enough to cover the maximum possible potential loss or damage. The sums that have been insured do not reflect the actual value of the property or item(s) being insured to effectively provide cover.
Unoccupied This can mean a property is uninhabitable in the case of renovations or damage or that no one lives there at the relevant time. Insurers will vary permitted periods of unoccupancy so it’s wise to refer any period that you will not be living at the property regardless of reason.

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