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Glossary

No insurance resource would be complete without a comprehensive glossary of terms. We've compiled a list of terms and their definitions to better help you navigate the sometimes confusing world of insurance.
A ~ B
Act of God
An accident or event which happens independently of human intervention, usually due to natural causes such as storm or earthquake, which no human foresight can provide against. Suggesting that an event was an "act of God" may be a defense in English law against a claim for liability since it may be held that it could not have been foreseen or safeguarded against. One of the reasons why it can be inadvisable to drive your vehicle in adverse or dangerous weather conditions.
Actuary
Professional person trained in the technical aspects of insurance and related fields who specializes in the mathematics and the calculation of premiums and reserves.
Addendum
An addition or change to a contract. Also called an endorsement.
Agent
Someone who acts on behalf of another.
Agreed Valuation
In certain circumstances an insurer may agree to insure a vehicle for a declared value from the outset, as opposed to paying the market value following a claim. This will usually relate to classic cars.
All Risks
An insurance policy that covers all risks - except those not listed under its exclusions.
Annual Policy
As it sounds, an insurance policy that applies for a full year rather than another specified period of time such as a holiday insurance policy.
Arbitration
This is a legal method employed to arrive at an acceptable agreement for two parties that are in dispute. An independent person or body listens to the situations of both parties and comes to a decision that will end up being binding for all concerned.
Beneficiary
The ultimate recipient of a benefit under an insurance policy.
Blanket Insurance Policy
A policy that is designed to cover more than one person or more than one property.
Breach of Contract
A failure to follow a provision of a contract.
Breakdown Cover
A policy that provides recovery and repair services for vehicles/motorists for when they break down.
Broker
An agent who brings two parties together, enabling them to enter into a contract to which he is not a principal. His remuneration is usually calculated as a percentage of the sum involved in the contract but may be fixed according to a tariff.
C ~ D
Cancellation
A policy may be cancelled at the request of either party.
Cancellation and Curtailment
This is the costs incurred if the Client is forced to cancel their trip, or end it suddenly, due to circumstances out of their control.
Carport
This is effectively a roof that covers a driveway or other parking area, which does not have a door like a garage.
Cash Surrender Value
In life insurance, this is the amount of money that is received by a policyholder when they surrender an insurance policy.
Certificate
A legal document, recognised in law, which proves that insurance cover is in place.
CII
An acronym for the Chartered Insurance Institute, a body that controls professional, eithical and educational standards in the insurance industry.
Claim
A request from an insured person for payment from the insurer.
Co-insurance
An arrangement by which a number of insurance companies cover a particular risk.
Collision Damage Waiver
An optional insurance that you may be able to take out which removes your liability to pay an insurance excess, should your vehicle such as a hire car be involved in an accident.
Commercial Vehicle Insurance
Any vehicle used exclusively for business e.g.vans.
Comprehensive Cover
Usually the most expensive cover for car insurance. As per its name, it offers the widest cover. It not only covers damage to third parties vehicles by also your own as well as losses caused by fire and theft.
Conditions
A policy that provides recovery and repair services for vehicles/motorists for when they break down.
Contract
An agent who brings two parties together, enabling them A legally enforceable agreement between two parties.
Contractual Liability
If you sign a contract you will end up being bound by the contracts specific terms and conditions - failure observe them may result in financial or, in some circumstances, even criminal penalties.
Cover
When an insurance company agrees to insure a client they are said to be ‘covering’ them.
Cover Note
A temporary certificate of insurance. This will be issued for the short period of time that it takes for the certificate to be prepared.
Declination/Decline
This is when an insurance application is rejected by an insurance company.
Deposit Premium
The premium deposit paid when an application is made for an insurance policy.
Direct Debit
A procedure under which an organization to whom a payment is due claims the amount directly from the bank account of its debtor. Many insurance companies will require premiums to be paid by direct debit.
Disclosure
This is the duty of any person when they are making an application for an insurance policy to disclose all relevant details that may affect the risk.
Double Indemnity
Payment of twice the policy normal benefit for specific kinds of losses under certain conditions.
E ~ K
Effective Date
This is the date on which insurance an insurance policy begins.
Endorsement
Wording inserted into the standard policy document varying its terms and conditions.
Excess
The excess on a policy is the first part of any claim that the client has to pay. Also called a deductible.
Exclusions
Events not covered by an insurance policy. Typical exclusions include running overloading your car, or allowing drivers other than those specified in the policy to take control of the vehicle.
Financial Adviser
The are two categories of Financial Advisers: Independent Financial Advisers (IFA's) who work on behalf of a client and are able to choose from any product or service in the market, or a Tied Agent who work on behalf of a single company and only recommend their products.
Fully Comprehensive
For car insurance, this is a policy that covers damage to the owner's vehicle as well as to that of Third Parties (see Comprehensive Insurance).
High-risk Occupation
This is a job or profession that means that a person may be more likely to have an accident.
Hire and Reward
The insurance required by taxi drivers.
Indemnity
The principle by which insurance policyholders are put in the same financial position after a loss as they were immediately before it.
Insurance
An agreement under which individuals, businesses, and other organizations, in exchange for payment of an insurance premium, are guaranteed indemnity for losses resulting from certain events specified within the contract of the policy.
Insurance Premium Tax (IPT)
This is a Government tax charged as a percentage of insurance premiums.
Insured Car
The insured car as specified by its registration mark on your current certificate of motor insurance.
Insured Value
This is the amount of money that a client will insure their vehicle for. Also called the sum insured.
Insurer
The party to the insurance contract who promises to pay losses or benefits, usually an insurance company.
Introducer
These can be either Individuals, companies or websites that contain information regarding specific products or services and 'effectively, as the name suggests, introduce clients to the insurer. Introducers usually receive a commission for the the business that results from them.
Judgment
This a decision made by a court of law.
Knock for Knock
A term used to describe an agreement between two insurers whereby each will meet the cost of repairing their own insured’s vehicle rather than go to the cost of swapping cheques. Because insurer A will meet many claims during the course of a year from insurer B and vice versa this is a sensible saving of administration by each of them that does not affect the client's interest in any way.
L ~ N
Lapse
This is when an insurance policy is terminated due to non-payment of the associated premium.
Lapsed Policy
A policy terminated for non-payment of the associated premium.
Legal Liability
This is the cover included in some types of policies e.g. motor and home insurance which protects the Client if someone should want to take legal action against them.
Loading
There can be deemed a standard or average rate for a persons insurance, the loading is effectively what an individual will be charged in excess of this for their insurance.
Loss
Insurance terminology to mean being robbed, burgled, injured or in a car accident. A loss gives rise to a potential claim.
Loss Adjuster
An independent third party usually used by an insurance company to assess the value of a claim, usually if there is a disagreement between the insurer and the insured.
Main Driver
The person who uses a vehicle the most.
Market Value
This is the cost of replacing a car based on the market price at the time of the loss.
Material Fact
A material fact is information that would affect what an insurance company's attitude may be to insuring a risk, or the premium it would charge. Failing to disclose a material fact could invalidate a policy and is the responsibility of the client.
Motor Schedule
This is a document which contains the details of your policy including any excesses and endorsements that is specific to your insurance. It should be read in conjunction with a policy document.
Named Driver
A driver who has been named on an insurance policy but who is not the owner of the vehicle.
New for Old (Motor)
Rather than pay the market value of a new car involved in a total loss, some insurers might replace it with an identical new car. If it is a brand new vehicle the market value of this vehicle will have depreciated so much in the first year, that it would leave the policy holder unable to replace the car.
New for Old (Property or Possessions)
This means that in the event of a claim, the Client is paid the money needed to buy the items in the shops at today's prices, regardless of the age or original purchase price of the item.
No Claims Bonus
A no claims bonus (or NCB) is the discount that you have earned on a previous insurance policy for not making a claim. These discounts are determined by the number of years that you have not made a claim.
Non-fault Claim
This is a claim whereby the insurance company is able to recover all the costs from another party.
O ~ P
Over Insured
This is the term employed to describe a situation whereby a person has taken out an insurance policy over and above the level of cover that they actually need and will therefore be paying a higher premium level than actually required. An example of this could be if you over value the worth of you car.
Outbuildings
This means garages (detached or integral) sheds, greenhouses and other outbuildings which are situated within the boundaries of the land belonging to the home.
Owner
The legal owner of a vehicle. This does not necessarily mean the person who runs, maintains or actually uses it.
Personal Lines
Insurance policies that are designed for individuals rather than businesses or organisations.
Personal Possessions Cover
Insurance for personal items such as money, jewellery and luggage.
Policy
This is the document that gives details of the insurance that the client has purchased.
Policy Booklet
This document contains a full list of the terms, conditions and exceptions of your insurance policy.
Policy Exclusions
These are events or instances which are not covered by your insurance policy.
Policy Schedule
A document that details the sum insured, any discounts you may qualify for and the actual premiums you have to pay for your policy.
Policy Term
The period of time for which an insurance policy provides cover.
Policyholder
Person to whom the insurer issues a policy.
Premium
The actual amount of money paid in respect of an insurance policy.
Proposal Form
The document that a client may complete to request insurance cover.
Protected No Claims Bonus
A client may pay an additional premium to his insurer so that his No Claim Bonus (NCB) is not stepped back in the event of a "fault" claim. This benefit is variable but only applies to the existing insurer, and is usually available only when maximum NCB has been accrued.
Public Liability Policy
This covers legal liability for injury or damage caused to others. Normally part of car insurance.
Q ~ S
Quotation
Quotations are provided to demonstrate the actual costs of insurance cover and the documentation forms the basis of a new contract or the renewal of an existing one.
Quote
This is an amount an insurer in this example estimates to be the cost of providing their service based on the information that has been disclosed to them.
Renewal
This is an agreement to continue insurance beyond the original term it was determined for. As an example, for a Car insurance policy, a renewal is likely to be made on an annual basis.
Replacement Car
If a client's vehicle is off the road undergoing repair, in certain circumstances a replacement car may be provided free of charge.
Rider Policy
Some policies offer the facility to ride any bike up to a certain CC. This is known as a rider policy.
Risk
Literally that which is being insured against - e.g. theft, accidental damage. Can also refer to the thing or person being insured.
Risk Address
The address of the thing or person that is actually being insured.
Roadside Recovery
A policy that provides recovery and repair services for vehicles/motorists for when they break down.
Security
Theft of certain models of car is a major risk for the insurer. If a security device is fitted that has the approval of the insurer, they will often reduce their premium.
Self Contained Accommodation
This means that all parts of a client's home, including kitchens and bathrooms, are only available to, and used by, the client or members of their family.
Settlement
This is when an insurer pays a claim.
Specified Items (Property)
Also called All Risks or Specified Personal Effects (SPE). This is cover outside the property for any item. As the name implies, the client is usually asked to describe the item to be insured and state how much it is worth.
Subsidence
Subsidence is the downward movement of the ground below a building. This may result in cracked walls, movement of walls and foundations and general instability of the building. Many insurers do not cover this risk.
Sum Insured (Buildings)
The sum insured should be the full rebuilding cost of the property, not its market value.
Sum Insured (Contents)
The sum insured should be the total cost of replacing all contents as new, including furniture, clothes, jewellery, kitchen utensils etc.
Surrender
Where you cancel a policy and usually receive a reduced payout, due to the impact of charges that have been incurred.
Surrender Value
The amount that you will actually receive when converting a policy into cash.
Suspension (Motor)
A temporary ‘freeze’ on insurance cover while, say, a client is abroad and the car is kept in a garage. In order to do this the policy holder must return their certificate of insurance and continue to pay for the policy (if paid monthly or they will not receive a refund if paid in full). When the policy is due to renew the policy holder will then receive a credit for the time they have suspended the policy (if they renew with the same insurer) and they will still accrue their No Claims Bonus (NCB). This helps policy holders who do not have maximum NCB and are keen to reach this level.
T ~ Z
Term
The period of time for which a policy is issued to cover.
Third Party
Any person who becomes involved in a claim against an insurer and their client or Who is claimed against by an insurer and their client. If you crash your car into someone you are the first party, your insurer the second party, and the person that you collide with is the third party. If they crash into you, the same applies.
Third Party, Fire and Theft
A relatively cheap form of car insurance. Like third party coverage, but with cover against fire or theft as well.
Total Loss
This is a decision made by an insurance company that it is uneconomical to repair your car.
Under-insurance
This is the situation when a customer takes out too little insurance, paying smaller premiums than they should. Obviously the insurance company would be well within its rights to only pay out exactly what was covered under the policy which could mean that a similar car would not be able to be bought.
Underwriter
Someone who assesses an insurance risk and decides the correct premium to charge for insuring that risk.
Underwriting
Where an insurance company takes into account known facts like your age, sex and health, in order to assess the likelihood of your making a claim on the policy. Your insurance premiums are calculated on these and other factors.
Uninsured Loss
A policy that provides recovery and repair services for vehicles/motorists for when they break down.
Voluntary Excess
This is the amount of money that you have to pay, in return for a reduced premium, in the event you make a claim.
Valuables
Valuables include jewellery, photographic equipment, musical instruments and stamp and coin collections. Cover for valuables will be limited on all contents policies and will vary with the amount of cover sought and the value of the valuables.
Voluntary Driving Restriction
In return for restricting the driving of the car to certain people, insurers will reduce the premium charged.
Waiver of Premium
A provision that sets certain conditions under which an insurance policy will be kept in full force by the company without the payment of premiums.
Written Off
The term used to describe a vehicle which is a total loss i.e. beyond economic repair.




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