Glossary

Where the cost of repairing the insured property, eg a car, exceeds the market value of that property. In such circumstances the insurer will pay the insured the market value of the insured property at the date of loss, subject to the terms of the policy (assuming the insurer is not under any obligation to provide a replacement).

Fixtures and Fittings

Fixtures & Fittings can be defined as the items within a building that are fixed to it. Examples of fixtures & fittings would be fitted kitchens (excluding freestanding appliances), bathrooms & central heating systems.

Broadly speaking items that can not be readily removed from the property are defines as being fixtures & fittings.

Goods in Transit

Goods in transit Insurance covers property against loss or damage whilst in transit from one place to another or being stored during a journey. You can take this insurance out for goods being distributed in your own vehicle or by a third-party carrier, both domestically and abroad. Policies often specify the means of transport to be used

High Risk Property

Items to be insured such as Jewellery, precious stones, articles made from gold, silver and other precious metals, clocks, watches, furs, photographic equipment, binoculars, telescopes, musical equipment, collectors' items, pictures and other works of art, rare and unusual figurines and ornamnets, guns, collections of stamps, coins or medals

Jurisdiction clause

A clause in an insurance or reinsurance contract which states to which territory's courts any contractual dispute shall be referred for resolution.

Minimum Securities

Minimum securities would normally comprise of 5 lever mortise deadlocks conforming to british standards to all entry/exit doors at your premises. In addition key operated window locks to all accessible windows would normally be required.

Personal Belongings

Personal belongings are items normally worn, used of carried by you/your family in daily life for example: Clothing, Mobile Phone, MP3 player. This does not extend to include money, credits, business items or valuable items.

Outbuilding

Outbuildings are defined as buildings within the property grounds that are detached from the main premises. Unless agreed with insurers, outbuildings are generally not covered as standard, with the exception of sheds and greenhouses.

Quotation

Quotation is what you will receive from us when you complete any of our online questionnaire's for purchasing Insurance. We will display our comparative quotations for your perusal and in addition a copy of the quotations will be e-mailed to you for your records.

Renewal

Renewal is the continuation of Insurance from one period to the suceeding one eg: 01/02/2009 to 31/01/2010. At the renewal of a policy you will be given adequate time to consider the renewal terms put forward by us which will generally be within 21 days of the renewal date.

Standard Construction

Standard Construction would usually be defined as a Building/Property that is built from brick, stone or concrete that is roofed with slate,tiles or concrete and is pitched in appearance. There are however some insurance companies that will extend the roof element of standard construction to include felt on timber and or metal. Please review your quotation/summaries of cover if in any doubt.

Statement of Fact

An alternative to a completed proposal form. A statement provided by the insurer clarifying the basis on which insurance is accepted and what conditions apply.

Terrorism

Terrorism insurance can be purchased by property owners to provide cover against the potential impact of losses occurred following terrorist activities.

Due to the combination of uncertainty and the potentially huge losses that might be incurred, it is difficult to set premiums and cover is not generally provided as standard by insurers.

Policy holders can however purchase terrorism insurance separately to run in line with their existing buildings insurance.

Unspecified Items

Unspecified items are items normally worn, used of carried by you/your family in daily life for example: Clothing, Mobile Phone, MP3 player. This does not extend to include money, credits, business items or valuable items.

Warranty

A warranty is a very strict condition that applies to Insurance policies. Different insurance products eg: motor, household, business etc will have different warranties applicable. A breach of policy warranty may entitle the insurer to void or cancel your policy or deny liability when a claim is presented.

Valuation

A valuation for insurance purposes may be required in respect of high risk items of jewellery under the personal possessions section of a contents insurance policy. A valuation will be the determination of the worth of the asset to be Insured. In addition a Valuation is generally conducted for Insurance purposes prior to the purchase of a freehold property or business.

Accident and Health

Including two main types of business - personal accident and medical expenses. Personal accident policies will pay a lump sum or weekly benefits in the event of accidental death or a specified injury e.g. loss of limb. Medical expenses insurance will pay the costs of treatment for acute medical conditions.

Act of God

An event that is not the fault of any individual. Acts of God can for the most part be insurable.

Actuary

A professional person qualified to apply mathematical principles to solving long-term financial problems.

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.

Advance Profits Insurance

Business interruption insurance of the expected profits of a new enterprise or an extension to an existing business.

Agent

A person who acts for one or small number of companies, this can particularly apply in selling insurance.

Agent

The maximum amount an insurer will pay under a policy in respect of all accumulated claims arising within a specified period of insurance.

All Risks

Wider cover than given under a normal property insurance policy. Covers any loss or damage apart from exclusions stated in the policy or schedule.

Annual Business

Business written which becomes renewable on an annual basis.

Annual Premium

Premium payable for an annual period of Insurance.

Appointed Representative

A firm or person who acts as agent for a principal that is itself authorised by the FSA and that accepts responsibility for the representative's activities.

Assets

Your money, and things that you own which are worth money, such as house or shares.

Assistance

The provision by an insurer or a service company of immediate practical help to resolve an insured problem (e.g. arranging medical treatment abroad/organising a roadside repair).

Authorised Insurer

An insurance company authorised under the Insurance Companies Act 1982 to carry on one or more classes of insurance business in the UK, and that are authorised by the Financial Services Authority.

Average

A policy condition that requires the amount of a claim payment to be reduced proportionately if the policyholder has not insured his property for the full amount of its value or replacement cost.

Broker

An insurance intermediary who advises his clients and arranges their insurances or investments.

Buildings Insurance

A policy covering the structure of a property or other building against a number of different events.

Business Interruption

Insurance covering the loss of profits of a business and certain other costs resulting from fire or other insured events. Consequential Loss.

Cancellation

The process whereby a policy may be or has been cancelled

Capacity

The measure of an insurance companies ability to write new business. It depends on the maintenance of adequate reserves to service its financial liabilities.

Certificate

Document issued by insurers as evidence that insurance is in force to meet the requirements of the law (eg: motor and employers liability insurance).

Claim

When a policyholder or beneficiary seeks payment or settlement under the terms & conditions of their insurance policy.

Claim Frequency

The number of claims made per policy year.

Claims and Underwriting Exchange

Computerised register of information from proposal, claims and renewal forms, shared by insurers as part of their efforts to combat insurance fraud.

Claims Incurred

The amounts paid during the year plus the amounts outstanding at the end of the year, less amounts outstanding at the start of the year. The claims incurred figure shown in the revenue account tables is net of reinsurance recoveries.

Co-Insurance

An arrangement whereby a number of separate insurance companies share the cover of one particular risk.

Commercial Business

Any policy taken out by a company, partnership or organisation to cover their trade, business or profession.

Company Agents

Any persons selling insurance on behalf of one or a small number of companies, but not necessarily employed by the company.

Composite Insurer

A company that transacts both life and non-life insurance.

Comprehensive Cover

A policy covering a number of types of loss or damage. The term is used mainly in motor insurance, where it means that, in addition to third party cover, the policy provides compensation to the policyholder if the insured vehicle is destroyed or damaged by accidental means. Policies may also offer additional benefits such as medical expenses and legal costs.

Concealment

Deliberate suppression by a proposer for insurance of a material fact relating to the risk, usually making the contract null and void.

Condition

Part of a policy stating that certain rules must be followed, for example, the duty to take reasonable care to protect property, or to report claims to the insurance company promptly.

Consequential Loss

Insurance covering the loss of profits of a business and certain other costs resulting from fire or other insured events. Also known as Business Interruption.

Contents Policy

A policy covering the contents of a property or other building against a number of different risks.

Contribution

The principle of contribution applies where a risk is insured on more than one insurance policy (for example on a travel and household policy), and the two insurers concerned may share the cost of any claim.

Cover Note

A document giving temporary evidence of insurance cover while the policy and certificate are being prepared.

Deductible

The specified amount a loss must exceed before a claim is payable. Only the amount that is in excess of the deductible is recoverable. This could also be known as policy excess.

Direct

Insurance sold without the intervention of an intermediary. Included in this category are sales via newspaper advertisements, telephone sales and business through branch offices.

Employers Liability

A compulsory class of insurance that all employers must have to cover them against claims by employees who are injured at work.

Endorsement

A written change to an insurance policy which becomes part of it.

Ex Gratia Payment

Any payment made by an insurance company which is not strictly necessary, under the terms of the policy.

Excess

An amount of money that the policyholder has to pay towards the cost of a claim, for example, the first £50.

Exclusion

Specified property, person or event that the policy does not cover.

Expenses

Costs incurred in the running of the business.

Exposure

Whether, and the extent to which, an insurer is subject to losses arising from a particular risk.

Financial Ombudsman Service

An organisation established by major insurance companies to settle disagreements between customers and companies. The service oversees the interests of policyholders whose complaints remain unsolved through normal company channels of communication. The service is available to all those holding personal cover. The decision of the Ombudsman is binding on the insurer, although the insured may appeal to the court if he so wishes. See Financial Ombudsman Service.

Financial Services Authority

The Financial Services Authority (FSA) is an independent non-governmental body, given legal powers by the Financial Services and Markets Act 2000 to regulate the financial services industry in the UK (see Financial Services Authority (FSA).

Financial Services Compensation Scheme

The Financial Services Compensation Scheme (FSCS) is a safety net for customers of financial services firms. It pays compensation if an authorised firm is unable to pay claims against it, usually because it has gone out of business. The Scheme is funded by the industry and covers deposits, insurance and investments.

Fire Claim

A claim arising from damage caused by fire and explosion following fire.

First Loss Insurance

Insurance where the sum insured is accepted to be less than the value of the property but the insurer undertakes to pay claims up to the sum insured, without application of average.

Friendly Society

Similar to a Mutual insurance company. A friendly society is owned by and established for the benefit of its members, mainly through the provision of life insurance and sickness benefit.

General Insurance

Insurance of (non-life) risks where the policy offers cover for a limited period, usually one year.

General Liability

Liability insurance covers the policyholders legal liability for injury, property damage or financial loss caused to others.

Green Card

A document issued to policyholders motoring abroad as evidence that they have the minimum insurance cover required by the law of the country visited. No longer required for European travel, because minimum legal cover is now automatically included in UK policies.

Household Business

Includes insurance of both domestic structure and contents, together with any optional covers included within the policy such as legal expenses and public liability.

Inception Date

The date when cover under a policy begins.

Increase in Cost of Working

Under a business interruption policy some cover is provided for additional expenditure incurred by the insured solely for the purpose of reducing the shortage in production following an insured event.

Indemnity

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

Index-linked

Insurance where the amount of cover changes automatically in line with an index. Examples are the cost of rebuilding a house or replacing its contents.

Insurable Interest

A principle of insurance which states that you may only take out insurance if you would suffer a financial loss if the event covered by the policy happens. Individuals have an unlimited insurable interest in their own life and that of their husband or wife.

Insurance

A service that offers financial compensation for something that may or may not happen. Originally the term assurance was generally used for life insurance, but now the two words are interchangeable.

Insurance Company

A company that takes on risks under the policies it sells in return for the payment of premiums. Companies may be mutual (owned by the policyholders) or proprietary (owned by the shareholders).

Insurance Premium Tax (IPT)

A tax imposed on most non-life insurance premiums.

Insured

A person covered by an insurance policy.

Insured Turnover

The amount of turnover that a company has insured.

Insurer

See Insurance Company and Lloyds of London.

Intermediary

Person or organisation that doesn't offer their own products but advises on or sells products from product providers such as insurance or investment firms.

Investment

The act of allowing someone else to have use of your money in return for payment of interest and/or a share in profits that may be made.

Key Features

A document that insurance and investment firms must produce, by law, that sets out the main features of the plan.

Key Person Insurance

In the event of the death of a key employee on whom the business depends for its continued profitability, or even existence, this type of cover provides a sum of money which can be used to pay for the cost of finding and training a successor, and to compensate for reduced profitability.

Key Facts

Documentation issued by Insurers that point out relevant types of cover under various types of policies.

Lapse

The non-renewal of a policy for any reason.

Legal Expenses Insurance

Covers the cost of legal proceedings in circumstances defined in the policy.

Liability

Legal responsibility for causing loss to someone else by injuring them or damaging their property.

Lloyds of London

An insurance market organised into syndicates, which underwrites most types of Insurance policies.

Loading

An extra premium you are charged because of a higher risk such as poor health or dangerous job.

Loss

Another term for a Claim.

Loss Adjuster

A person, independent of an insurance company but engaged and paid by it, who checks that a claim is covered and negotiates with the policyholder the amount payable for a claim.

Loss Assessor

A person who negotiates claims on behalf of policyholders.

Marine, Aviation & Transport (MAT)

The class of insurance which covers damage to both the hull and cargo of ships or aeroplanes, along with the liability for property damage, injury and death to passengers and others. Indemnities are also provided for the goods that may be lost or damaged whilst in transit.

Material Fact

A fact that would influence an insurance companies decision on whether to issue a policy, and on what terms and conditions. You must state any material facts when you apply for cover.

Mechanical Breakdown Insurance

Covers against the cost of breakdowns of household appliances or motor vehicles.

Motor

Motor policies cover the legal liabilities arising from the use of a motor vehicle. Private car, motorcycle, commercial vehicles and fleets are all included within this category. Comprehensive policies also cover damage to the vehicle.

Motor Insurance Anti-Fraud and Theft Register

Computerised record of claims for stolen or written-off vehicles. Used by insurers to detect multiple, and therefore fraudulent claims.

Motor Insurance Anti-Fraud and Theft Register

An insurance company that is owned by its policyholders.

Negligence

Perhaps the most common form of 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

Cover for property where an item lost or destroyed would be replaced with a brand new one, with no deduction for wear and tear. Also called Replacement-as-New.

No Claim Discount (or Bonus)

A reduction in a renewal premium to reflect a claim-free record; used most often in motor insurance.

Non-comprehensive Cover

A policy covering a limited number of types of loss or damage. The term is mainly used in motor insurance, where a vehicle may have RTA cover the minimum cover provided by the Road Traffic Act; third party cover, which indemnifies the policyholder for damage caused to other peoples property and injury that may be caused to others; or third party, fire and/or theft cover which additionally provides compensation to the policyholder if the insured vehicle is destroyed or damaged by fire and/or theft.

Non-Disclosure

Where you or anyone acting for or on behalf of you, fails to state a material fact when applying for insurance.

Outgo

The total expenditure of an insurer in relation to any class of insurance business, comprising the cost of claims and the insurers business expenses, including any commission paid to sales staff, Brokers or Intermediaries, together with amounts set aside for Reserves.

Pecuniary Loss

This class of business loss relates to financial losses that may have occurred, e.g. Consequential Loss and Mortgage Indemnity policies.

Personal Accident Insurance

A policy that pays specified amounts of money if the policyholder is injured in an accident. Depending on the type of disability, the payments may be made weekly, for a set period, or as a lump sum.

Personal Lines

Any policy taken out by an individual in his/her private capacity.

Pluvius Insurance

Covers against losses arising as a result of bad weather.

Policy

The document giving full details of the contract between the insurer and the policyholder.

Policyholder

Person or organisation, to whom the insurer issues the policy. Normally the person to whom benefits are payable.

Pool Re

A Government-backed reinsurance scheme that meets the cost of claims over £100,000 occurring as a result of terrorist attacks in Great Britain.

Premium

The amount paid by the policyholder for insurance.

Private Medical Insurance

A policy that covers the cost of private medical treatment.

Product Liability Policy

Protects businesses against liability claims resulting from defects in the products they sell.

Professional Indemnity

Provides protection to businesses against errors cause in their professional capacity e.g. solicitors who incorrectly advise clients.

Property Damage

Property policies cover specified property that may be damaged or destroyed by events or perils such as fire, storm or theft.

Proportional Treaty Reinsurance

Agreements in which the reinsured and the reinsurer participate in premiums and losses in a fixed proportion. It can apply to both facultative and treaty reinsurance.

Proposal Form

An application for insurance cover.

Proposer

Person or company who applies to take out insurance.

Proprietary Companies

Those that are owned by shareholders.

Public Liability

The insurance of liability for accidental bodily injury or damage to the property of third parties.

Rate

The price of insurance, usually expressed as the cost of a unit of cover, e.g.per £1,000.

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.

Reinsurance

Reinsurance is the cover insurance companies can purchase to protect themselves against large losses or an unexpected aggregation of losses.

Renewal Notice

Notice sent to the policyholder inviting him/her to renew a policy for a further period and stating the premium payable.

Revenue Account

The financial statement containing the underwriting results. It usually shows premiums, claims incurred, commission, expenses and the transfer to/from the Profit & Loss Account.

Risk Management

The identification, measurement and economic control of risks that threaten the assets and earnings of a business or other enterprise.

Salvage

A recovery of all or part of the value of an insured item on which a claim has been paid. The insurer will normally dispose of the item and apply the proceeds to reduce the cost of the claim.

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.

Solvency Margin

The excess determined in accordance with the insurance supervisory rules of the insurers assets over its liabilities. Under those rules, this is required to be not less than a prescribed minimum.

Solvency Ratio

The ratio of the net assets of a non-life insurer to its annual net written premiums.

Statute Law

Presently the most important source of law is statute law, otherwise known as Acts of Parliament, which may create entirely new law, over-rule, modify, or extend existing principles of common law and equity, and repeal or modify existing Statute law.

Subject to Survey

Phrase used by an insurer to signify provisional acceptance of an insurance pending inspection by a surveyor whose report is necessary to determine the rate and conditions applicable.

Subrogation

The right of an insurer who has indemnified a policyholder to take over any legal rights the policyholder may have had in respect of that particular claim.

Subsidence Claim

A claim arising from subsidence, heave and landslip.

Sum Insured

The amount for which property is insured, and the maximum amount that the insurance company will pay for any claim. In life insurance, the amount that is guaranteed to be paid and to which bonuses may be added.

Surety Bond

A guarantee to pay the direct loss and damage suffered as a result of a breach of contractual obligations.

Syndicate

Group of underwriters at Lloyds of London.

Theft Claim

One arising from burglary, robbery and theft under the Theft Act 1968 in England and Wales, and burglary, robbery, housebreaking and larceny in Scotland and Northern Ireland.

Third Party

Someone involved in a claim who is neither the policyholder nor the insurer.

Third Party Administrator

An organisation to which an insurance company contracts out administration.

Tied agent

A sales person who sells the policies of only one insurance company. Some sales people are tied to several companies - this is known as a multi-tie.

Total Loss

See Write-Off.

Travel

A policy that covers a combination of loss of baggage, medical expenses, legal fees, and change in travel arrangements.

Treaty Reinsurance

An agreement between offices whereby the ceding company is bound to cede and the re-insurer bound to accept a share of all risks defined in the treaty.

Trust

An arrangement whereby control over an Asset is transferred to a person or organisation (known as the "trustee") for the benefit of someone else (known as "the beneficiary").

Trustee

A person appointed to manage and safeguard the assets of a trust.

Underinsurance

When the sum insured is not enough to cover the maximum possible loss or damage.

Underwriter

Person who decides whether to accept a risk and calculates the premium to be charged.

Underwriting Result

The profit or loss achieved by an insurer on insurance underwriting activity, calculated as premium income less the cost of claims and the insurers expenses in connection with that business. It has been common for insurers to make underwriting losses since they also receive investment income which generally offsets the underwriting loss.

Uninsurable Risk

A risk where loss is either inevitable (e.g. a house already on fire or a person suffering from a terminal illness) or gradual (e.g. rust and corrosion).

Utilities / Retailers / Affinity Groups

Institutions which sell insurance policies to their customers but it is not their primary product or service. These policies are underwritten by established insurers.

Utmost Good Faith

The principle of insurance which requires proposers to give all relevant information to the insurer and requires insurers to deal openly and honestly with policyholders.

Warranty Insurance

This type of insurance provides cover against the cost of repairs to broken down household appliances.

Wear and Tear

This is the amount deducted from claims payments to allow for any depreciation in the property insured that is caused by its usage.

Weather Claim

One arising from burst pipes, storm and weather damage.

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 a Total Loss.

Written Premium

Premium income due to the insurer on the risks accepted during the year.

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