A Guide to Insurance Terminology
Understanding insurance terms can be a daunting and difficult task. Use this essential guide to insurance terminology to help you get your head around the key terms. Adjuster This is an independent professional individual who investigates and assesses claims on behalf of insurance companies. Assets Assets are the goods that you own, such as your car, house, belongings, cash and investments. Assets are anything you own with a tangible value. Benefit The amount payable by an insurer.
Buildings and content insurance Buildings insurance covers the cost of rebuilding or repairing your house if it is damaged or destroyed. Buildings insurance can normally be combined with contents insurance, which covers your personal possessions within your home. Cover note The document issued that confirms details of your insurance cover and policy. Car insurance An insurance policy for your car. There are three main types, comprehensive third party and theft or third party only. Comprehensive insurance covers you for the widest range of possible claims in the case of accident or theft, including repairs, replacements, personal injury and other losses. Third party is the minimum cover required by law in the UK. Deductible The specified amount a loss must exceed before a claim is payable. When the loss exceeds the deductible only the excess is recoverable under the policy. Excess The first portion of the cost of a claim or loss which the insured has to bear in accordance with the policy. The excess can be either voluntary or imposed.
Ex gratia The means without legal obligation. Fraud A criminal offence that refers to making false statements to an insurance company or making a claim for a fictional loss. Claims A claim arises following injury or loss to the insured, which causes liability to the insurer under an insurance policy. Health Insurance Insurance that provides you with access to health treatment if you are ill or need treatment for an injury. It can also provide cover for regular income if you have a long term illness. Home Emergency Cover An addition to home insurance that covers you for emergency repairs for services in your house, such as electricity, plumbing and heating. Inception When an insurance contract comes into force. Indemity Security against financial loss. A policy of indemnity is designed to place the insured in the same financial position as he/she would have been in had the insured peril not occurred. Life insurance/assurance A type of insurance policy that pays a lump sum on the death of the insured person.
Legal Expenses Cover A type of insurance that covers you for any fees or expenses incurred for consulting a lawyer or other legal proceedings. Multi Trip Travel Insurance A type of annual travel insurance that covers you for multiple trips in the same year.
New for old Where insurers agree to pay the cost of property lost or destroyed without deduction for depreciation. No claims bonus No claims bonus is very common in motor insurance. It is a rebate of premium where no claims have been made by the insured. Premium The amount paid for a contract of insurance.
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. Sum insured The maximum amount payable for a claim as part of an insurance policy. Single Trip Travel Insurance Travel insurance cover for a single trip, which protects you against medical emergencies, lost baggage, cancellations and accidents. Underlying insurance The primary insurance, distinct from excess insurance. Underwriter A person who accepts business on behalf of an insurer. Wear and tear The amount deducted from claims payments to allow for any depreciation, which is caused by its usage.