Adjuster

A professional who investigates and assesses claims for the insurer (Claims adjuster or loss adjuster).

Additional Premium

An extra premium payable to the insurer as a result of an amendment to the policy, that may have increased or decreased the risk and / or changed the policy conditions or sum insured.

All Risks Insurance

This is an extension which may be included in a property insurance policy which covers accidental loss or damage that is not specifically excluded under the policy. It is the broadest form of property cover available as it dictates what is excluded rather than what is included.

Average

This condition is included in any non-marine property insurance so that if the property value has been understated by the insured the insured’s claim is reduced in proportion to the understatement.

Cancellation

Termination of a policy before it is due to expire. All policies contain a cancellation clause setting out the condition under which the policy may be cancelled by either the insurer or the insured. The period of notice is normally 7 – 14 days for compulsory cancelation by the insurers. In most cases this will result in a return premium being paid by the insurer to the insured unless there has been a claim.

Carrier (of risk)

The insurer or reinsurer.

Claim

Depending on the context this term may refer to:

(a) a demand made by a policyholder on his insurer for under an insurance policy.

(b) a demand made by a third party on a policyholder to be compensated for some injury, damage or loss for which the third party blames the policyholder. A claim is payable under an insurance contract if it is caused by an insured peril provided it is not excluded under the terms of that contract.

Claimant

The person who is making a claim.

Common Law

The common law is the ancient customs and usages of the land, which have been recognised by the courts and given the force of law. It is a complex system of law, both civil and criminal, although it is greatly modified and extended by statute law and equity. It is unwritten, and has come down in the recorded judgements of judges who for hundreds of years have interpreted it.

Concealment

Deliberate suppression by a proposer for insurance of any material fact relating to the risk.

Cover Note

A document issued by an insurer or insurance broker pending the issue of a policy which confirms the arrangement of cover for the insured.

Days of Grace

A period after the renewal date of a policy during which cover continues provided that the premium is paid before the end of the period and the insured has not indicated an intention not to renew.

Deductible

The amount that is deducted from claims under an insurance contract. The effect is the same as an excess. The insured must bear a proportion of the loss. If that loss is less than the amount of deductible/excess then the insured or reassured must bear all of the loss (unless there is other insurance in place to cover the deductible). An increase in deductible will normally result in a reduction in premium.

Duty of Disclosure

There is an obligation on every person seeking insurance or reinsurance to inform the insurer from whom a quotation for insurance is sought of every material fact. The duty arises when seeking new insurance, when seeking a change of cover and at renewal. The scope of the duty may be modified by the terms of a proposal form. Should a person seeking insurance fail to disclose a material fact then this may lead to the avoidance of the relevant insurance or reinsurance by the insurer.

Endorsement

Documentary evidence of a change in the cover on an existing policy or clarification or wording if the policy is written on restricted terms.

Excess

The proportion of some or all losses arising under an insurance policy that is the insured must carry. If the loss is less than the amount of the excess then the insured must meet the cost of it. Excesses can be either compulsory or voluntary. An insured who accepts an increased excess in the form of a voluntary excess will usually receive a reduction in premium.

Exclusion

A provision in a policy that excludes the insurer’s liability in specified circumstances or for specified loss.

Hazard

Something that causes an exposure to injury, loss or damage. It can be a physical or moral feature that creates or increases risk.

Inception Date

The date on which an insurance policy comes into force.

Home Insurance / House Insurance

A package policy designed to cover buildings, contents, all risks (valuables etc while temporarily removed from the home) and various other options like Money, Caravan etc.

Indemnity

The principle according to which a person who has suffered a loss is restored (so far as possible) to the same financial position that he was in immediately prior to the loss. Most contracts of insurance are contracts of indemnity. Personal accident insurances are not contracts of indemnity as the payments due under those contracts for loss of life or bodily injury are not based on the principle of indemnity.

Insurable Interest

In order to set up a valid policy to cover property the insured must stand to benefit from its preservation and will suffer from its loss.

Insurance

A contract where an insurer promises to pay the insured a sum of money or some benefit upon the occurrence of one or more uncertain events in exchange for the payment of a premium.

Insurance Ombudsman Bureau

A bureau established to oversee the interests of policyholders whose complaints remain unsolved through normal channels of communication. The service is available to anyone holding personal cover with the insurers. The decision of the Ombudsman is binding on the insurer, although the insured may appeal to court if he wishes.

Insured

A person who is insured under a contract of insurance. Where there is one insured this person may also be called the policyholder.

Insurer

The provider of insurance. An insurance company or Lloyd's underwriter who, in return for a premium. Agrees to make good in a manner laid down in the policy wording any loss or damage suffered by the insured person as a result of some accident or occurrence.

Lapse

The non-renewal of a policy for any reason.

Limit of Indemnity

A term for policy limit. It refers to the maximum amount payable under a policy of insurance or reinsurance, either overall or with reference to a particular section of a policy.

Loss

This term generally refers to some injury, harm, damage or financial detriment that a person sustains. Losses may be insured or uninsured. Whether a loss is covered by a policy or certificate of insurance depends on the terms of that document and local law.

Loss Adjuster

A person who is appointed to investigate the circumstances of a claim under an insurance policy and to advise on the amount that is payable to the policyholder in order to settle that claim. Loss adjusters are generally appointed by insurers but sometimes policyholders appoint their own loss adjusters to negotiate claims on their behalf.

Loss Assessor

(1) In motor insurance the loss assessor is a qualified engineer.

(2) In other classes of insurance the loss assessor is a person who, for a fee, acts for the claimant in negotiating the claim.

Material Fact

This is any fact which would influence the judgment of an underwriter in deciding whether to accept an insurance/reinsurance risk and the terms on which he would be willing to grant cover. See duty of disclosure.

Negligence

This is the most common form of tort. In the case of 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.

Net Premium

The amount of the premium that is left after the subtraction of some or all permitted deductions such as brokerage and (for certain types of business) profit commission.

New for Old

This is where insurers agree to pay the cost of property lost or destroyed without deduction for depreciation.

No Claims Bonus

A reduction of the premium given to an insured by an insurer where no claims have been made by that insured. Very common in motor insurance.

Peril

This is the term used to describe a harmful event which is covered under a contract of insurance as an insured peril or excluded from it.

Period of Risk

The period during which the policy is in force.

Policy

A policy is the document detailing the terms and conditions applicable to an insurance contract. It is issued by an insurer or his representative. On renewal a new policy may not be issued but the same conditions would apply.

Policy Holder

The person who is insured under the contract of insurance.

Premium

The amount charged by an insurer as the price of granting insurance cover.

Proposal Form

The form sent by an insurer to a person requiring insurance to obtain sufficient information to allow the insurer to decide whether or not to accept a risk and what conditions to apply if it is accepted.

Quotation

A statement of the premium that an underwriter requires to underwrite an insurance risk based on the information supplied by the person seeking cover. A quotation may be conditional, e.g. it may be subject to the provision of further information.

Renewal

The process of continuing the insurance from one period of risk to the next.

Risk

The peril insured against or an individual exposure.

Salvage/Salvage Value

The recovery of all or part of the value of an insured item on which a claim has been paid. The insurer will usually dispose of the item and apply any money recovered to reduce the cost of the claim.

Schedule

The part of a policy containing information relating 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.

Statement of Fact

The statement of fact is 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.

Sum Insured

This is the maximum amount that an insurer will pay under a contract of insurance. The expression is usually used in the context of property and life insurance where (subject to the premium cost) the insured determines the amount of cover to be purchased.

Third Party

Someone other than the insured or his insurer who has suffered injury or loss. It is a person claiming against the insured. The first party is the insurer and the second party is the insured.

Underwriter

A person who accepts and rates business on behalf of an Insurer.

Utmost Good Faith

Contracts of insurance are contracts of utmost good faith. In the event that either party fails to observe utmost good faith towards the other in regard to the negotiation of cover then the other party may avoid the contract. The duty of utmost good faith requires each party to inform the other all material facts during the negotiation of the placement, renewal or alteration of cover. An insured has a separate duty of good faith when making a claim under an insurance policy.

Without Prejudice

(1) A term used in legal discussion and correspondence.

(2) Where there is a dispute or negotiations for a settlement and terms are offered 'without prejudice' an offer so made or a letter so marked and subsequent correspondence cannot be admitted in evidence without the consent of both parties concerned.

(3) Term also used by an underwriter when paying a claim which he feels may not attach to the policy. This payment must not be treated as a precedent for future similar claims.