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.