Matthew Ashton

Written by

Matthew Ashton

11 minute read

Updated 14th February 2024

The insurance world is filled with a host of jargon words. See below a comprehensive insurance glossary that helps to unpack some of the commonly used words or phrases in the insurance world.

What is accidental damage cover?

Accidental damage is fortuitous damage caused by accidental means as opposed to fire, theft or reckless conduct on your part. This means the damage was by chance and not intended. Accidental damage is usually subject to a policy excess for each claim.

What is an additional premium?

This is a further premium payable by the insured as a result of policy amendments, that may have increased the risk or changed the policy conditions or sum insured.

Who, or what, is a loss adjuster?

One who investigates and assesses claims on behalf of insurers (claims adjuster or loss adjuster).

What is an agreed value policy?

This is a policy where the value of the specified insured item(s) is agreed by the insured and the underwriters at the start of the period of insurance. This value applies at the time of a claim.

What does all risks mean?

All risks is a term used to describe insurance against worldwide loss of, or damage to, property arising from any fortuitous cause except those that are specifically excluded. Emphasis is placed on the term ‘any’.

What does the term assurance mean?

A term interchangeable with insurance but generally used in connection with life cover as assurance implies the certainty of an event (IE death) and insurance the probability of an event.

What is the average clause?

The average clause is a clause in insurance policies whereby, in the event of under-insurance, the claim paid out by the insurer is restricted to the same proportion of the loss as the sum insured under the policy bears to the total value of the insured item. This is a clause that protects the insurer in the event of intentional under-insurance to keep premiums low by the insured.

What do we mean when we say buildings insurance?

Buildings insurance covers the fabric of the actual building and the cost of damage to the structure of your property for which you are legally responsible. This includes but is not limited to, the roof, walls, ceilings, floors, doors and windows. Outdoor structures such as garages and fences are also included.

What is business interruption?

Business interruption covers the insured for lost income while a business is out of commission or is unable to trade. This could also include the costs of repair(s) necessary to get the business back up and running

What does the term cancellation mean?

Cancellation refers to the termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the condition under which the policy may be cancelled by notice. The period of notice could be anything from 48 hours to 3 months. In most cases, this will result in a return premium being paid by the insurer to the insured.

What is a certificate of insurance?

This is a document issued by an insurer as evidence that insurance is in force. Certain certificates (e.g. motor, employer’s liability) are required by law. For household policies this is also known as the Schedule of Insurance or the Insurance Schedule.

What is a claim or a loss?

A claim or a loss is any report of an incident in which the policyholder requests a pay-out or indemnity from the insurer under the conditions of the policy. Claims and losses dated within five years prior to the start of the insurance must be disclosed to the insurer. Failure to do this could invalidate the cover issued.

What is contents insurance?

Covers the items in your home that are not fitted to the main structure of the building such as clothes, appliances, furniture, jewellery and other items of value. If you were to turn your house upside down, anything that fell out would be classed as ‘contents’

What is the claims underwriting exchange?

Also known as CUE, the Claims Underwriting Exchange is a central database of all claims held by insurers.

What constitutes an insurance complaint?

The FCA defines a complaint as an expression of dissatisfaction (oral or written) about the provision of, or failure to provide, a financial service. It alleges how you have suffered (or may suffer): financial loss; material distress; or. material inconvenience.

What is an insurance cover note?

A cover note is a temporary form of certificate, usually valid for 30 days only.

What is meant by the term ‘current market value’?

The current market value is the price that your property would sell for on the open market.

What is meant by the term endorsement?

An endorsement is a policy wording that extends or restricts the cover provided, or that requires compliance with stated conditions. Appears on a Policy Schedule. Also known as subjectivity, conditions or warranties on a policy schedule.

What is escape of water?

Escape of water refers to leakage from fixed water tanks, apparatus (e.g. washing machine) or pipes.

What is an excess?

Generally a policy will have an excess applied to it. This indicates the initial amount of any claim that you will pay. For example, if the value of your claim is deemed to be £600 and your excess is £100 – you will pay the first £100 and the insurer will pay the difference, in this case £500. Excesses can often be increased or decreased to affect the premium (the amount you pay for your insurance). Increasing your excess will often result in a lower premium as the insurance company decreases the potential pay out in the event of a claim

What is a policy exclusion?

This is a provision in a policy that excludes the insurer’s liability in certain circumstances or for specified types of loss(es)

What is the financial ombudsmen service?

This is a bureau established by major insurance companies to oversee the interests of policyholders whose complaints remain unsolved through normal company channels of communication. The service is available to all those holding personal cover with the insurers who have joined the scheme. The decision of the Ombudsman is binding on the insurer, although the insured may appeal to the court if he so wishes

What is meant by general conditions?

These are conditions that apply to all sections of the policy. These must be read in conjunction with other sections

What is the gross premium?

A term normally applied to gross written premiums before deduction of brokerage (also known as income or commission) and discounts

What is a hazard?

A physical or moral feature that introduces or increases the risk

What is the inception of insurance?

The day your insurance policy starts or the date from which, under the terms of a policy, an insurer is deemed to be at risk

What is index listing?

Index linking ensures that the sum you insure your building or property for is updated every year to reflect economic variations – giving you the reassurance of knowing your insurance value is going up in line with inflation, not down. This feature comes as standard on all our property insurance products

What is insurance premium tax?

The Finance Act 1994 introduced this new tax on most general insurance risks located in the UK. It is currently 12% of the premium (Correct as of May 2021)

Who is the insured?

The person whose property is insured or in whose favour the policy is issued

Who is the insurer?

An insurance company or Lloyd’s underwriter who, in return for a consideration (a premium) agrees to make good in a manner laid down in the policy any loss or damage suffered by the person paying the premium as a result of some accident or occurrence

What is insurable interest?

For a contract of insurance to be valid the policyholder must have an interest in the insured item that is recognised at law whereby he benefits from its safety, well being or freedom from liability and would be prejudiced by its damage or the existence of liability. This is called the insurable interest and must exist at the time the policy is taken out and at the time of the loss

What is an insurance broker?

An insurance intermediary who advises his clients and arranges their insurances. Although he acts as the agent of his client, he is normally remunerated by a commission (brokerage) from the insurer. An insurance broker is a full-time specialist with professional skills in handling insurance business. Since January 2005 intermediaries and brokers must be registered with, and regulated by the Financial Conduct Authority

What is a lapse?

The non-renewal of a policy for any reason

What is a latent disease?

An illness which lies dormant for some years before manifesting itself

What is a limit?

The insurer’s maximum liability under an insurance, which may be expressed ‘per accident’, ‘per event’, ‘per occurrence’, ‘per annum’, etc

Who are Lloyd’s of London?

A Society, incorporated under Act of Parliament of 1871 and known as the Corporation of Lloyd’s, which provides the premises a wide variety of services, administrative staff and other facilities to enable the Lloyds market to carry on insurance business efficiently.

What is a Lloyd’s broker?

A broker approved by the Council of Lloyd’s and thereby entitled to enter the underwriting room at Lloyd’s and place business direct with underwriters. Lloyd’s brokers must meet the Council of Lloyd’s stringent requirements as to integrity and financial stability. They have to file annually with the Council of Lloyd’s a special accountant’s report concerning their financial position.

What is a loss?

A loss is another word for a claim in insurance terms

What is a loss adjuster?

Independent qualified loss adjusters are used by Insurers for their experience and expertise necessary to carry out detailed and in some instances prolonged investigations of complex and large losses. Although the adjuster’s fees are invariably paid by the insurers they are an impartial professional person and make judgement on the amount to be paid in settlement solely on the basis of established market practice. It is their task to negotiate a settlement which is within the terms of the policy and equitable to both insured and insurer. Should they not be an expert in a particular discipline, which is necessary or desirable to pursue his negotiations, they will consult or employ such an expert

What is a loss assessor?

In motor insurance, an engineer. In other classes, a person who, in return for a fee (usually a percentage of the amount claimed), acts for the claimant in negotiating the claim

What is a managing general agent (MGA)?

A Managing General Agent (MGA) manages all or part of the insurance life-cycle for an insurance carrier. This delivers multiple benefits to the carrier: Expertise: An MGA has in-depth expertise that insurers may not have and which can be costly to develop in-house

What is a material fact?

Any fact which would influence the insurer in accepting or declining a risk or in fixing the premium or terms and conditions of the contract is material and must be disclosed by a proposer, or by the insurer to the insured

What is the Motor Insurance Database (M.I.D)?

The Motor Insurance Database is an independently operated database of all insured cars in the UK. It is accessible by the police, and insurers are required by law to supply certain data to the MID within a maximum of 14 days from inception of insurance cover

What is meant by 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

What is new for old cover?

Where insurers agree to pay the cost of property lost or destroyed without deduction for depreciation

What is a no-claims bonus?

A premium discount that rewards the insured for a number of years of claim-free period. It is important to note it is a no-claim, not no blame bonus, meaning if your insurer pays out for a loss and the outlay is not recoverable, then the bonus will be lost

What is non-disclosure?

The failure by the insured or his broker to disclose a material fact or circumstance to the underwriter before acceptance of the risk

What is meant by non-standard?

Refers to a risk that may be outside the insurer’s usual limit of acceptance and often refers to a modification made to your insured items

What is non-standard construction?

Any property which includes an element of construction which causes the property to require specialist cover. Examples include; thatched roofs, steel framed houses, timber framed houses and flat roofed houses

What is occupier’s liability?

As occupier (irrespective of whether you own the property), you carry a duty of care to protect your safety and the safety of other occupants of the property. It is your responsibility to ensure that the premises are reasonably safe and free from danger

What is overseas use?

Use of insured items outside of the UK and Northern Ireland

What is peril?

A contingency, of fortuitous happening, which may be covered or excluded by a policy of insurance

What is meant by period of insurance?

The period covered by the policy as shown in the policy schedule and any further period for which the insurer agrees to insure you

What is policy wording?

A document issued by an insurer detailing the terms and conditions applicable to an insurer contract, and constituting legal evidence of the agreement to insure. Issued together with a Schedule, which shows any variation to the terms and conditions

What is a policy schedule?

A document issued by an insurer that forms part of the contract of insurance, and provides information including the period of insurance, the sections of the policy that apply and information relating to any applicable excesses/ endorsements

What is meant by policy holder?

The person in whose name the policy is issued (see also insured and assured)

What is a premium?

The insurance premium is the amount you pay for your insurance, normally on an annual basis (or through instalments).

What is a proposal form?

The basis of the contract between you and the insurer. An insurance contract is based on utmost good faith, which means the insured is duty bound to answer all questions correctly to the best of their knowledge. Failure to do so may void cover. It is also known as the statement of fact or statement of insurance

What is a quotation?

Issued by an insurer or broker to provide details of the premium and terms based on the details disclosed about the risk

What is rebuild value?

Buildings insurance covers the cost of rebuilding your property, as it stands – not in as-new condition or the value of the land on which it stands. This is a different valuation than the current market value of your home (the price you could sell your property for). Outbuildings including sheds, garages, swimming pools, tennis courts, terraces and patios should be taken into consideration when deciding on the rebuild value of your property. As well as the cost for removing debris and any professional fees

What is 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

What is risk?

The peril insured against or an individual exposure

What is a renewal?

The point at which you as a policyholder are invited to reinsure for a further year. Normally terms will be issued 22 days prior to your renewal date

What is salvage?

Following the settlement that has paid out at the resolution of a claim, you will usually be allowed to retain the vehicle salvage at a nominal cost, subject to prevailing legislation regarding motor vehicle salvage. This is especially important where the vehicle is rare or of historical importance.

What is a settlement?

The settlement is the pay out you receive at the resolution of a claim, and in line with the stipulations of your policy. A settlement is affected by the excess you choose and is dependent on you supplying your insurer with accurate and up-to-date information.

What is a structural survey?

A thorough examination of the property usually carried out by a qualified surveyor, who will check that the interior and exterior match the minimum requirements for a lender to make a mortgage offer

What is subsidence?

Subsidence refers to movements in the earth caused by geological or fabricated factors. If your house is a subsidence risk, it can make it harder to insure

What is meant by sum insured?

The maximum amount payable in the event of a claim under contract of insurance

What is a statement of fact?

Records information provided to the insurer by the proposer, which has been relied upon to offer a quotation, and its price and terms. Used instead of a proposal form (which serves an identical purpose)

What is total loss?

The situation where the repair cost versus the item’s value renders repairs uneconomic, thus ‘writing off’ the property as a total loss

What is underwriting?

Underwriting is the process that insurers go through when assessing any new risk for insurance cover

What is an underwriter?

A person who accepts business on behalf of an insurer

What is ULR?

Stands for uninsured loss recovery. The process by which your uninsured losses in the event of a no-fault accident are recovered for you. For example, your excess is an uninsured loss and you would not wish to have to forfeit this if the accident was not your fault.

What is vacant possession?

If your holiday property specifies vacant possession, it simply means that it will be unoccupied on, or before the sale completion date, ready for you to move in.

What is utmost good faith?

Insurance contracts are contracts of utmost good faith (uberrima fides), which means that both parties to the contract have a duty to disclose, clearly and accurately, all material facts relating to the proposed insurance. Any breach of this duty by the proposer may entitle the insurer to repudiate liability

What is warranty?

A policy condition that must be complied with to the letter, for example, a garaging warranty, whereby the vehicle must be in a locked garage between the hours of 2200 and 0600 unless in the course of a journey. No cover would operate if this strict warranty was not complied with. Also known as endorsement, condition or subjectivity.

What is wear and tear?

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

What does unoccupied mean?

If the property is not furnished for usual habitation and / or a person does not reside at the property for two consecutive nights in a 30 days period then the property could be defined as being unoccupied

Written by Matthew Ashton

I started working in the insurance industry in 2004. Four years later, I left to focus on theological studies, working as a youth worker and then as a ministry director in Seattle, USA. When returning to the UK, I had an opportunity to work for the late Andrew Marchington. I joined his firm as a sales advisor when it had around ten staff members. Within three years, I was Head of Ops with a staff team of over 30 people. After a chance encounter in 2019 with Rachel Living and Will Cooper, I co-started Stanhope to build a high-value home, luxury watch, and jewellery broker synonymous with trust. I love being with Donna, my wife, and four kids when not working, cramming in the odd row, or run when I can. I am fortunate to love what I do and consider it a blessing to grow the Stanhope brand.

Matthew Ashton

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