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Accidental damage cover
Insurance against damage to goods rather than loss or theft.
Home insurance will replace possessions that are stolen
or damaged by a fire or a flood, but it doesn't protect
against more minor and frankly, more common hazards including
errant pets, angry children or dangerous DIY-ers.
Act of God
Less miraculous than it sounds. The clause Act of God covers
natural events that can't be foreseen or predicted. Insurance
policies often exclude acts of God or acts of war, although
they will cover natural disasters such as floods.
All risks
An insurance policy that covers all risks - except those
not listed under its exclusions. An all risks section of
a home policy, for example, covers possessions such as cameras
and watches when taken outside the house. Customers can
specify certain possessions, such as a camera, as all risk
on their policies.
Annual policy
For travel, an insurance policy that applies all year round
rather than just for a single journey or holiday.
Any driver
Insurance that allows anyone to drive a vehicle, not just
the owner. But, any driver policies only cover drivers if
they have permission to use the car.
B top
Breakdown
cover
A policy that provides recovery and repair services for
motorists. Traditionally, breakdown services were provided
by the RAC and the AA, but more recently insurance companies
have come in on the act, offering recovery alongside car
or bike insurance.
Broker
An independent intermediary who sells policies from several
insurance companies. Insurance brokers have to be registered
by law to use the name. Intermediaries using other names
- such as insurance consultant - don't need to register,
leading to confusion. The Government plans to remove the
confusion by no longer policing insurance brokers.
Buildings
insurance
A policy that covers the fabric of a building against damage
from hazards such as flood, fire or subsidence. A policy
will pay to rebuild or repair the property. Buildings insurance
is usually a requirement if you have a mortgage.
Business
equipment
Anything used for a business is normally excluded from a
standard home insurance policy. This can cover valuable
items such as faxes and computers. If you work from home,
it pays to check the exact conditions of a policy to make
sure you are covered. Computers that are not used for business
- for example for games - are usually covered as standard
though.
C-D top
Claim
The term used to describe the process of getting an insurance
company to pay out on the policy you bought from them.
Combined
policy
In home insurance, a policy that covers both buildings and
contents. Insurers usually offer a discount for combined
policies making them look attractive - but it can still
be cheaper to buy separate policies on the open market.
Term life and critical illness insurance is another example.
Contents
insurance
Cover for household possessions. As a rule, contents cover
insures anything that can be moved while buildings cover
insures anything that can't, such as the windows or bathroom
fittings. Contents cover doesn't always include jewelery
and cash as standard.
E top
Excess
The amount of a claim a policy holder agrees to pay if he
or she suffers a loss. An excess is often standard with
some policies such as car insurance or travel. A voluntary
excess cuts the cost of most insurance premiums.
Exclusions
Events not covered by an insurance policy. Typical exclusions
include running a taxi service (for motor insurance), business
equipment (for home policies) and dangerous sports (for
travel).
F top
Fully comprehensive
For motor insurance, a policy that covers damage to the
owner's vehicle as well as to others'.
G top
Green Card
A document issued to those motoring abroad as evidence that
they have the legal minimum insurance cover required. Not
essential for European travel, because minimum legal cover
is automatically included in UK policies.
H top
High-risk
occupation
A job that makes a person more likely to have an accident.
Travel and motor insurance can exclude people with some
jobs, or charge higher premiums.
I-J top
Indemnity
The principle by which insurance policyholders are put in
the same financial position after a loss as they were immediately
before it.
Insurance
Premium Tax (IPT)
A Government tax charged as a percentage of insurance premiums.
K top
Knock for
knock
An agreement between insurance companies to cut down on
paperwork and legal action. Insurers pay for the costs of
claims for their own customers, rather than claiming the
money from the other party.
L top
Legal expenses
insurance
Insurance that covers the costs of private legal action,
for example disputes with neighbours or trades people. Usually
sold as an add-on to home insurance.
Lloyd's of
London
An insurance market organised into syndicates, which underwrites
most types of policy.
Loss adjuster
An insurance specialist who deals with large or complicated
insurance claims. The loss adjuster works on behalf of the
insurance company. His or her job is to check that claims
are all they seem.
Loss Assessor
A person who negotiates claims on behalf of policyholders.
Not to be confused with Loss Adjustor, whose aim is precisely
the opposite - ie to reduce insurance company pay-outs.
Loss
Insurance people's term for being robbed, burgled, injured
or in a car accident. A loss gives rise to a claim.
M top
Material
fact
Information that would affect an insurance company's willingness
to accept a policy, or the premium it would charge. Failing
to disclose a material fact could invalidate a policy. Typical
examples include previous driving convictions or a history
of subsidence in a house.
Mechanical
breakdown insurance
MBI policies are better-known as extended warranties for
cars. They are not really warranties at all, but insurance
policies that pay out if certain faults arise with a car.
Moratorium
Starts as of today and all prior illnesses or illnesess
that have started before this date are excluded. (see also
Switch)
Mutual
An insurance company that is owned by its policyholders.
N-O top
Named driver
A driver specified on an insurance policy who is not the
vehicle's owner. Named additional drivers are a cheaper
option than any driver insurance.
New-For-Old
Cover for property where anything lost or destroyed is replaced
with a brand new item, with no deduction for wear and tear.
Also called 'replacement as new'.
No claims
bonus
A discount that grows for every year without a claim. No
claims bonuses are most common with motor insurance, but
they are also becoming available on home insurance.
P-Q top
Personal
possessions cover
Insurance for personal items such as money, jewelery and
luggage.
Pluvius Insurance
Covers against losses arising as a result of bad weather,
principally rain. Also known as 'event insurance'. Typically
taken out for spectator events.
PMI
Private medical insurance or private health insurance. Either
by and for individuals and family or a group and company
schemes. (see
www.critical-illness.info)
Policy
The document that details the contract between the insurer
and the policyholder.
Policyholder
Person to whom the insurer issues the policy. Normally this
is the person benefits from an insurance policy.
Premium
The amount a customer has to pay in return for insurance
cover.
Professional
Indemnity Insurance
Protects professionals, such as lawyers, against liability
claims resulting from negligent work.
Public Liability
Policy
Covers legal liability for injury or damage caused to others.
Normally part of motor insurance and some home insurance
policies.
R top
Roadside
rescue
See breakdown cover.
S top
Settlement
When an insurer pays a claim.
Single trip
Travel insurance that covers one holiday or business trip,
for a specified length of time.
Sum insured
The maximum an insurance company will pay for a claim. Some
policies, such as travel insurance, come with built-in sums
insured. Others, such as home insurance, leave it for the
customer to choose the appropriate level of cover, and work
out the cost accordingly.
Switch
The insurance runs retrospective and existing conditopns
are included (usualy only available for company PMI).
T top
Third party
A cheap and basic form of motor insurance. Third party covers
damage to others' cars but not to your own. It's cheaper
than comprehensive cover but not as much as it was. If you
can afford comprehensive insurance, it is almost always
a better option.
U-V top
Under-insurance
When a customer takes out too little insurance, paying smaller
premiums than they should. Insurance companies take a dim
view on under-insurance, and they will almost always scale
down a claim as a result. So, if you insure a car for £8000
when it's worth £10,000, they will only pay out £8000 if
it is written off. Even worse, if the car sustains more
minor damage, the insurer will only pay four fifths of a
claim.
Underwriter
Person employed by an insurance company who decides whether
to accept a risk and calculates the premium to be charged.
W-Z top
Warranty
Insurance
Provides cover against the cost of repairs to broken-down
household appliances.
Write-Off
A damaged vehicle or apliance which is not repairable, or
one which would cost more to repair than it was worth before
the damage occurred. Also known as a 'total loss'.
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