Jargon Buster
A
Accident Year - The calendar or accounting year in which a loss occurs
Additional Premium - A further premium payable by the insured as a result of a policy amendment, that may have increased the risk or changed the policy conditions or sum insured
Assured – Another name to describe an insured
Authorised Person - A person (usually a firm) that has been approved by the Financial Services Authority (FSA) to carry on one or more FSA regulated activities
B
Beyond Economic Repair – Where the cost of repairing the insured property (eg golf equipment) exceeds the market value of that property
Binding Authority - An agreement between a Lloyd’s managing agent and a coverholder under which the Lloyd’s managing agent delegates its authority to enter into a contract or contracts of insurance to be underwritten by the members of a syndicate
Bordereaux - A list of premiums payable and claims paid or due which is prepared by a coverholder for a managing agent. Bordereaux are commonly produced on a monthly or quarterly basis. They breakdown block premium payments that are made to underwriters and detail claim payments made on behalf of or due from underwriters
Broker - A broker is an independent intermediary who sells one or a range of policies from different insurance companies
C
Cancellation – Termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the conditions under which the policy may be cancelled by notice. These are sometimes called a ‘right to cancel’ or ‘cooling off period’ and can range in time from a couple of days or a couple of months. In most cases they result in the premium being returned by the insurer to the insured
Certificate of Insurance – This refers to a document which proves the existence of insurance cover but does not detail all of its terms which are contained in a separate policy document
Claim – Injury or loss to the insured which results in liability to the insurer under a policy it has issued
Claimant – The person making the claim
Claim Settlement – the amount awarded by the insurer to the insured in respect of their claim
Claims Notification Clause - A clause in an insurance contract which sets out the procedure that the insured must follow in order to make a claim under the contract
Concealment – Deliberate hiding of an important fact relating to the risk which usually results in the contract being made null and void
Cover - Insurance as it applies to one or more specific risks
D
Deductible – The specified amount a loss must exceed before a claim is payable. Only an amount which is in excess of the deductible is recoverable
Depreciation - The decrease in the value of an item due to age, use or wear and tear
Duty of Disclosure - The duty of every person seeking insurance to inform the insurer of every material fact. The duty arises when seeking new insurance, when seeking a variation of cover and at renewal. If a person seeking insurance fails to disclose a material fact then this may lead to the avoidance of the relevant insurance by the underwriter
E
Excess - This is your contribution towards every claim which you (not your insurer) must pay. Individual policy excesses vary from insurer to insurer and the terms of the cover provided
Exclusion - A term in an insurance contract that excludes the insurer from liability for specified types of loss. An exclusion may apply throughout a policy or it may be limited to specific sections of it. In certain circumstances an exclusion may be limited or removed altogether following the payment of an additional premium
F
Financial Ombudsman Service – A bureau established by major insurance companies to oversee the interests of policyholders whose complaints remain unsolved through normal company channels of communication
Financial Services Authority (FSA) – The UK’s financial watchdog, the FSA, regulates financial services companies including insurance companies. The FSA can advise you on making a complaint against an insurance company
G
Golf Buggy Insurance – A specialist kind of cover specifically aimed at insuring golf buggies for use at a golf course
Golf Club Group Cover – A type of ‘blanket’ cover offered to individual golf club members, often as part of their membership fee and usually limited to personal liability cover at their home golf club
Golf Travel Insurance – Travel insurance providing tailored cover for the golfer intending to play overseas or around the UK
Good Neighbour Cover – A specific kind of cover for golfers aimed at insuring the risk of damage to property around the outskirts of a golf club
Gross Premium - A term normally applied to gross written premiums before deduction of brokerage and discounts
H
Hazard – Something that causes an exposure to injury, loss or damage
I
Indemnity – Indemnity cover means you are insuring your equipment for claim settlement based on its depreciating value over the term of your policy
Insurance Premium Tax (IPT) – A Government tax charge as a percentage of insurance premiums, currently 5%
Insurable Interest – For a contract of insurance to be valid, the policyholder must have a legal interest in the insured items whereby he benefits from its safe keeping, 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
Insurable Value – The value of the insurable equipment which an individual requires to be covered in the event of accidental damage, loss or theft. Amounts paid out by the insurer may be for an individual item of equipment or total loss
Insured – The person whose property is insured or in whose favour the policy is issued
Insurer – An insurance company or Lloyds underwriter who, in return for 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
Intrinsic Value – Unusual term describing the component value of equipment ie not second hand or market value
L
Liability Insurance – An insurance which covers the insured against third party claims
Limit of Indemnity – Another term for policy limit. It refers to the maximum amount payable under an insurance policy either overall or with reference to a particular section of a policy
Lloyds - Depending on the context this term may refer to –
(a) the society of individual and corporate underwriting members that insure and reinsure risks as members of one or more syndicates. Lloyd’s is not an insurance company;
(b) the underwriting room in the Lloyd’s Building in which managing agents underwrite insurance and reinsurance on behalf of their syndicate members. In this sense Lloyd’s should be understood as a market place; or
(c) the Corporation of Lloyd’s which regulates and provides support services to the Lloyd’s market.
Loss – This term generally refers to some injury, harm, damage or financial detriment that a person sustains. Losses may be insured or uninsured
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
M
Material Fact – Any information that may influence either an insurer’s decision to offer you cover or the premium they charge for it. If you leave out information which may influence a decision to offer cover, your policy may be invalidate.
N
Net Premiums – Term used to mean gross premiums net of commission, taxes or brokerage or any combination of these
New for Old – When equipment insured on a new for old basis is lost or stolen, this means your insurance provider will replace it with brand new equipment no matter how old it was at the time of loss
O
Overseas Cover – Specific level of cover which is applied only in the event of an individual policy holder being out of their normal country of residence
P
Peril – A contingency, of fortuitous happening, which may be covered or excluded by a policy of insurance
Personal Effects – The term used to describe
Personal Accident Insurance – A type of insurance which provides for the payment of specified sums in the event that the insured suffers some bodily injury as the result of an accident
Personal Liability – A liability an individual holds in relation to a third party
Policy – The wording of a contract of insurance
Policy Book/Policy Document– A document detailing the terms and conditions applicable to an insurance contract which constitutes the legal evidence of the agreement to insure. A policy document should be supplied for the first period of risk and each subsequent or renewal period
Policy Fee – Some insurers apply a policy fee as a form of an administration fee in order to complete the insurance application process
Policy Holder – The person in whose name the policy is issued
Policy Limit – The maximum amount payable under an insurance policy either overall or with reference to a particular section of a policy
Premium – The amount paid for a contract of insurance
Q
Quote – A statement by an insurer of the premium required to supply a particular insurance
R
Renewal – The process of continuing an insurance from one period of risk to a subsequent one
Replacement – Where an insurer agrees to replace irreparably damaged or stolen goods with goods of a similar type and quality instead of paying a cash sum to the insured
Risk – The assessment an insurance company makes in order to produce a quote to provide cover
S
Schedule – The part of a policy containing information which is relevant to that particular risk
Second Hand - Equipment that is not new
Settlement – When an insurer pays a claim
Sum Insured – The maximum amount payable in the event of a claim under a contract of insurance
T
Third Party – Someone involved in a claim who is neither the policy holder nor the insurer
Third Party Liability – Liability of the insured to persons who are not parties to the contract of insurance and are not employees of the insured
Total Loss – Where the subject of the insurance is lost, destroyed or damaged beyond repair
TPO – Third party only
U
Under Insurance – Where the sum insured does not represent the value of the property insured
Underwriter - Depending on the context this term may refer to:
(a) the individual who is responsible for underwriting a particular insurance or reinsurance contract and who is either an employee of a managing agent, an insurance company or reinsurance company or an employee of a coverholder or any similar underwriting agent
(b) an individual member or company that insures or reinsures a risk
Uninsured Losses – Elements not covered by a policy
Utmost Good Faith – Insurance contracts are contracts of utmost good faith, 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 refuse to accept liability
W
Warranty – A very strict condition in a policy imposed by an insurer. A breach entitles the insurer to deny liability
Wear and Tear – This is the amount deducted from claims payments to allow for any depreciation of the property insured through usage of it over time. Where cover is provided on a ‘new for old’ basis (ie the insurer agrees to replace an old item with a similar new one) no such deduction is made
Y
Yearly Premium - The amount you are quoted by an insurance company to cover the risk details you have supplied, inclusive of I.P.T (insurance premium tax). There can be instances where the total amount you're required to pay to an insurance company for a year is higher than just the yearly premium quoted. This may well be for charges for other products such as payment protection or windscreen protection or due to an additional cost for paying by instalments
