Confused with the terminology in your insurance document, and not sure what’s covered? Don’t worry, you’re not alone.We are often contacted by customers who find insurance policy wording and its meanings hard to get to grips with.
To help you understand popular policy terminology, we’ve pulled together a glossary of insurance terms.
If you’ve come across a term not covered in our glossary, please feel free to drop us a line and we’d be happy to provide advice.
Act of God (also referred to as Vis Major)
This refers to “natural causes directly and exclusively without human intervention and that could not have been prevented by any amount of foresight and pains and care reasonably to have been expected”.
In other words, an “act of god” refers to natural phenomena such as lightning strikes, hurricanes, tornadoes and earthquakes – large-scale, freak weather occurrences. It’s often used by insurance companies to describe events that couldn’t have been predicted or prevented by any reasonable measures.
Insurance policies often contain an act of god clause, which is designed to protect insurers from hefty payouts associated with such unpredictable events.
An addendum is an addition that is needed to be made to a document after its printing or publication. In the case of insurance, it’s an additional document setting out agreed alterations to an insurance contract.
This is an additional amount payable by the insured on top of the agreed premium payments as a result of a change to the existing policy (for example, an increased risk, a change to the policy conditions or sum insured).
Is the person responsible for investigating and assessing claims on behalf of insurers (for example a claims adjuster or loss adjuster).
Aggregate limit of indemnity
The maximum amount an insurer will pay under a policy in respect of all accumulated claims over a set time period.
Assurance is a term that is interchangeable with insurance, but is different in that it is cover for an event that is certain to happen (for example death), rather than one which might happen.
Business insurance is a policy that is specifically taken out for businesses, governments, or non-profit organisations. This insurance protects businesses against unforeseen losses through circumstances out of the companies control.
The termination of a policy before it’s date of expiry. Most policies contain a cancellation clause that sets out the conditions under which it can be cancelled. It will also state the type of notice that is required, and the notice period (which can range from 48 hours to 3 months). Once a policy has been cancelled, it can result in a return premium being paid to the insured by the insurer.
A claim is what the insured asks the insurance company to pay in order to sort out problems caused by an insured event such as a flood or house fire.
Part of any claim that a customer has to pay.
A policy that covers the contents of your home and property against a number of risks.
Common law is a series of ancient customs that are recognised by courts and given force within a court of law. It is an intricate system in both civil and criminal law, although it has been greatly modified compared to its original introduction. It is an unwritten law, and is up to a recording of judges interpretations over the years.
Deliberatley not giving information of a risk by the proposer, redering your insurance void.
A specific amount of loss must exceed before an insurance claim is payable. Your deduction is only recoverable from the amount of excess.
Excess is the first portion of your claim that is included either voluntarily or underwritten, and is borne by the insured.
A payment from a policy holder to the insured where there is no legal reason to pay.