Accidental Damage

When it comes to buildings insurance, this could be an optional extra or included in your policy and it covers accidents which might cause damage to your home. The classic example is putting your foot through the ceiling whilst in the loft (not a good idea). In the case of contents insurance, this would cover accidents in the home where personal possessions might be damaged.

Act of God

If none of us saw it coming, we have to call it something and God gets the blame, whatever religion you might follow! Can also be known as VIS MAJOR. If you’re interested, it cropped up following a case in 1876 (Nugent vs Smith).

Actual Cash Value

This means a value for a given loss by taking into account replacement value, less depreciation.

Addendum

Something which can be added to an insurance contract which changes it. Same as an Endorsement (or caveat, as the lawyers might say).

Additional Insured

Used in the context of business insurance it is common when, say an external contractor is on site and they need cover from you. It might also mean cover for a tenant of a commercial property.

Adjuster

The person who’s heard it all before. They decide on losses and whether a loss is covered within a particular policy. There are a number of adjuster types and these cover various aspects of the industry.

Advance Profits Insurance

This applies when a company fails to make the expected profits on a new enterprise, or some new operation which is a part of the existing business. It is effectively business interruption insurance.

Aggregate Limit of Indemnity

Basically, the total an insurance company will pay out across a number of claims within one particular policy.

Aggravated Theft

This is not only someone stealing you property, or breaking into your home, or office but doing it with menace.

Alarm

Not every alarm will get a reduction in your insurance, so before you rush out and invest in such a device, do some homework. If you want your insurance company to recognise your alarm, ensure that it is installed by a recognised body such as the National Security Inspectorate (NSI), or the Security Systems and Alarms Inspection Board (SSAIB). The alarm also has to be properly maintained.

Betterment

No, not climbing up the social ladder. But, you might have to cough up more if, when your vehicle is repaired, it’s in far better condition, and subsequently worth more, than when it was prior to being damaged. This can also apply to personal possessions being replaced as well.

Broker

A person who acts on behalf of an insurance company, or companies, and should be regulated within the industry. Officially known as an Insurance Broker, or an Intermediary. They fall within the auspices of the Financial Conduct Authority. If in doubt, ask to see their professional credentials.

Business Owner’s Policy

The ‘BOP’ has come to mean a package of insurance components which covers the main requirements, such as business interruption, liability etc, for a business.

Buildings

When taking out buildings insurance, check out to see what is defined by the word building. It usually means the structure (plus gates, fences etc), but may not include fittings to the house (say a television aerial, or satellite dish). It’s best to have a quick look to see what exactly is covered.

Cancellation

The clause by which a policy can be cancelled and the notice period that the company will give. It might also involve the handing back of a premium. This is often referred to by insurers / brokers as a ‘seven day cancellation clause’.

Car Alarm

An anti-theft device which might, just might, get you a better rate for your car insurance. But don’t just assume this to be the case, check it out first.

Certificate of Insurance

The dreaded paperwork. Every policy will have a certificate of insurance and you must keep it somewhere accessible, and safe. This proves you have insurance and could be used on many occasions to prove you’re covered. You don’t want to have to visit the police empty handed, saying you’ve lost your insurance certificate – they heard that one before.

Claim

A claim is the first part of the process in seeking monies from your insurer. It is a formal application and if you want your money, you are obliged to make sure it is honest and legible. Don’t think a claim will work better if you are a budding Shakespeare. Stick to the facts; it’s better for all concerned.

Co-insurance

This is a requirement, written in a policy, that the person, or entity insured, actually insures a percentage of an asset’s value to the required level.

Common Law

The law as practiced in this fair land.

Comprehensive Insurance

Used in the sense of vehicle insurance policies, a fully ‘comp’ policy means that you can claim against damage for your own vehicle, if it’s your fault. It provides cover for you and the third party (the other people involved).

Compulsory Excess

Some policies will tell you that a particular cover is based on a compulsory excess. This means that in the result of making a claim, you will have to pay the excess and your insurance company will pay the rest.

Concealment

You don’t want to be accused of this. It basically means not telling an insurer facts which are relevant to the policy, or claim when you are asked the question.

Consequential Loss

Mainly for businesses, this comes down to insuring for damage to say a company’s profits.

Construction Type

Relevant for buildings insurance ‘just’ refers to how your property is built: bricks, wood, or straw (well, the three little pigs might have needed cover for their homes)! But, the construction material of the house is important when you arrange your building insurance.

Contents Value

An estimate of the value of the contents in your property which are covered within the insurance policy.

Cover Note

A piece of paper which confirms the pertinent details of an insurance policy. Widely used with vehicle insurance.

Cosmetic Modification

This means any modification to vehicle which changes its appearance, as opposed to changing its performance. Usually an insurance company will want to hear of any modification. Be wary before you start, it could rocket your premiums.

Deferred Premium

If you want to pay in instalments, this is the official terminology.

Endorsement

Right, a dirty word for drivers and riders, but in insurance terms, it means that a clause has been inserted into a policy which in some way alters the cover.

Excess

Choosing the right excess can bring down the cost of your insurance. It then means that you pay whatever you have agreed with your insurance company, before they pay out the remainder.

Exclusion

Yes, this is as cold and as harsh as it sounds. It refers to something on which the insurers are not obliged to pay out.

Fault Claim

This can have two meanings, so be careful. It can mean that you are to blame for an accident and are having to make a claim, or it can mean your insurance company cannot recover costs from a third party who is to blame.

Financial Conduct Authority

This is the regulator for the insurance industry, as well as of course of the financial industry. Commonly known as the FCA, it used to be called the Financial Services Authority.

Geographical Limits

The boundaries to which your particular insurance policy applies.

GAP Insurance

Relevant to van operators and related businesses. This is to cover a shortfall if your van, bought on a lease agreement, is damaged and your insurance company will only pay out what it’s worth at the time of the crash (less than the finance due). GAP insurance fills that gap.

Indemnity

A lovely legal term this, but forget the Hollywood movies for a minute. In insurance terms, it means that following your claim, you should be restored to your financial position before you made the claim. In other words, you shouldn’t lose out.

Insurance Premium Tax

Well, where would we be without taxes? This one is payable on virtually all non-life insurance policies. And it’s the policyholder which has to shell out. And don’t blame us and it’s imposed by the Government.

Insured Value

Often a contentious one this, but it means that should your vehicle be damaged beyond repair, this is its value at the time you make the claim. You might have decided this figure, or your insurance company. And as you can imagine, there are often differences of opinion.

Lapse

When a policy lapses, it has not been renewed, for whatever reason.

Legal Assistance

This is generally an add-on service which means that you can get cover for legal advice (usually a 24/7 helpline), should you have need of it. Now, given that we all live in a society where legal wrangles are commonplace, this should be seriously considered these days. And if you buy the assistance through your insurance policy, it can be very good value.

Legal Interests

Most commonly used when another party has a financial interest in your property. A mortgage company is a prime example of this.

Legal Liability

If you’re at fault, then you have to make good, financially.

Limit

An insurer will usually make clear the limit of its liability and this might be expressed in terms of per annum, or per event.

Listed Building

If you live in a listed building, then hopefully you are aware of it. Basically, it means that it has a historic value and only certain work can be carried out. If in doubt, check online, or at your local library.

Locks

Insurance companies like people who secure their properties properly. So, check out the latest models and designs which could help you bring down your premiums.

Loss

If used in the context of a claim. Making good a loss with a claim so to speak.

Market Value

If your vehicle is written-off (they decide it doesn’t work anymore), then the cost of replacing it is referred to as its market value. They base it on similar models at similar stages of their lives (mileage etc).

Medical Examiners Report

Should someone need to be checked out medically, an insurance company will usually pay for a medical examiners report (MER).

Modification

Changing a vehicle whether in terms of how its looks (Cosmetic Modification), or how it performs.

Motoring Convictions

Most insurance companies insist on you letting them know of your motoring convictions (speeding, drink driving, dangerous driving etc.) from the previous five years. Be honest about these. There’s always a record somewhere.

Negligence

Now, you might think this a subjective term, but in the eyes of the law, this is when you fail to take care towards another person and don’t behave in such a way as a reasonable, or prudent person would do in the similar circumstances. Okay, as clear as mud then, but the law will interpret your actions as either fair, or unreasonable. This is case by case, but if you haven’t behaved reasonably, then you will be considered negligent. Here’s a line from the court case which started it all. It was in 1856 and involved the case of Blyth versus Birmingham Waterworks Co. It was ruled: ‘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’. Well said.

Neighbourhood Watch

No, not nosy neighbours, but a scheme where neighbours keep an eye on each other’s property and ideally, it should be within the National Neighbourhood Watch Association (NNWA).

New for Old

Not quite as straightforward as it sounds. It means paying for new goods, without deducting for depreciation of the old.

No Claim Bonus

If you don’t make a claim, you will be rewarded with a lower premium. Effectively, it’s discount for trying to stay away from claims. Hence you will hear the question and ‘how many years no claim bonus do you have?’. When it comes vehicle insurance, this is the biggie.

Peril

This is all about crossing the t’s and dotting the I’s. It’s a happening, which might, or might not, be covered by a particular insurance policy.

Period of Insurance

How long the policy is valid. Every policy will have a strict start and finish date.

Permanently Attached Accessories

Mostly used in terms of a motorbike which has had bits added and which are not there to improve performance, but to improve the user experience. Think radios, tank bags and luggage carriers.

Personal Liability

What you might be liable for, should an action of yours be proved to be negligent.

Pillion Passenger

The term for the passenger on a motorbike.

Personnal Possessions

Those items of yours which are in your property. Now, you can arrange cover via a personnel possessions outside home condition, because you need to bear in mind that most standard contents cover stops once your possessions leave your property.

Policy

The legal contact that exists between you and your insurance company.

Premium

The term which refers to the amount of money you pay the insurance company for cover.

Protected No Claim Bonus

Given the importance of a no-claims bonus, some companies will allow you to protect your number of bonus years, meaning that if you do make a claim, then you won’t necessarily lose your hard-earned years of not having made a claim. Consider this, if you can.

Professional Indemnity

This is very important for businesses, especially those who provide services for their clients. Should your client/customer accuse you of negligence, or pinching their intellectual property, or losing sensitive information, or dishonesty, then you could be liable for a large sum. This sort of insurance helps you sleep at night.

Public and Employers' Liability

If you are in business, then this is a must. It provides you with basic protection for those who work for you and those who come into contact with you in terms of the public, suppliers and visitors.

Rebuild Cost

This is what it would cost to rebuild your property, should the worst happen.

Reinsurance

The is where one insurance company will insure its risk with another company in order to mitigate its potential losses on a claim.

Renewal Notice

When your policy is about to expire, usually you will get a renewal notice from your insurance company / broker.

Responsible Party

The one who is responsible for causing the damage, or losses.

Schedule

The devil is in the detail as they say and this is the attachment which comes with your policy. All the details are included here ‘such as the dates, excess levels’ and it forms part of the official contract between you and the insurance company.

Settlement

When you make a claim and get a payment, this is the amount that the insurer will pay you.

Statement of Fact

As it says, this is factual information given by you, to your insurance company. Note the word ‘fact’. It’s always best to stick to the facts where insurance is concerned.

Telematics

This is an idea which is catching on with vehicle insurance. It’s technology which can, remotely, figure out how you are driving, or riding. It should, in theory, bring down premiums because when you say you’re only out on Sundays and always stick to the speed limit, it can tell! Over the coming years, telematics is going to play a big part in vehicle insurance.

Terrorism

Insurance companies will often benchmark their statements, so, in this case, they use the Terrorism Act 2000, which provides definitions and fundamental principles.

Third Party Only

You are required by law to have this minimum standard of cover and it means you are protected should you be at fault and have to recompense a third party. But, you will get no recompense yourself if you are liable.

Third Party Fire and Theft

The same as third party only, but with the added benefit that if your vehicle is damaged by fire, or is stolen, then you can get compensation.

Total Loss

Same as written-off. It means that the insurance company thinks that the vehicle cannot be repaired, or would cost too much to repair, and replacement is cheaper.

Uninsured Losses

This covers a number of things, but mainly refers to what is not covered within your insurance policy, such as any excess you might have to pay as part of a claim.

Valuables

Those items in your property which are considered personal possessions. The biggest problem when it comes to possessions, is that people under-estimate their value, which means that there can be problems when it comes to the claim. It’s always a good idea to keep every receipt for every personal possession you might purchase, as then you can value them efficiently and prove you actually had them.

Voluntary Excess

Generally, the greater the excess you volunteer to pay, the lower your premium. You can have can a compulsory excess (you need to pay this), or a Voluntary Excess (it’s up to you).

Utmost Good Faith

In other words, tell the truth. Both parties to an insurance agreement are honour bound to disclose all that is necessary. If one side does not tell the whole truth, then the policy can be worthless.

Without Prejudice

If you had a document with these two words, it means that the contents, statements, or meanings within it, cannot be used in court, unless both parties agree to their admittance. It can also be used when one party pays for something, but does not wish to admit a liability.

Written-Off

This is when your vehicle is badly damaged and the insurance company says it’s not worth repairing, or indeed, cannot be repaired. Arguments can arise because an owner might think it is in their best interest to have the vehicle written-off, or conversely, say that it is indeed roadworthy. Nowadays, it’s being replaced by the term, total loss.