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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. (Back
to top)
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. (Back to top)
Actuary
Professional who calculates risks and costs related to life assurance
and investment policies. (Back to top)
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. (Back to top)
Annual policy
For travel, an insurance policy that applies all year round rather than
just for a single journey or holiday. (Back to top)
Annuity
A type of contract where an agreed amount is paid yearly for life or an
agreed shorter period. (Back to top)
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. (Back to top)
Assurance
Also known as insurance but generally used for life assurance. Insurance
covers an uncertain event whereas life assurance covers a certain event
(ie death) only where the date is unknown. (Back to 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. (Back to top)
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. (Back
to top)
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. (Back to top)
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. (Back
to top)
Claim
The term used to describe the process of getting an insurance company
to pay out on the policy you bought from them. (Back to
top)
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. (Back
to top)
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. (Back to top)
Critical Illness Policy
A policy that pays out a tax-free capital sum in the event of a qualifying
illness being diagnosed eg certain cancers. They can stand alone or be
written as an ’add-on’ to a variety of other contracts eg whole
of life. (Back to top)
Endowment Assurance
A savings contract, medium to long-term life assurance-linked, that has
an investment element and a protection element. The policy will pay out
on surrender, maturity or death. (Back to 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.
(Back to top)
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). (Back
to top)
Financial Services Authority
This is the government body that regulates all aspects of the financial
services industry in the UK. (Back to top)
Fully comprehensive
For motor insurance, a policy that covers damage to the owner's vehicle
as well as to others'. (Back to 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.
(Back to top)
Group Pension Policy
A pension policy operated by an employer for a group of employees.
Generally, the employer helps fund employee contributions. However, some
group schemes exist only for administrative convenience. (Back
to 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.
(Back to top)
Indemnity
The principle by which insurance policyholders are put in the same financial
position after a loss as they were immediately before it. (Back
to top)
Insurance
A contract in which the recipient of agreed payments agrees to compensate
the payer in the event of certain events i.e. loss, damage, injury, death,
etc. (Back to top)
Insurance Premium Tax (IPT)
A Government tax charged as a percentage of insurance premiums. (Back
to top)
ISA Individual savings Account
Tax-free environment in which to hold savings. Introduced by the UK Government
on 6 April 1999 to replace PEP and TESSA products. They enable savings
to be held in the form of stocks and shares, cash or life assurance, or
any combination of these three asset types. (Back to 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. (Back
to 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.
(Back to top)
Life Assurance
A general term to describe different types of personal protection policy,
whose main purpose is to provide payment in the event of death. (Back
to top)
Life Insurance
A general term to describe different types of personal protection policy,
whose main purpose is to provide payment in the event of death. (Back
to top)
Lloyd's of London
An insurance market organised into syndicates, which underwrites most
types of policy. (Back to top)
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. (Back
to top)
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. (Back to top)
Loss
Insurance people's term for being robbed, burgled, injured or in a car
accident. A loss gives rise to a claim. (Back to 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. (Back
to top)
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. (Back to top)
Moratorium
Starts as of today and all prior illnesses or illnesess that have started
before this date are excluded. (see also Switch). (Back
to top)
Mutual
An insurance company that is owned by its policyholders. (Back
to 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.
(Back to top)
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'. (Back to top)
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. (Back to top)
PAI - Personal Accident Insurance
A policy that will pay out an income or a lump sum in the event of disability,
dismemberment or death, caused by an accident. Personal Accident Insurance
is not Life Assurance. (Back to top)
Pension
An annual income, usually associated with the period after retirement,
but not necessarily so. A pension fund is a general term used to describe
an investment fund built up during working life and used at retirement
to purchase an annuity to provide a continuing income. (Back
to top)
PHI (Permanent health insurance)
A policy which will provide an income in the event of a long-term absence
from work because of illness or disability; income ceases upon return
to work, retirement or death. (Back to top)
Personal possessions cover
Insurance for personal items such as money, jewelery and luggage. (Back
to top)
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. (Back to top)
PMI
Private medical insurance or private health insurance. Either by and for
individuals and family or a group and company schemes. (see www.p-m-i.com).
(Back to top)
Policy
The document that details the contract between the insurer and the policyholder.
(Back to top)
Policyholder
Person to whom the insurer issues the policy. Normally this is the person
benefits from an insurance policy. (Back to top)
PPP - Personal Pension Plan
A pension policy available to employed persons who do not qualify for,
or are not members of, an occupational scheme. Also available to the self-employed
with Net Relevant Earnings. (Back to top)
Premium
The amount a customer has to pay in return for insurance cover. (Back
to top)
Professional Indemnity Insurance
Protects professionals, such as lawyers, against liability claims resulting
from negligent work. (Back to top)
Public Liability Policy
Covers legal liability for injury or damage caused to others. Normally
part of motor insurance and some home insurance policies. (Back
to top)
Roadside rescue
See breakdown cover. (Back to top)
Settlement
When an insurer pays a claim. (Back to top)
Single trip
Travel insurance that covers one holiday or business trip, for a specified
length of time. (Back to top)
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. (Back
to top)
Switch
The insurance runs retrospective and existing conditopns are included
(usualy only available for company PMI). (Back to 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. (Back to 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. (Back to top)
Underwriter
Person employed by an insurance company who decides whether to accept
a risk and calculates the premium to be charged. (Back
to top)
Warranty Insurance
Provides cover against the cost of repairs to broken-down household appliances.
(Back to top)
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'. (Back to top)
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