Aggregate Limit of Indemnity
This is the total amount an insurer will pay out under a policy — not for just one claim, but for all the claims made within a certain period of time. For example: if your aggregate limit for the year is £10,000, and you’ve claimed for £12,000 over the course of the year, your insurer will only pay out up to £10,000.
Insurance covering damage or loss that’s caused by accidents or something beyond your control — such as natural disasters. (Each insurer will list any situations like this that they specifically don’t cover.)
If you make a claim but it turns out you’re under-insured (perhaps the value of the item or building you insured has changed, or you misjudged its value in the first place), your insurer can decide to use the ‘condition of average’. This means that if you insure an item for £8,000 but — at the point when you make a claim — it’s worth £10,000, the insurer would take an average of the two amounts and offer you a percentage of the amount you’ve claimed. (In this case, it’d be 80%.)
Commercial Combined Insurance
A package made up of several commercial insurance policies.
This is insurance against loss that occurs because of direct damage to property. E.g. loss of profits are covered if a business is unable to trade.
A document issued to the insured person to confirm details of their cover. Sometimes, cover notes are a legal requirement; e.g. for motor insurance.
Employer's Liability Insurance
This is insurance taken out by employers for their employees, to cover them if they’re affected by injury or disease as a result of their work. With a few exceptions, this insurance is compulsory in the UK and can only be provided by an authorised insurer.
This is an amount of money that you agree to pay when you make a claim, before the insurer will pay out the rest. For example, if the excess is £200 and you’re making a claim for £1000, you’ll need to pay £200 before the insurer will cover the remaining £800.
An excess can be voluntary, allowing you to access premium benefits, or imposed for underwriting reasons.
This part of a policy confirms the types of loss an insurer won’t cover, or circumstances in which an insured person will not be able to make a claim.
A payment made by an insurer to a policyholder when there’s no legal obligation to pay.
First Loss Insurance
This is insurance for situations where it’s very unlikely that all the goods covered by the policy would be lost or damaged at once (for example, a warehouse or large shop). So the insurer offers cover for a sum that’s less than the total value of the goods, because it’s so unlikely that the policyholder will ever need to make a single claim that involves all the insured goods.
Increase in Cost of Working
Under a business interruption policy, it provides the customer with cash to cover reasonable additional expenses that will help the business recover following a loss.
A principle whereby the insurer seeks to place the insured in the same position after a loss as he occupied immediately before the loss (as far as possible).
Under a business interruption policy, this is the period of time after an insured event (such as a storm causing damage to an office) where cover is offered to counteract disruption to the business.
For a contract of insurance to be valid, the policyholder needs to have an interest in the insured item that is recognised by law. This usually means that you need to own (or have a direct relationship with) this item, and it would cause problems for you if the item was lost or damaged. This must be the case when the policy is taken out, as well as at the time of the loss.
Insurance Premium Tax
The Finance Act 1994 introduced this new tax on most general insurance risks located in the UK.
This is the maximum amount an insurer will pay out — whether that’s ‘per accident’, ‘per event’, ‘per occurrence’, ‘per annum’ or per any other terms stated in the insurance policy.
Independent, qualified loss adjusters are used by insurers for their experience and expertise. Loss adjusters are employed to carry out detailed and (if necessary) prolonged investigations into large, complex losses. Although the adjuster is paid by the insurer, they are impartial. Their job is to negotiate a settlement which meets the terms of the policy, and is fair for both the insured person and the insurer.
Someone who, for a fee (usually a percentage of the amount claimed), helps the insured person to gather the information needed to make a claim. In motor insurance, the loss assessor is usually an engineer.
This is any piece of information that would affect the insurer’s decision to offer cover. Material facts must always be disclosed before an insurance policy is agreed, otherwise claims made may not be covered.
New for Old
Where insurers agree to pay for lost or damaged property, without taking into account that this property might have decreased in value since it was bought by the policyholder.
No Claims Bonus (or Discount)
When an insured person hasn’t made any claims, the insurer might return an amount of money to them as a thank-you. This is very common in motor insurance.
When the insured person (or their broker) fails to disclose a relevant piece of information to the insurer before the insurance contract has been agreed.
Personal Accident and Sickness Insurance
If an accident or illness causes death, loss of limbs or loss of sight, this insurance offers fixed benefits to the insured person or another pre-agreed person/group of people.
Products Liability Insurance
These policies cover an insured person if they cause bodily injury to other people — or loss of/damage to property — because of defects in goods (including containers) they’ve sold, supplied, erected, installed, repaired, treated, manufactured, and/or tested.
Professional Indemnity Insurance
If a professional person causes injury, loss or damage to a third party (a client of theirs, for example) due to an error they’ve made at work, this policy covers claims that the third party might make against them.
This is a form sent out by an insurer to someone who’s looking to take out insurance. The form helps the insurer to gather information about this person and the cover they need, so the insurer can decide whether to offer a policy to them and the conditions that will apply.
When insured property is damaged, it’s common for the claim to be settled by the insurer paying out money. However, a policy may give either the insured person or insurer the option to restore or rebuild the property instead of a cash pay-out.
This is when an insurer takes ownership of damaged property that they’ve insured — e.g. a car that’s been damaged beyond repair. The insurer might use any money they can get from selling the remains of this property to help cover the cost of the claim.
Statement of Fact
A statement provided by the insurer detailing the terms of the insurance and the conditions that apply. This is an alternative to a completed proposal form.
A person claiming against a policyholder. In insurance lingo, the first party is the insurer and the second party is whoever’s insured (the policyholder).
Utmost Good Faith
Insurance contracts are contracts of utmost good faith. This means that both the insurer and the insured person must state — clearly and accurately — all the necessary facts relating to the insurance policy. If this doesn’t happen, the insurer may not be obliged to honour their side of the contract — and so may not cover claims that are made.
A very strict condition in a policy. Breaching a warranty means the insurer is no longer obliged to pay out.
Wear and Tear
This is the amount deducted from a claims pay-out, in order to account for any damage to the insured property that’s been caused by its usage. For example: a carpet will naturally decrease in value over time as it’s used, and this will be taken into account if a claim is made to cover unexpected damage to it.
A document that’s marked ‘without prejudice’ (and any correspondance following on from it) can’t be used as evidence in court, without the consent of both the insured person and the insurer.
Financial Controller, Britannia Windows