Finding the right home insurance and deciding whether you need buildings insurance, contents cover or both can be daunting in itself. But then you have to deal with some of the unusual words and terms used in the insurance world. So to make things a little easier to understand we have put together a glossary of the main jargon and words used.
ABI - Association of British Insurers - Insurance association that brings insurance companies together setting industry standards and codes of practice.
Act of God - An accident or event, which happens due to natural causes such as storm or earthquake which no one could foresee.
Actuary - A person trained in the technical aspects of insurance and its related fields, particularly in the mathematics of insurance to calculate the chances of an incident happening.
Agent - A licensed person or organisation authorised to sell and service insurance policies for a particular insurance company.
All-Risks Policy - Contents insurance that includes cover for your belongings when you take them outside the home.
Broker - A broker is a licensed person or organization who considers multiple insurance companies when looking for insurance coverage on your behalf.
Buildings Insurance - Insurance taken out to cover costs of rebuilding or making structural repairs to your property.
Buildings And Contents Insurance - A combined insurance policy which covers both the cost of rebuilding or repairing the structure of the property and also includes cover for loss or damage to the contents within the property.
Cancellation Clause - A provision in an insurance contract that allows the insurer or the insured to cancel a policy at any time before its expiration date.
Caveats - These are conditions that are attached to an insurance quotation or agreement when opening an account.
CCA - Consumer Credit Act - UK legislation which sets the rules for the way in which banks and other lenders lend money to members of the public.
Claim - When you notify an insurance company that a loss has occurred that may be covered under the terms and conditions of their insurance policy. This term can also be used to represent the actual or estimated amount of the loss.
Commission - An amount paid by a financial institution to an intermediary for the placing of business, insurance or other.
Conditions - Provisions in the insurance contract that state the rights and duties of the insured and of the insurer.
Consequential loss - A financial loss occurring as the result of some other loss.
Contents Insurance - Type of home insurance used to cover the contents and personal possessions in a house in the event of theft or damage.
Cover note - A temporary certificate confirming that an insurance policy is in force.
Declaration - The section of your insurance policy containing information including your name and address, the description and location of the insured property, the policy's term, amount of coverage, and premium amounts payable.
Deductible - The amount you are to pay in the event of a claim before the insurance company pays the balance. In most cases, a higher deductible/excess will give you lower premiums. In The UK this is known as Excess - See Below
Depreciation - A reduction in the value of an insured object due to age, wear and tear, or obsolescence over a period of time.
Direct debit - A method that enables an organisation to take money directly from the bank account of a person; for example, an insurance company taking monthly payments to insure your home.
Disclosure - The duty of any person applying for an insurance policy to tell/ disclose the insurer all relevant information affecting the policy that they are applying for.
Effective date - The date on which the insurance policy will begin.
Endorsement - A written amendment made to a policy that changes the terms the policy by adding or subtracting coverage. This is also known as a rider.
Excess - This is the amount of money which you the insured must pay before insurer will settle the rest of the outstanding monies due from the claim.
Exclusions - A provision to your insurance policy that highlights specific situations or conditions that the insurer will not cover under the contract, for example coverage for specific hazards, perils, persons, property, or locations.
Financial Ombudsman Service - Independent body to decide complaints from consumers relating to banking, investments and insurance.
Fixed premiums - Costs for an insurance policy which stay the same , usually for a specified period.
FSA - Financial Services Authority - Regulator of all providers of financial services in the UK.
Grace period - A period after a premium payment is due on an insurance policy (but where a policyholder is late making the payment), during which the policyholder can make the late payment without losing the protection which the insurance policy provides.
Home insurance - Buildings and or Contents insurance to protect a policyholder's home and possessions.
IFA - Independent Financial Adviser - Qualified consultant who gives independent advice on all financial products.
Indemnity policy - Home contents insurance cover for the second-hand value of you possessions.
Index Linking - A system whereby your policy is updated automatically in line with the rate of inflation each year.
Inflation - the percentage increase or decrease in prices each year.
Insured - The person or organization covered by an insurance policy; the one who is reimbursed for losses or receives benefits. Also called the policyholder.
Insurer - The insurance company that issues the insurance policy and agrees to pay for losses and provide covered benefits.
Insurance Premium Tax - IPT - Special type of tax imposed on most insurance policies by the government that are sold within the United Kingdom This tax is normally automatically incorporated into the price of your policy.
Intermediary - A person or organisation that offers advice and arranges policies for clients.
Interest - The charge made for borrowing a sum of money.
Loss adjustor - An independent person who may be used by an insurance company to assess the value of a claim you make on your insurance policy for loss or damage.
Mutual - A commercial organisation owned by its members (savers and borrowers), as opposed to being owned by shareholders.
New for old Policy - Contents insurance that covers you for the cost of replacing your possessions with a new item or its present day equivalent.
Ombudsman - An independent official to whom grievances can be aired, free of charge. See Financial Ombudsman Service.
No claims bonus - Policy holders who have not made any claims on their insurance for a period of time will be offered a special discount.
Policy - Document outlining the full details and terms of an insurance contract between the insurer and the insured.
Policy Term - The length of time that an insurance policy lasts.
Policy holder - A person or organisation that takes out an insurance policy, who is insured.
PremiumThis the amount that the insured pays to cover the cost of the insurance policy.
Quotation - An illustration provided by an insurance company to show the costs of insurance cover, before you buy it. Sometimes known as the rate.
Rebuild Value - The cost to rebuild your home.
Reinsurance - The practice whereby one insurance company transfers part or all of the risk it has accepted to another insurance company (the reinsurer).
Replacement Cost - The cost to repair or replace insured property with new property of a like kind and quality in the local market.
Risk - The likelihood of making a claim. This is calculated by an actuary.
Standing Order - A pre authorised payment in which the customer gives instructions to their bank to pay fixed sums at regular intervals or on defined dates.
Sum Insured The amount which the property or item is insured for. The sum insured is the highest amount that an insurer will pay out in the event of a claim.
Underinsurance - Occurs when a property or item has been underinsured and the policy would not cover the insured property or items sufficiently to be reimbursed.
Underwriter - A person within the insurance company who evaluates the risks and determining rates and coverage for them.
Underwriting - Where an insurance company takes into account known facts like your age, sex and health, in order to assess the likelihood of you making a claim on the policy.
Underwriting Decision - A decision made by insurance underwriters based on evidence supplied.
Unlimited Cover - Buildings insurance paying out as much as necessary to rebuild your home (although some policies do have an upper limit).
