Business and Commercial Insurance Glossary
A | B | C | D | E | F | H | I | K | L | M | N | P | R | S | T | U | V | W
A
Acceptance Terms
In Life Assurance these are issued when all underwriting has been completed. Your acceptance terms provide all of the information about your plan.
Accident
An unexpected event, which happens by chance and is not expected in the normal course of events.
Additional Premium
An extra charge for an alteration, during the policy period, which increases the hazard or the Company's liability.
All Risk
Coverage against loss or damage from all perils except those specifically excluded.
Aggregate Limit
This relates to liability insurance and is the total amount of cover provided by the terms of the contract for the contract period, no matter how many separate accidents might occur.
Assignment
In life assurance, your lender will take an assignment over your plan when the loan is drawn. This ensures that should anything happen to you the benefits are paid to lender immediately to repay your mortgage.
Assurance
Same as "insurance".
Assured
Same as "insured".
Assurer
Same as "insurer" (insurance company).
B
Buildings Reinstatement
The cost of rebuilding the insured property following its destruction by an insured peril. The amount you insure should represent the cost of rebuilding the premises to its original standard. You should also make allowance for debris removal costs and architect's fees.
Business Interruption (Loss of Profits)
This protects the revenue of your business if its trade is affected as a result of an insured peril occurring. Insurers will compensate you for the reduction in your revenue from the first day of the loss until such time as your business has returned to pre-loss levels or until the expiry of the pre-agreed indemnity period (usually 12, 18, 24 or 32 months).
C
Cancellation
Termination of an insurance coverage during the policy period by the voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.
Claim
A demand made by the insured, or the insured's beneficiary, for payment of the benefits as provided by the policy.
Compulsory Insurance
Any form of insurance, which is required by law.
Consequential Damage
A loss, which is an indirect result of an accident or fire, e.g. food spoiled through breakdown of a refrigerator.
Cover
Coverage
Insurance.
D
Depreciation
Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence.
E
Effective Date (sometimes Inception Date)
The date on which an insurance policy or bond goes into effect, and from which protection is furnished.
Employers’ Liability Insurance
Cover against common law liability of an employer for accidents to employees, as distinguished from liability imposed by a workers' compensation law. This is a legal requirement for all businesses.
Endorsement
Amendment to the policy used to add or delete coverage.
Excess (or Deductible)
The amount of loss that the insured is responsible for paying before the insurance will come into effect.
Exclusions
Items or conditions that are not covered by the general insurance contract.
Expiration
The date upon which a policy will end.
Exposure
Degree of hazard threatening a risk because of external or internal physical conditions.
F
Fire Insurance
Coverage for loss of or damage to a building and/or contents due to fire.
Flood Insurance
A form of insurance designed to reimburse property owners from loss due to the defined peril of flood. Usually sold in connection with a government flood insurance plan.
Fortuitous Event
An unforeseen accident.
H
Hazard
A circumstance that increases the likelihood or probable severity of a loss. For example, the storing of fireworks in a warehouse is a hazard that increases the probability of a fire.
I
Indemnification Basis
When insurance policies are written on an "indemnification" basis, the insurance company will reimburse the insured for claim costs already paid. Technically, the insured must not only suffer a loss, but must also pay the loss before being reimbursed (indemnified) by the company.
Indemnity
To restore the victim of a loss, in whole or in part, by payment, repair, or replacement.
Insurability
How acceptable the applicant is to the insurance company.
Insurable Interest
Interest in property such that loss or destruction of the property could cause a financial loss.
Insurance
A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the insured.
Insurance Policy
Legal document issued to the insured setting out the terms of the contract of insurance.
Insurance Premium Tax (IPT)
A tax on premiums paid by the clients in addition to the cost of their insurance. IPT is currently charged at 5% of the policy total.
Insurance to Value
Insurance written in an amount approximating the value of the property insured.
Insured (or Policyholder)
The person (or persons) whose risk of financial loss from an insured peril is protected by the policy.
Insurer
The Insurance Company.
K
Key Features Documents
These provide specific information about the plan you applying for, including details of policy charges, risk factors and the plan's aims.
Key Notes Letter
In life assurance, these provide detailed information about specific products. Christie Insurance will always issue a Key Notes Letter with all of our illustrations.
L
Lapse
Termination of a policy because of failure to pay the premium.
Lapse Ratio
The ratio of the number of life insurance policies that lapsed within a given period to the number in force at the beginning of that period.
Legal Expenses
An insurance to pay out for the cost to hire legal representation or meet other court costs in the event that a legal claim is made against you.
Lessee
The person to whom a lease is granted, commonly called the tenant.
Lessor
The person granting a lease, also known as the landlord.
Liability Insurance
Insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility, due to negligence, to others imposed by law or assumed by contract.
Liability Limits
The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy.
Limit of Liability
The maximum amount which an insurance company agrees to pay in case of loss.
Limits
Maximum amount a policy will pay either overall or under a particular coverage.
Lloyd's
Lloyd's of London - an institution made up of syndicates within which individual underwriters accept or reject the risks offered to them.
Loss
The amount of reduction in the value of an insured's property caused by an insured peril; the amount sought through an insured's claim, or the amount paid on behalf of an insured under an insurance contract.
Loss Adjustment Expenses
Expenses incurred to investigate and settle losses.
Loss Adjustor
A person who investigates a loss and negotiates settlement with the claimant on the Company's behalf.
Loss of Licence
The insurer will pay for the depreciation or loss of income of the business as a result of its licence being forfeited, suspended or withdrawn. They will also pay for costs and expenses incurred, with their consent, in connection with any appeal against the forfeiture, suspension or withdrawal of the licence.
Loss Ratio
The ratio of incurred losses and loss-adjustment expenses to net premiums earned. This ratio measures the company's underlying profitability, or loss experience, on its total book of business.
M
Medical Malpractice
Failure of a physician or other medical personnel to meet the standards of conduct for duties relating to the medical profession. Those standards are based on what a reasonable person with the requisite knowledge and skills would or would not do.
Money
An insurer's definition of money includes cash, bank notes, cheques, postal orders and postage stamps. Standard policy limits usually apply.
Mortgage Insurance Policy
In life and health insurance, a policy covering a mortgagor with benefits intended to pay off the balance due on a mortgage upon the insured's death, or to meet the payments due on a mortgage in case of the insured's death or disability.
Mutual Insurance Companies
Companies with no capital stock, and owned by policyholders. The earnings of the company--over and above the payments of the losses, operating expenses and reserves--are the property of the policyholders.
N
Named (or Specified) Perils
Perils specifically covered on insured property.
Net Income
The total after-tax earnings generated from operations and realised capital gains as reported in the company's annual statement.
Net Premium
The amount of premium minus the agent's commission. Also, the premium necessary to cover only anticipated losses, before loading to cover other expenses.
P
Para-Med Screening
This is a streamlined medical, usually completed by a nurse. Normally these will be conducted in your own home.
Peril
The cause of a possible loss e.g. fire, lightening, aircraft, explosion.
PMA
Private Medical Attendant's report. This is a questionnaire completed by your own doctor from your medical records.
Policy
The written contract effecting insurance, or the certificate thereof, by whatever name called, and including all clauses, riders, endorsements, and papers attached thereto and made a part thereof.
Pre-Existing Condition
A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.
Premium
The price of insurance protection for a specified risk for a specified period of time.
Professional Indemnity Insurance (PI)
Coverage for professional damage caused by negligence or misunderstandings that can result in court cases or legal action.
Public Liability
This protects your legal liability (standard limit of £2 million) against compensation, claimant's costs and expenses in the event of death or injury to a third party. Public Liability also extends to indemnify you against loss or damage to third party property.
R
Reinsurance
In effect, insurance that an insurance company buys for its own protection. The risk of loss is spread amongst more than one insurer so a disproportionately large loss under a single policy doesn't fall on one company.
Renewal
The automatic re-establishment of in-force status effected by the payment of another premium.
Replacement Cost
The amount needed to replace damaged property without deducting for depreciation but limited by the maximum amount disclosed at the time of inception.
Reserve
An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders following the notification of a claim or incident which may arise in a claim.
S
Subrogation
The right of an insurer who has taken over another company's loss to also take over the other's right to pursue remedies against a third party.
Sum Assured/Insured
The amount paid should a claim arise.
T
Term
The period of cover your plan provides.
Total Loss
A loss of such magnitude that it can be said no value is left e.g. the complete destruction of the property. The term is also used to mean a loss requiring the maximum amount a policy will pay.
Trade Contents
Your trade contents should include furniture, fixtures, fittings, business machines and appliances. All items are insured to their value if replaced as new.
Treatment Indemnity
An insurance to pay compensation and claimants' costs and expenses in respect of injury to any person arising from any treatment given by or on behalf of the policyholder.
U
Umbrella Policy
Coverage for losses above the limit of an underlying policy or policies. Terms of coverage are occasionally broader than those of underlying policies.
Underwriter (also Insurer)
The individual who evaluates the risks and determines the premium and level of coverage.
Underwriting
The process of selecting risks (or rejecting unsuitable risks) for insurance and classifying them according to their degrees of insurability so that the appropriate rates may be assigned.
Uninsured Loss Recovery (Uninsured Motorist Coverage)
Endorsement to a personal automobile policy that covers an insured collision with a driver who does not have liability insurance.
Universal Life Insurance
A combination flexible premium, adjustable life insurance policy.
V
Valuation
A calculation of the policy reserve in life insurance. Also, a mathematical analysis of the financial condition of a pension plan.
Valuation Reserve
A reserve against the contingency that the valuation of assets, particularly investments, might be higher than what can be actually realised or that a liability may turn out to be greater than the valuation placed on it.
Variable Life Insurance
A form of life insurance whose face value fluctuates depending upon the value of the dollar, securities or other equity products supporting the policy at the time payment is due.
Voluntary Reserve
An allocation of surplus not required by law. Insurers often accumulate such reserves to strengthen their financial structure.
W
Whole Life Insurance
Life insurance which might be kept in force for a person's whole life and which pays a benefit upon the person's death, whenever that might be.
