A

Act of God: Is an unpredictable and unpreventable event such as a lightning storm which could cause loss or damage to buildings, vehicles or personal property.

Additional Premium: Amendments or additions to a policy may result in an increase in premium. This additional premium must be paid by the insured to secure cover.

C

Cancellation: Termination of an insurance policy before its expiry date.

Certificate: This is a document issued by your insurer as evidence of your policy details.

Claim: The act of the insured requesting a payout from the insurer in line with the conditions of their policy.

Comprehensive or Fully Comprehensive insurance: A policy in which a wide range of risks are covered and for this reason, this is generally the most extensive and costly policy type.

Compulsory excess: Is the minimum excess payment your insurer is willing to accept on a policy based on your personal circumstances. This amount varies based on a policy holders circumstances and the policy type.

Cooling off period: Is the statutory 14-day period a new policy holder is given in which they can cancel their policy at no cost.

Cover Note: A temporary document confirming details of the insurance policy which is issued by the insurer prior to the policy being produced.

E

Effective Date: The date on which an insurance policy comes into force.

Exception: An exclusion identified in your contract which denies cover of an entity such as an individual, location, peril or property.

Excess: Your policy excess is a fixed amount you must pay each time you make a claim under the conditions of your policy.

F

Financial Services Authority (FSA): Is an independent non-governmental body which regulates the provision of financial services in the UK. The FSA aim to provide consumers with the appropriate level of protection, an understanding of and the confidence in the financial system.

I

Inception Date: The date on which the insurance policy comes into force and the insured is covered under the terms of the policy.

Insurable Interest: For a policy to be valid, the policyholder must have an interest in the insured item for the full length of the insurance cover.

Insurance: A contract which covers the insured against something which may or may not happen. The insured pays a premium to set up the contract in addition to providing the insurer with the mandatory policy information required. Failure to provide full and accurate information at inception could render the policy invalid in event of a claim.

Insurance Broker: A person or company specialising in providing insurance cover and insurance advice to its customers. The broker acts as an intermediary between the customer and insurance company using their knowledge and experience to negotiate the best deal. Brokers are independent and offer a range of products from different insurance companies making their money in fees from the insurance companies they place business with.

Insurance policy: A document detailing the policy details, policy conditions and the premium payable for cover. Insurance premium: The fee payable by the insured in return for cover against specified risks.

Insurance premium tax or IPT: Introduced in 1999, IPT is a tax payable on most general insurance premiums where the risk is located within the UK namely motor, household, medical and travel insurance.

Insured: The person, company or property that is covered by an insurance policy. A company authorised and regulated to provide insurance.

L

Lapse: A policy can be deemed by the insurer as lapsed if the policyholder fails to pay their premium or if at renewal, they are not invited by the insurer to renew their policy.

Legal expenses insurance: Covers the cost of and provides access to legal advice in event of pursuing or defending legal action.

Loss Adjuster: An independent consultant who acts on behalf of the insurer to asses the value and extent of a claim.

Loss Assessor: A person who represents the policyholder in event of a claim. The Loss Assessor handles all aspects of the claim process to negotiate the best settlement for the policyholder

N

No claims bonus: An award given to the policyholder if no claims are made during the cover period (usually a year). This bonus is used to reduce the annual premium and is widely used in the motor insurance business. No claims bonus is also referred to as NCB or NCD (no claims discount).

P

Policyholder: The person’s name in which the policy has been issued. Policy document:

Premium: The cost of the insurance policy.

Proof of Loss: A statement provided by the insured with detailed facts of the incident which gave rise to the claim.

Proposer: The person applying for insurance. On acceptance of the policy the proposer becomes the policyholder.

Q

Quote: The provision, by an insurer, of a price and policy terms to cover a specified risk.

R

Return Premium: Is a refund amount payable to the insured in event of a change to the existing policy or its cancellation.

Risk: Is a term used to describe the subject matter of insurance, the hazard insured against or the uncertainty of a potential loss.

S

Schedule: The policy schedule details exactly what the insured is and isn’t covered for under the policy terms and conditions.

Sum insured: In the event of a claim, the sum insured is the maximum amount payable under the insurance policy.

T

Term: Is a specified period of time.

Third party fire and theft: Is the minimum level of motor cover required legally and these policies are designed to protect victims of accidents in which your car in involved. These policies do not protect against injuries sustained by the policyholder or damage to the car in event of a fault accident. The policy does provides compensation if your car is stolen or damaged through fire.

Third party insurance: UK law requires every person in control of a vehicle to have at least third party insurance which covers against the liability for injuries to others and for damage to another’s property, as a result of an accident. Third party insurance offers no cover for damage to yourself or your vehicle.

U

Underwriter: An individual working for an insurer who accepts business on the company’s behalf.

Underwriting: Is the act of assessing a risk and the terms on which it can be accepted.

Uninsured/Underinsured Coverage: A policy which provides cover if the party at fault does not have insurance.

Utmost good faith: Both the insurer and the insured have the duty to disclose full and accurate information when a policy is taken out. Failure to do so by the insured may render the policy invalid.

V

Voluntary Excess: Some insurers allow you to increase the amount of excess you are liable to pay in the event of an accident. The extra amount you agree to pay over and above the compulsory excess set out in your policy is called your voluntary excess. A bigger excess reduces the financial risk carried by your insurance company and as a consequence, they are able to offer you a considerably lower premium.