Insurance Glossary

B

Beneficiary: The person or organisation the claim payment is made to. For a home bought with a loan, for example, the beneficiary is often the lending bank.

C

Cancellation: Ending a policy before it expires. The premium for the unused period may be refunded according to the policy conditions.
Claim: A loss suffered by the insured because of a covered event, and the request made to the insurer to pay for it.
Claim Notification: Reporting a loss to the insurer. Doing it within the period set in the policy and with the required documents helps the claim move quickly.
Compulsory Motor Insurance: Insurance every motor vehicle owner must hold by law. It pays for injury and damage the vehicle causes to third parties, but not for damage to the vehicle itself.
Coverage: Each of the risks a policy protects against. The main cover can be widened with additional cover options.

D

Deductible (Excess): The amount or percentage taken off a claim payment and paid by the insured themselves. The higher the deductible, the lower the premium usually is.
Duty of Disclosure: The policyholder's duty to give accurate and complete information that affects the risk when taking out a policy. Wrong or missing information can reduce or void a claim payment.

E

Employer's Liability Insurance: Insurance that covers compensation claims brought against an employer for losses employees suffer in workplace accidents.
Endorsement: An add-on document recording a change made during the policy period, such as a new address, vehicle, cover or sum insured. It forms part of the policy.
Exclusion: A situation the policy expressly does not cover. No claim is paid for an excluded event, so exclusions are worth reading carefully in the policy conditions.

F

Fire Insurance: Insurance that protects a building and its contents against fire, lightning and explosion. Further risks such as flood or earthquake can be added as extra cover.

H

Home Insurance: A single policy that protects your home and belongings against risks such as fire, theft and water damage.

I

Indemnity: The amount the insurer pays for a covered loss under the policy conditions.
Insurance Agency: An authorised intermediary that issues policies on behalf of an insurer and gives customers quotes and advice.
Insurance Policy: The document that records the contract between the insurer and the policyholder. It sets out which risks are covered, for how long and up to what amount, the premium, and the rights and duties of both sides.
Insured: The person or organisation whose life, health, property or liability is protected by the policy.
Insurer: The insurance company that takes on the risk in return for the premium and undertakes to pay claims covered by the policy.

L

Loss Adjuster: An independent expert who inspects a loss and establishes its cause and amount. The adjuster's report is the basis for calculating the claim payment.

M

Motor Own Damage (Kasko): Optional motor insurance that pays for damage to your own vehicle, such as from a collision, rollover, fire or theft, under the policy conditions.

N

No-Claims Discount: A premium discount given on renewal to an insured who made no claims during the policy period. Common in motor insurance.

O

Overinsurance: When the sum insured is higher than the real value of the property. Since a claim cannot exceed the real value, the extra premium buys no extra cover.

P

Partial Loss: Damage to the insured vehicle or property that can be repaired. The claim is calculated from the repair costs.
Personal Accident Insurance: Insurance that pays the amounts set in the policy if the insured dies, is permanently disabled or needs treatment because of an accident.
Policy Period: The time between the policy's start and end dates. Cover only applies to events within this period; most policies run for one year.
Policyholder: The person or organisation that takes out the policy with the insurer and is responsible for paying the premium. Often the same as the insured, but not always.
Premium: The price paid to the insurer for cover. It can be paid upfront or in instalments, and depends on the size of the risk, the cover chosen and the sum insured.
Professional Liability Insurance: Insurance that pays for losses that professionals such as doctors, engineers and lawyers cause to third parties through mistakes or negligence in their work.

Q

Quote: The premium and terms an insurer offers for a given cover and amount. Once the quote is accepted and the premium paid, the policy is issued.

R

Reinsurance: An insurer passing part of the risks it has taken on to another insurer (the reinsurer). It strengthens the ability to pay large claims.
Renewal: Issuing an expiring policy again for a new period. On renewal the premium is recalculated using the claims history and current values.
Risk: An uncertain event that could cause the insured a loss, where it is not known whether or when it will happen. Fire, accidents, theft and floods are all risks.

S

Subrogation: The insurer's right, after paying a claim, to recover that amount from the party at fault or from that party's insurer.
Sum Insured: The value of the insured property or cover as stated in the policy. It sets the most the insurer will pay for a claim.

T

Third Party: A person or organisation that is not a party to the insurance contract and suffers a loss caused by the insured.
Total Loss: Damage so severe that the insured vehicle or property cannot be repaired, or repairs would cost close to its value. The claim is then usually paid based on its market value.

U

Underinsurance: When the sum insured is lower than the real value of the property. A claim payment may then be reduced in the same proportion.

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