Insurance policy jargon
Many people are caught short when it comes time to make an insurance claim because they never read or understood the policy’s terms and conditions in the first place.
While policy documents might seem complicated, it’s still important to read the fine print; the last thing you want is to find out you’re missing or aren’t eligible for cover in the moments when you need it most.
The insurance industry uses a number of technical terms to define its policies – here’s a list of common terms to look out for and how to understand them:
Adjuster: A person who assess and investigates a claim on behalf of the insurer. Also sometimes referred to as a claims adjuster or loss adjuster.
Assurance: Usually used in the context of life insurance, assurance is a term used interchangeably with insurance.
Act of God: An unpreventable and unpredictable event, which could cause the loss of or damage to buildings, vehicles etc., which could not have been prevented by any amount or foresight or reasonably expected care. Also known as Vis Major.
Arbitration clause: A contract clause that states if two parties cannot agree on an appropriate claim settlement you will both hire a mutually agreed appraiser or independent mediator to settle the dispute.
Cancellation: Ending an insurance policy before it is due to finish. You may be required to pay a cancellation fee in the event of cancellation as well as a percentage of your premium. Rates are normally found in your policy documentation.
Fault claim: A claim where you are deemed at fault of the accident or incident where your insurer cannot recover any or all of their costs from the third party. Claims like theft or hit-and-runs can be classed as fault claims because there is no third party to recover the cost from.
Non-fault claim: A non-fault claim is a claim where you have been involved in an accident and your insurance company is able to recover all their costs from the third party.
Depreciation: A reduction of value over time for wear and tear of possessions.
Excess: What you are liable to pay directly towards any claim. It could be a voluntary excess to reduce the cost of what you pay for your insurance when you buy it or a compulsory excess set by your insurance company.
Exclusions: Specific risks or events that insurance companies won’t pay for as part of your cover; for example theft if you have sub-let your house. Any exclusions must be clearly set out in the terms of your policy.
Green card: Provides basic Road Traffic Act cover while you are driving abroad on holiday. Many insurers require proof of a Green card before going abroad for car insurance cover to be valid.
High risk items: Items commonly stolen from homes when burgled. Common examples include jewellery, televisions, paintings, antiques and computers.
Indemnity: The insurer will endeavour to put you back in the same state or financial position you were in prior to the loss. For example if you are in a car accident they will repair your car so you can drive it again.
Material fact: Information or facts that would affect an insurers willingness to accept a policy or the premium it could charge. If you fail to disclose a material fact you could invalidate a policy.
Owner and registered keeper: Usually the person taking out an insurance policy. Occasionally the owner and registered keeper are different people; for example a company car is owned by someone other than the registered keeper, who drives it.
Rebuilding cost: The total amount it would cost to rebuild your home if it was completely destroyed. The cost includes materials and labour and professional fees.
Single article limit: A single article limit is the maximum amount one item can be covered for on a home contents policy and is set by the insurance company. Any items exceeding the single article limit will need to be covered separately.
Third party: A person claiming against the insured. An insurer is known as a first party, the insured person (you) is known as a second party and a third party is a person claiming against you – for example another driver involved in a car accident.
Write-off: If a damaged vehicle is not repairable, or it costs more to repair the vehicle than the value of it before the damage occurred.
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