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A Guide to Insurance Terminology


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Understanding insurance terms can be a daunting and difficult task. Use this essential guide to insurance terminology to help you get your head around the key terms.

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A Guide to Insurance Terminology

  1. 1. A Guide toInsuranceTerminology
  2. 2. Understanding insurance termscan be a daunting and difficulttask. Use this essential guide toinsurance terminology to helpyou get your head around thekey terms.AdjusterThis is an independent professional individual who investigatesand assesses claims on behalf of insurance companies.AssetsAssets are the goods that you own, such as your car, house,belongings, cash and investments. Assets are anything you ownwith a tangible value.BenefitThe amount payable by an insurer.
  3. 3. Buildings and content insuranceBuildings insurance covers the cost of rebuilding or repairing yourhouse if it is damaged or destroyed. Buildings insurance cannormally be combined with contents insurance, which coversyour personal possessions within your home.Cover noteThe document issued that confirms details of your insurancecover and policy.Car insuranceAn insurance policy for your car. There are three main types,comprehensive third party and theft or third party only.Comprehensive insurance covers you for the widest range ofpossible claims in the case of accident or theft, including repairs,replacements, personal injury and other losses. Third party is theminimum cover required by law in the UK.DeductibleThe specified amount a loss must exceed before a claim ispayable. When the loss exceeds the deductible only the excessis recoverable under the policy.ExcessThe first portion of the cost of a claim or loss which the insuredhas to bear in accordance with the policy. The excess can beeither voluntary or imposed.
  4. 4. Ex gratiaThe means without legal obligation.FraudA criminal offence that refers to making false statements to aninsurance company or making a claim for a fictional loss.ClaimsA claim arises following injuryor loss to the insured, whichcauses liability to the insurerunder an insurance policy.Health InsuranceInsurance that provides youwith access to healthtreatment if you are ill or needtreatment for an injury. It canalso provide cover for regularincome if you have a longterm illness.Home Emergency CoverAn addition to home insurance that covers you for emergencyrepairs for services in your house, such as electricity, plumbing andheating.InceptionWhen an insurance contract comes into force.IndemitySecurity against financial loss. A policy of indemnity is designed toplace the insured in the same financial position as he/she wouldhave been in had the insured peril not occurred.Life insurance/assuranceA type of insurance policy that pays a lump sum on the death of theinsured person.
  5. 5. Legal Expenses CoverA type of insurance that covers you for any fees or expensesincurred for consulting a lawyer or other legal proceedings.Multi Trip Travel InsuranceA type of annual travel insurance that covers you for multipletrips in the same year.New for oldWhere insurers agree to pay the cost of property lost ordestroyed without deduction for depreciation.No claims bonusNo claims bonus is very common in motor insurance. It is a rebateof premium where no claims have been made by the insured.PremiumThe amount paid for a contract of insurance.SalvageA recovery of all or part of the value of an insured item on whicha claim has been paid. The insurer will normally dispose of theitem and apply the proceeds to reduce the cost of the claim.Sum insuredThe maximum amount payable for a claim as part of aninsurance policy.Single Trip Travel InsuranceTravel insurance cover for a single trip, which protects youagainst medical emergencies, lost baggage, cancellations andaccidents.Underlying insuranceThe primary insurance, distinct from excess insurance.UnderwriterA person who accepts business on behalf of an insurer.Wear and tearThe amount deducted from claims payments to allow for anydepreciation, which is caused by its usage.