Jargon Buster (Glossary of Terms)


Accident Insurance

Insurance against an accident, sometimes called personal accident. Often included in a motor insurance policy but check your own policy wording.

Act of God

Natural event which causes a loss without any human intervention and could not have been prevented by reasonable foresight or planning.


Statistician who calculates probability of risks for insurance purposes.


Person or company who handles work on behalf of a client, either for a fee or commission.

All Risks

Cover against most events, including accidental damage, other than those specifically excluded in the policy wording.

ASU, Accident Sicknes and Unemployment

Insurance to replace someones income if they are unable to work due to an accident, sickness or involuntary redundancy.



A common clause in an insurance policy. The principle is that in the case of underinsurance the same proportion of the claim will be paid as the sum insured forms of the total value of the insured item.

For example, if a property has a rebuild value of £500,000 but is only insured for £300,000 it is 40% underinsured. In the event that property is damaged by fire and the cost of repairs is £60,000, insurers would reduce the claim by 40%. This means the Insured only receives £36,000 from Insurers, leaving a shortfall of £24,000.


A person or company which places an insurance risk with the most suitable company, usually from the 'whole of market'.

Buildings Insurance

Cover to reimburse the owner if the building becomes damaged through a host of insured perils including storm, flood, fire, explosion, impact, earth quake, or subsidence (see your own policy wording).

Buildings and Contents Insurance

A package of both buildings insurance and contents insurance from the same company, usually offered with a discount over buying the two insurances separately.


Document which proves insurance cover is in place on the dates specified and often includes details of the risk and the risk address.


Event which causes injury or loss which makes the insurer liable under the terms of the contract issued.


The splitting of a risk between several insurers. This may be either different insurers taking responsibility for different parts of a policy or by each insurer contributing to the overall payments in the case of a claim.

Commercial Business

Insurance for companies rather than individuals. Examples include Professional Indemnity, Shop, Office, Public and Employers Liability Insurance.


Part of the premium paid for an insurance policy which goes to the agent, broker or intermediary who set up the policy on your behalf, normally in replacement of any fees waived.

Comprehensive Insurance

Normally a term used for motor vehicle insurance. Provides legal liability cover for damage to third parties and their property, as well as losses to the insured's own vehicle from accidents caused by the insured and their vehicle. Includes theft and all sections of cover including personal accident, passenger liability and sometimes cover for the contents of the vehicle (often restricted).

Consequential Loss

Monetary losses incurred after an insured event which caused a direct loss of revenue or income, often called loss of profits insurance.

Contents Insurance

A policy providing the protection of the contents within a home against damage caused by an insured peril, such as fire, flood, theft, impact or explosion. The purpose of this Home Insurance cover is to reinstate a policyholder back to the position they were in prior to the insured occurring.


Where there is more than one insurer covering the same risk, the contribution clause in a policy entitles each insurer to equally share any loss.

Cover Note

A temporary insurance document which can be issued to prove cover is in place before the full documentation is issued.


A term used to describe a risk which an insurer will not cover as it is too likely to suffer a loss or where an insurer will not accept a claim as it’s not covered by the terms of the policy.


An extra clause on an insurance policy above and beyond the standard wording, usually because of a high risk which is not sufficient to decline.


The first part of a claim which the insurer will not pay for and must therefore be paid by the policyholder.

Excess Period

The first period of a claim during which the insurer will not pay benefit.


A specific item or event which is not covered by an insurance policy.

Financial Conduct Authority (FCA)

The regulatory body responsible for insurance and other financial services.

High Net Worth

An insurance policy is often called 'High Net Worth' if the property to be the subject of the insurance is of significant value, usually where the Building rebuild sums insured exceeds £500,000 or above, or the contents sum insured is over £100,000.


The process of putting someone in the same position they were before a loss.

Insurable Interest

A person has an insurable interest in something when loss of or damage to that item would cause the person to suffer a financial or other kind of loss. You must have an insurable interest to insure any risk, including life insurance.

Insurance Company

The provider of insurance cover.

Insurance Premium Tax (IPT)

Tax levied by the government on most insurances.

Legal Expenses Insurance

A policy specially designed to provide cover for legal expeses such as employment disputes, disputes with third parties etc.


An exposure to negligent liability after the occurence of a certain event.

Lloyd's of London

The oldest insurance institution in the world.


Extra premium added for high risk cases.

Loss Adjuster

Person and/or company who investigates and judges the amount to be paid in settlement as a result of complex and sometimes large losses. Loss Adjusters are not always independent from both the insurer and the insured, they usually are employed by the insurer.

Loss Assessor

Person and/or company who decides the cause and value of damage following a loss. This may include establishing whether a loss is insured or not. Loss assessors are not always independent from both the insurer and the insured, they are usually employed by the insured.

Material Fact

Any information which may affect the underwriters' decision as to whether they will accept a risk and the terms and rates offered. Material Facts must be declared from the outset and during the period of insurance by the insured.

Monthly Benefit

The payment received each month in the event of an ongoing claim, normally as part of an ASU, MPPI or income protection policy.

Motor Insurance

Minimum compulsary road traffic act insurance for motor vehicles which will, at a minimum, pay for any damages and injury dealt to others and their possessions if you cause an accident involving your vehicle. Other types of cover are Comprehensive, Third Party Fire and Theft, Theft and Third Party.

MPPI, Mortgage Payment Protection Insurance

Insurance that enables the insured to continue to pay their mortgage if they are unable to work due to an accident, sickness or involuntary unemployment. Can also cover additional associated expenses.

See also ASU.


An insurance which will replace items with brand new equivalents in the case of a loss, rather than taking into account depreciation.

No Claim Discount (NCD) also known as No Claim Bonus (NCB)

A discount on premiums which is given if you have held the same type of insurance previously but have not made a claim.


The formal document outlining the cover provided by the insurance purchased, showing the cover, conditions, date of risk, sums insured, exclusions and person(s) insured.


The person or firm who formed the contract of insurance with the insurer.


The cost of the insurance product if you wish to take out cover.

Professional Indemnity (PI)

An insurance policy designed to provide cover against being held responsible for negligent acts including wrongful advice.

Proposal Form

Form used to collect the material facts the underwriter needs to decide a premium for an insurance policy.


The person requesting insurance, normally using a proposal form.


A percentage used to find a cost for a risk.

Renewal Notice

A letter or notice issued near the end of a period of insurance to notify the insured that cover will cease and offer new contract terms for the forthcoming period.

Residential Let

A property owned by a person or firm who is not the occupier, but lets the property to a third party to occupy.


A document, forming the basis of the contract attached to a policy, which details the cover levels provided by the insurance.


The process whereby the insurer agrees to meet a claim for an amount stated.


The process whereby the insurer pays a claim on behalf of another person or insurer and may then try to reclaim the costs from those originally liable.

Sum Insured

The maximum amount the insurer will pay in the event of an insured peril occuring.

Third Party

Any person or organisation which is not insured under an insurance contract.


Inadequate insurance coverage by the policyholder. Please also refer to Average definition.


Person who decides whether a risk is acceptable on behalf of the insurer, based on the probabilities produced by the actuaries.

Uninsured Losses

Losses incurred which are not covered as part of the insurance in force at the time.

Utmost Good Faith

Insurance contracts were based on Utmost Good Faith, a term given whereby all parties involved (normally the proposer and the insurer) must disclose all material facts which could be deemed relevant to the proposed insurance. The insurer may be able to deny liability if the proposer does not do so.

Following the introduction of the Insurance Act 2015 the duty and concept of “utmost good faith” has been replaced with a “duty of fair presentation” by the insured. This duty of the insured still requires disclosure of material information but the intention of this act is to provide transparency on the actual disclosure requirements, thus improving the customer journey. Therefore greater emphasis is placed on Insurer asking relevant questions to establish the material information they require.

Waiting Period

Normally used with ASU and MPPI insurance. This is the minimum duration for an event to become the subject of a claim, then payment will then be made as if the claim was valid from the first day of the event.