A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Accident & Health
Class of cover under the Insurance Companies Act including two main types of business - personal accident and medical expenses. Personal accident policies will pay a lump sum or weekly benefits in the event of accidental death or injury. Medical expenses insurance will pay the costs of treatment for acute conditions.

Act of God
An event, which is not the fault of any individual. Acts of God can be insurable.

Actuary
A professional person qualified to apply mathematical principles to solving long-term financial problems, primarily in connection with pensions, life insurance and investment.

Agent
A person who acts for one or small number of companies, particularly in selling insurance.

Annual Premium
See "Yearly Premium".

Assistance
The provision by an insurer or a service company of immediate practical help to resolve an insured problem (e.g. arranging medical treatment abroad/organising a roadside repair).

Assurance
See "Insurance".

Average
A policy condition that requires the amount of a claim payment to be reduced proportionately if the policyholder has not insured his property for the full amount of its value or replacement cost.

B

Benefit
The money paid by the life insurance company when a claim is made.

Betterment
The principle by which a claimant has to make a payment towards the cost of the claim because his or her property will be in better condition after repair than before the loss or damage occurred.

Broker
An "intermediary" registered with the Insurance Brokers Registration Council (IBRC) under the Insurance Brokers (Registration) Act 1977.

Business Interruption
See "Consequential Loss".

C

Capacity
Capacity is the measure of an insurer's ability to write new business. It depends on the maintenance of adequate reserves.

Captive Insurer
An insurance company set up by an industrial or commercial organisation, for example an oil company, to provide insurance to that organisation only.

Certificate
Document issued by insurers as evidence that insurance is in force to meet the requirements of the law (notably for motor and employers' liability cover).

Claim
When a policyholder or beneficiary seeks payment or settlement under the terms of a policy.

Co-Insurance
An arrangement whereby a number of separate insurance companies share in the cover of one particular risk.

Commission
Money paid by an insurance company to a broker/ independent intermediary/agent for selling policies.

Company Representative
An agent appointed by a life insurance organisation who is authorised to sell only that company's products.

Composite Insurer
A company which transacts both life and non-life insurance.

Comprehensive Insurance
A policy covering a number of types of loss or damage. The name is used mainly in the motor industry.

Condition
Part of a policy stating that certain rules must be followed, for example, the duty to take reasonable care to protect property, or to report claims to the insurance company promptly.

Contents Policy
A policy covering the contents of a home or other building against a number of different risks.

Contribution
The principle of contribution applies where a risk is insured on more than one insurance policy (for example on a travel and household policy), and the two insurers concerned may share the cost of any claim.

Cover Note
A document giving temporary evidence of cover while the policy and certificate are being prepared.

D

Direct Sources of Business
Insurance business where no intermediary is involved, including marketing sources (e.g. newspaper advertisements), telephone sales and business through branch offices.

E

Endorsement
A written amendment to an insurance policy that becomes part of it.

Excess
An amount of money that the policyholder has to pay towards the cost of a claim, for example, the first £50.

Excess of Loss Policy
Covers claims costs exceeding an amount specified in the policy.

Exclusion
Specified property, person or event that the policy does not cover.

Ex Gratia Payment
Any payment made by an insurance company that is not strictly necessary, under the terms of the policy.

Exposure
Whether, and the extent to which, an insurer is subject to losses arising from a particular risk.

F

Fatal Accident Benefit
Certain life policies will make an additional payment - over and above the sum insured - if the policyholder dies as a result of an accident.

G

General Insurance
Insurances of (non-life) risks where the policy offers cover for a limited period, usually one year.

General Liability
Covers the policyholder's legal liability for injury, property damage or financial loss caused to others.

Green Card
A document issued to policyholders motoring abroad as evidence that they have the minimum insurance cover required by the law of the country visited. Not essential for European travel, because minimum legal cover is automatically included in UK policies.

H

Holiday Insurance
A policy covering certain risks connected with holidays. Usually includes cover for the costs of unavoidable cancellation, personal accident, medical treatment abroad and lost or stolen luggage.

Home-foreign
Home foreign policies are issued to provide insurance where the business is written in one country, although the risk is actually situated abroad.

Home Service
The provision and servicing of life and non-life insurance by company agents calling regularly at policyholders' homes. (See also Industrial Branch)

Household Business
Includes insurance of both structure and contents, along with any "add-ons" included within the policy such as legal expenses.

I

Impaired Lives Register
Lists individuals who have been refused, or charged more for, life insurance, for medical reasons.

Indemnity
The principle by which policyholders are put in the same financial position after a loss as they were immediately before it.

Index-linked
Insurance where the amount of cover changes automatically in line with an index. Examples are the cost of rebuilding a house or replacing its contents.

Individual Permanent Health Insurance
Policies arranged by an individual providing for the payment of income during a period of incapacity due to ill health or accident. The benefit is paid to the policyholder until he/she is able to return to work, or until retirement.

Insurable Interest
A principle of insurance which states that someone may only take out cover if he/she stands to suffer a financial loss from an event covered by a policy. Individuals have an unlimited insurable interest in their own life and that of their spouse.

Insurance
A service that offers financial compensation for something that may or may not happen. Originally the term assurance was generally used for life cover, but now the two words are interchangeable.

Insurance Company
An organisation that takes on risks under the policies it sells in return for the payment of premiums. Companies may be "mutual" (owned by the policyholders) or "proprietary" (owned by the shareholders).

Insurance Premium Tax
A tax imposed on most non-life premiums.

Insured
A person covered by an insurance policy.

Insurer
See "Insurance Company"/"Lloyd's".

Intermediary
Person or organisation that offers advice and arranges policies for clients. Intermediaries may be either "tied" - representing one company in the case of life business or a limited number of companies for general business, or "independent" - with no limit on the number of companies with which they can deal.

J

K

L

Legal Expenses Insurance
Covers the cost of legal proceedings in circumstances defined in the policy.

Level Premium
The same premium paid throughout the term of a policy.

Liability
Legal responsibility for causing loss to someone else by injuring him or her or damaging their property.

Life Expectancy
The average length of time people are likely to live, taking into account such factors as their present age, health and occupation.

Lloyd's Members
Individuals on whose behalf Lloyd's policies are issued. They pledge all their personal wealth to pay losses. Corporate members were also introduced in 1994.

Lloyd's of London
An insurance market organised into syndicates, which underwrites most types of policy.

Loading
The extent to which an individual is charged more than the "average" for his/her insurance.

Loss Adjuster
A person, independent of an insurance company but engaged and paid by it, who checks that a claim is covered and negotiates with the policyholder the amount payable for a claim.

Loss Assessor
A person who negotiates claims on behalf of policyholders.

M

Mechanical Breakdown Insurance
Covers against the cost of breakdowns of household appliances or motor vehicles.

Mutual
An insurance company that is owned by its policyholders.

N

New-For-Old
Cover for property where an item lost or destroyed would be replaced with a brand new one, with no deduction for wear and tear. Also called "replacement as new".

Non-Motor
Includes all business written under the accident and health, general liability, pecuniary loss and property damage classes. Also known as Fire and Accident.

O

Outgo

The total expenditure of an insurer in relation to any class of insurance business, comprising the cost of claims and the insurer's business expenses, including any commission paid to sales staff, brokers or intermediaries.

P

Pecuniary Loss
Covers any financial loss that may have been incurred, e.g. business interruption and mortgage indemnity policies.

Personal Lines of Business
Any policy taken out by an individual in his/her private capacity.

Pluvius Insurance
Covers against losses arising as a result of bad weather.

Policy
The document providing full details of the contract between the insurer and the policyholder.

Policyholder
Person or organisation to which the insurer issues the policy. Normally the person to whom benefits are payable.

Pool Re
A Government-backed reinsurance scheme that meets the cost of claims over £100,000 occurring as a result of terrorist attacks in Great Britain.

Premium
The amount paid by the policyholder for insurance.

Private Medical Insurance
A policy that covers the cost of private medical treatment.

Professional Indemnity Insurance
Protects professionals against liability claims resulting from negligent work.

Proposal Form
An application for insurance cover.

Proposer
Person or company who applies to take out insurance.

Public Liability Policy
Covers legal liability for injury or damage caused to others.

Q

R

Rate
The price of insurance, usually expressed as the cost of a unit of cover, e.g. £x per £1,000.

Reinsurance
Is the cover insurance companies can purchase to protect themselves against large losses.

Renewable Single Premium Policy
Policies under which additional premiums can be paid later to provide increased benefits; these are at the policyholder's discretion and are non-contractual.

Renewal Notice
Notice sent to the policyholder inviting him/her to renew a policy for a further period and stating the premium payable.

Replacement-as-New
See "New-for-Old".

S

Savings Policies
Policies used as a savings vehicle.

Solvency Margin
The solvency margin is the excess of the reserves the insurance company holds over its liabilities.

Subrogation
The right of an insurer who has indemnified a policyholder to take over any legal rights the policyholder may have had in respect of that particular claim.

Sum Insured
The amount for which property is insured, and the maximum amount which the insurance company will pay for any claim. In life insurance, the amount which is guaranteed to be paid and to which bonuses may be added.

Syndicate
Group of underwriters at Lloyd's.

T

Temporary Policy
See "Term Policy".

Third Party
Someone involved in a claim who is neither the policyholder nor the insurer.

Trading Result
An insurer's overall profit/loss calculated as the underwriting result plus investment income.

U

Underinsurance
When the sum insured is not enough to cover the maximum possible loss or damage.

Underwriter
Person who decides whether to accept a risk and calculates the premium to be charged.

Uninsurable Risk
A risk where loss is either inevitable (e.g. a house already on fire or a person suffering from a terminal illness). Also applies where damage is gradual e.g. rust and corrosion.

Unit-Linked
See "Linked".

Utmost Good Faith
The principle of insurance that requires a proposer to give all relevant information to the insurer.

V

W

Write-Off
A damaged vehicle which is not repairable, or one that would cost more to repair than the car was worth before the damage occurred. Also known as a "total loss".

X

Y

Yearly Premium
Recurring premiums paid over the term of the policy, at intervals specified in the policy.

Z

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z