Insurance Glossary
Here is a glossary of terms you may have heard or seen used in the world of insurance. These definitions are intended for general guidance to help you have a better understanding of a word or phrase you might not be familiar with.
If you have any questions about insurance terminology or need any support or advice, a member of our team in any of our Howden branches would be more than happy to assist you.
Insurance terms A-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)
A
Absolute Owner: The person who has complete control over the policy and has the right to do whatever they would like to whatever it is that they own, e.g., a policy, an item, a property, etc.
Accident: an event or occurrence that is unforeseen and unintended, resulting in bodily injury or property damage.
Accidental damage: Damage inflicted on a property or belongings that occurs unexpectedly and unintentionally.
Accidental death: A death that occurs as a result of an unexpected and unintended event is known as an accident.
Accidental death benefit: A form of insurance that will pay out a benefit if the insured dies because of an accident.
Accrue: In insurance, this term is often used to describe how interest or dividends that are earned on an investment or policy have accumulated or grown over time.
Act of God: an event or natural disaster that is uninfluenced by humans and could not have been avoided or foreseen.
Actual cash value (ACV): The fair market value of a property or item at the time of loss or damage. The actual cash value is the amount that an insurer will pay to replace or repair the property.
Actuary: A professional who uses their expertise and statistical analysis skills to evaluate and predict risks and assess insurance premiums.
Addendum: an additional document that amends the terms of an existing insurance policy, either removing or adding coverage depending on the circumstances.
Additional premium: An extra amount of money is paid by the policyholder to the insurance company to provide additional coverage or to cover an increased risk.
Affidavit: A written statement made under oath is often used in insurance claims to provide evidence of a loss or damage.
Agent: A person who represents an insurance company and sells insurance policies to customers.
Aggregate limit of indemnity: The maximum amount an insurance company will pay out for all claims during a specific period, usually one policy year.
Allocation rate: The percentage of the premium paid by the policyholder that is allocated to investments or other accounts within an insurance policy.
All Risks: an insurance policy that covers all risks of loss or damage to the insured property, except for those specifically excluded in the policy.
Annual allowance: The maximum amount an individual can contribute to a pension plan or retirement account each year and still receive tax benefits.
Annual management charge: The fee charged by an insurance company or investment manager for managing an investment or insurance policy.
Annual payment: a premium or contribution that is paid once a year, usually for an insurance policy or retirement account.
Annual percentage rate: The interest rate charged on a loan or credit card is expressed as an annual percentage of the amount borrowed.
Annual premium: The amount a policyholder pays each year for an insurance policy.
Annuitant: The person who receives payments from an annuity.
Annuity: A financial product that provides a fixed income stream in exchange for a lump-sum payment or series of payments.
Annuity protection: A feature of some annuity products is that they guarantee a minimum income stream for a set period, even if the annuitant dies before the end of the period.
Annuity rate: The rate at which an annuity pays out income is usually expressed as a percentage of the initial investment.
Appointed representative: A person or organisation authorised to represent an insurance company in the sale of insurance policies.
Assets: Anything owned by an individual or organisation that has value, such as cash, investments, or property.
Assurance: A type of insurance that provides a guaranteed benefit, such as a fixed sum of money, regardless of the circumstances.
Authorised insurer: An insurance company that is licenced and regulated by a government authority to provide insurance in a specific jurisdiction.
Average: A condition in an insurance policy that requires the insured to share in the loss when the insured value of the property is less than the actual value of the property at the time of the loss.
B
Beneficiary (pensions): The person or entity designated to receive pension benefits upon the death of the plan participant.
Benefit: The amount paid by an insurance company to a policyholder or beneficiary for a covered loss or event.
Bid or offer spread: The difference between the bid price (the price at which a buyer is willing to purchase a security) and the offer price (the price at which a seller is willing to sell a security).
Bid price: The price at which a buyer is willing to purchase a security.
Binder: a temporary insurance agreement that provides coverage until a formal policy is issued.
Bond: A type of investment that represents a loan made by an investor to a borrower, typically a government or corporation.
Bonus: An additional payment or benefit paid by an insurance company or investment fund.
Broker: an insurance professional who represents clients and helps them find insurance policies that best meet their needs.
Business Insurance: insurance that provides protection for businesses against risks such as property damage, liability claims, and business interruption.
Business interruption: coverage that provides financial protection for a business in the event of a disruption to normal operations, such as due to a natural disaster or equipment failure. Business interruption is covered under a business insurance contract.
C
Cancellation: The termination of an insurance policy before its expiration date.
Cash in value: The amount of cash that can be obtained by surrendering an insurance policy before the end of the term.
Caveat: a warning or condition attached to an agreement or contract, indicating that certain provisions or clauses must be adhered to.
Claim: A formal request made to an insurance company to pay for a loss or damage covered by an insurance policy.
Claim frequency: The number of claims filed against an insurance policy during a specified period, typically a year.
Claims and underwriting exchange: A database is used by insurance companies to share information about claims and underwriting activities.
Co-insurance is a cost-sharing arrangement in which the policyholder and insurance company each pay a portion of the cost of a covered loss.
Collective investment scheme: an investment vehicle that pools funds from multiple investors to invest in a diversified portfolio of assets.
Commercial business: a business that is engaged in activities to generate profits, such as selling goods or services.
Commission: The fee paid to an insurance agent or broker for selling an insurance policy.
Commutation: The process of converting a future stream of income or payments into a lump-sum payment.
Composite insurer: An insurance company that offers both life insurance and non-life insurance products.
Compulsory: required by law or regulation.
Compulsory excess: There is a minimum amount that the policyholder must pay towards a claim before the insurance company pays it. pay out.
Concealment: The failure of the insured to disclose material facts or information that could affect the underwriting of an insurance policy.
Consequential Loss: A loss that is not a direct result of a covered event but is a result of the covered event.
Contents policy: an insurance policy that covers loss or damage to the contents of a property, such as furniture, appliances, and personal belongings.
Contestable period: The period during which an insurance company can investigate and deny a claim based on misrepresentation or non-disclosure by the policyholder.
Contract: An agreement between two or more parties that creates legal obligations.
Contracted out: a pension scheme that is exempt from certain government regulations in exchange for providing certain benefits to its members.
Contribution: The amount paid by the policyholder towards an insurance policy or pension plan.
Convertible term assurance: A type of life insurance policy that can be converted to a different type of policy, such as a whole life policy, at a later date.
Cooling off period: The period of time during which a policyholder can cancel an insurance policy and receive a refund of any premiums paid.
Coverage: the scope of protection provided by an insurance policy.
Cover Note: A temporary insurance document that provides proof of insurance coverage until the full policy is issued.
Credit: The ability to borrow money or receive goods or services in exchange for a promise to pay in the future.
Creditor: A person or entity to whom money is owed.
Current assets: Assets that can be easily converted into cash, such as cash, accounts receivable, and inventory.
Current liabilities: Debts that must be paid within one year, such as accounts payable and short-term loans.
D
Decarbonisation is the process of reducing carbon emissions and transitioning to a low-carbon economy.
Declined risk: A risk that an insurance company has determined is too high to insure.
Decreasing term insurance: A type of life insurance policy in which the death benefit decreases over time.
Decumulation: The process of converting retirement savings or pension benefits into a stream of income during retirement.
Deductible: The amount that the policyholder must pay towards a claim before the insurance company will pay out.
Default fund: The default investment option for members of a pension scheme who do not actively choose a different investment option.
Deferred premium: a premium payment that is postponed to a future date.
Defined ambition: a type of pension scheme that provides a target benefit level but does not guarantee a specific benefit.
Defined benefit pension scheme: A type of pension scheme that guarantees a specific level of retirement income based on a formula that takes into account factors such as salary and length of service.
Defined contribution pension scheme: a type of pension scheme in which the retirement benefit is based on the amount of money contributed to the plan and the performance of the investments in the plan.
Dependant: a person who relies on someone else for financial support, such as a child, spouse, or elderly parent.
Depreciation: The decrease in the value of an asset over time due to wear and tear, age, or other factors.
Direct sales: The process of selling insurance products directly to customers without the involvement of intermediaries such as brokers or agents.
Distribution bond: a type of investment product that combines a bond with a unit trust, allowing investors to receive income from the bond while also benefiting from potential capital gains from the unit trust.
Distributor: an intermediary that sells financial products such as insurance or investment products on behalf of an insurance or investment company.
E
Eligible capital: The amount of capital that an insurer is required to hold to meet regulatory requirements.
Endorsement: A written amendment to an insurance policy that changes the terms and conditions of the policy.
Endowment: A life insurance policy that pays out a lump sum of money at the end of a specified term, or upon the death of the policyholder.
Endowment policy: A life insurance policy that combines insurance coverage with savings, allowing policyholders to build up a cash value over time.
Enhanced annuity: An annuity that provides a higher income pay out to individuals with certain medical conditions or lifestyle factors that could shorten their life expectancy.
Escalating annuity: an annuity that increases in value over time to account for inflation or other cost-of-living adjustments.
Escalation benefit: A feature of some insurance policies that increases the value of the benefit pay out over time to account for inflation or other cost-of-living adjustments.
Evidence of insurability: Information that an insurer may require from an applicant in order to determine whether or not to provide coverage, such as medical history, lifestyle habits, or occupation.
Excess: The amount that an insurance policyholder is responsible for paying before the insurance company begins to cover costs.
Exclusion: A provision in an insurance policy that specifies circumstances or events that are not covered by the policy.
Ex-gratia payment: A payment made by an insurance company out of goodwill rather than as part of a contractual obligation.
Export credit insurance: insurance that protects exporters against the risk of non-payment by foreign buyers.
Exposure: The degree to which an individual or company is at risk of loss due to a specific event or circumstance.
Extended warranty: A type of insurance product that provides additional coverage beyond the manufacturer's warranty on a product.
F
Family income benefit: A life insurance policy that pays out a regular income to dependents in the event of the policyholder's death.
Fixed asset: an asset that has a long-term value to a company, such as personal property, equipment, or machinery.
First Loss Insurance: a property insurance policy that provides coverage for a specific amount of loss, regardless of the total value of the insured property.
Fixed interest rate: an interest rate that remains the same over the life of a loan or investment.
Friendly society: a mutual insurance company that provides insurance and other financial services to its members.
G
General insurance: Insurance policies that provide coverage for non-life events, such as personal property damage, liability, or theft.
Glass replacement: insurance coverage that pays for the replacement of broken or damaged glass in a home or vehicle.
Gross: Total revenue or income before expenses or deductions are considered.
Gross interest: The interest paid on an investment before taxes or fees are deducted.
Gross premium: The total amount of money paid by an insurance policyholder for coverage before any deductions or adjustments.
Group personal pension: a pension plan offered by an employer to its employees, where each employee has their own individual pension account.
Guarantee period: a specified period during which an insurance policy will provide coverage, regardless of changes in circumstances or risk factors.
Guaranteed annuity rate: an annuity that provides a guaranteed income pay-out rate for the life of the annuitant, regardless of changes in market conditions or interest rates.
Guaranteed bond: a type of bond that guarantees a specific rate of return to the investor. This means that regardless of market conditions, the investor will receive the promised return on their investment.
Guaranteed equity product: an investment product that offers a guarantee of a minimum return on the invested capital, typically with some potential for upside gains. These products can take many different forms, but generally involve some combination of equity investments and derivative contracts.
Guaranteed minimum pension: a pension benefit that is guaranteed to be paid out to the individual for the rest of their life, regardless of how long they live. This type of pension benefit is often provided by defined-benefit pension plans.
Guaranteed premiums are a type of insurance premium where the premium amount is guaranteed to remain the same for the duration of the policy. This can provide predictability and stability for the policyholder, as they will know exactly how much they need to budget for their insurance costs over time.
H
Holiday insurance: A type of insurance that provides coverage for travel-related risks, such as trip cancellations, lost luggage, and medical emergencies while travelling
Home foreign policy: an insurance policy that provides coverage for a person's personal property while it is outside of their home country. This type of policy may also provide coverage for medical emergencies and other travel-related risks.
I
Inception date: The date on which an insurance policy becomes effective.
Income drawdown is a retirement income strategy that involves withdrawing money from a pension pot as needed rather than purchasing an annuity.
Income tax: a tax on income that is collected by the government.
Increasing term: A type of life insurancepolicy where the death benefit increases over time.
Indemnity: A type of insurance that provides protection against financial losses that may result from a specific event.
Independent financial adviser: a professional who provides financial advice and recommendations to clients without being affiliated with a particular financial institution.
Index-linked: refers to an investment or insurance policy that is tied to an index, such as the stock market or inflation rate.
Individual policy: an insurance policy that is designed to provide coverage for an individual rather than a group of people.
Individual savings account: A tax-advantaged savings account that is available to residents of the United Kingdom.
Inflation: The rate at which the general price level of goods and services in an economy is increasing over time.
Insolvency: a financial state where an individual or organisation is unable to pay their debts.
Insolvent: refers to an individual or organisation that is unable to pay their debts.
Insurable interest: A financial interest in a property or person that would result in financial loss if that property or person were damaged or lost.
Insurance: A financial product that provides protection against certain risks in exchange for a premium.
Insurance contract: A legal agreement between an insurer and an insured that sets out the terms and conditions of the insurance coverage, including the obligations and responsibilities of both parties.
Insurance company: a company that provides insurance products and services.
Insurance policy: A written agreement between an insurer and an insured that outlines the terms and conditions of the insurance coverage, including the risks covered, the premium to be paid, and any exclusions or limitations.
Insured: The person or entity that is covered by an insurance policy.
Insured turnover: The total amount of sales generated by a company that is covered by an insurance policy.
Insurer: The company that provides insurance and coverage.
Intangible assets: assets that do not have a physical presence, such as patents, trademarks, and intellectual property.
Intellectual property rights: legal rights that protect the creations of the human mind, such as inventions, literary and artistic works, and symbols, names, and images used in commerce.
Intermediary: A person or company that acts as a middleman between buyers and sellers of financial products and services.
Intestate or intestacy: refers to a situation where a person dies without a valid will in place.
Investment: The act of putting money into a financial product or asset with the expectation of earning a return.
Investment income: Income earned from investments, such as dividends or interest.
Investment-linked annuity: A type of annuity where the income payments are linked to the performance of the underlying investments.
Investment trust: A type of investment fund that is structured as a public limited company and is traded on a stock exchange.
Irrecoverable loss: a loss that cannot be recovered or compensated for.
J
Joint life insurance: A policy that covers two people, typically a married couple, under a single policy. The policy pays out a death benefit when the first person dies, and the policy ends at that point.
Joint life annuity: an insurance product that provides income payments to two people, typically a married couple, for the rest of their lives.
Joint life last survivor: an insurance product that provides income payments to two people, typically a married couple, but the payments continue until the last person dies. This type of annuity is commonly used to provide income to a surviving spouse after the death of the primary annuitant.
K
Key facts document: a document that outlines the key features of a financial product or service, such as insurance, to help consumers understand the product they are buying.
Key Person Insurance: insurance that provides financial protection to a business against the loss of a key employee, such as the owner or a key executive.
L
Lapse: The termination of an insurance policy due to non-payment of premiums or other reasons specified in the policy.
Legal Expenses Insurance: Insurance that covers the cost of legal expenses associated with a variety of legal matters, such as employment disputes or personal injury claims.
Legal liability: The legal responsibility for damages caused to another person or personal property.
Level annuity: an annuity that pays out a fixed income for the rest of the annuitant's life without any adjustments for inflation or changes in interest rates.
Level premium: a premium that remains constant over the life of an insurance policy.
Life expectancy: The expected remaining lifespan of an individual that is based on statistical data and other factors such as health and lifestyle.
Life fund: The total amount of money that an insurance business has set aside to pay out claims on life insurance policies.
Life of another: A type of life insurance policy that pays out a benefit to the policyholder if the insured person dies.
Lifetime allowance: The maximum amount of money that an individual can accumulate in a pension scheme without incurring additional taxes.
Liquidation: The process of selling off a company's assets to pay off its debts when the company is no longer able to operate or pay its debts.
Lloyds of London: A well-known insurance market in London, known for insuring unusual or high-risk items.
Loading: An additional charge added to an insurance premium to account for increased risk or other factors that may make the policy more expensive to insure.
Loss: The reduction in value or financial harm caused by a particular event, such as a fire or theft.
Loss adjuster: A person who investigates and assesses the damage or loss caused by an insured event, such as a fire or flood, and determines the amount of compensation that should be paid.
Loss assessor: A professional who represents policyholders in the settlement of insurance claims, typically for losses related to property or business.
M
Managed fund: A type of investment fund that pools money from many investors to purchase a diversified portfolio of securities managed by a professional fund manager.
Market value: The current value of an asset in the market, which is determined by the price at which it can be bought or sold.
Market value adjustment: A charge that an insurance business may apply to the value of a policy's investments, in order to adjust for changes in market conditions.
Market value excess of investments: The difference between the current market value of an insurance policy's investments and the minimum amount required to support the policy.
Material damage: Physical damage to property, which can result in a loss that can be covered by an insurance policy.
Material fact: Any information that could influence an insurance business's decision to issue or renew an insurance policy or the terms of coverage.
Maturity: The date when an insurance policy or an investment reaches the end of its term and is due to be paid out.
Mechanical Breakdown: A sudden and unforeseen mechanical failure of an insured item, such as a car or a home appliance, which can be covered by an insurance policy.
Medical Expenses Insurance: A type of insurance policy that covers the cost of medical treatment and related expenses.
Moratorium: A waiting period during which an insurer will not cover certain medical conditions for a policyholder.
Mortality rate: The number of deaths in a given population or group, usually expressed as a percentage of the total population or group.
Motor insurance anti-fraud and theft database: A database maintained by the insurance industry to help prevent motor insurance fraud and theft. It contains information on stolen vehicles and suspected fraudulent claims.
Mutual: A type of insurance business that is owned by its policyholders and operates for their benefit.
N
National brokers: These are insurance brokers with a national presence, serving clients across the country. They typically have a large network of offices and agents that provide insurance products and services to individuals and businesses.
National Insurance contributions: These are payments made by employees and employers in the UK to fund the country's social security system. The contributions go towards funding benefits such as the state pension, unemployment benefits, and sickness benefits.
Negligence: This refers to a failure to take reasonable care or to act as a reasonable person would in a particular situation, which results in harm or damage to another person or their personal property.
Net: This refers to the amount of money left after all expenses have been deducted.
New for old: This is a type of insurance policy that provides cover for the full replacement value of an item in the event of loss or damage, without considering any depreciation that may have occurred since the item was purchased.
No claims discount: A discount on an insurance premium that is offered to policyholders who do not make any claims during a specific period.
Non-disclosure: This refers to the failure of a policyholder to disclose relevant information to their insurer when taking out an insurance policy.
O
Occupational pension scheme: A retirement plan sponsored by an employer for the benefit of its employees. It provides retirement benefits to employees in the form of regular income payments, either for a specified period or for the remainder of the employee's life.
Offer price: The price at which an investment product, such as a unit trust or a mutual fund, can be purchased.
Opting out: The decision of an individual to choose not to participate in a particular scheme, program, or service, such as a pension scheme.
Over-insured: The situation where an individual or entity has purchased insurance coverage in excess of the actual value of the property or asset being insured.
P
PAYE: Pay as you earn. A system of income tax payment in which taxes are deducted directly from an employee's salary or wages by the employer and paid directly to the government.
Pecuniary loss: A financial loss that can be measured in monetary terms, such as the loss of income, profits, or savings.
Pension: A regular payment made by an employer or a government to a retired or disabled person, usually in consideration of services rendered or as a means of providing financial support in old age.
Pension benefits: The payments made to a retired or disabled person under a pension plan.
Peril: The event or circumstance that causes damage or loss to an insured property or asset, such as fire, theft, or flood.
Permanent Health Insurance: Insurance coverage that provides income replacement in the event of an insured person's disability, illness, or bodily injury.
Personal accident: An insurance policy that provides compensation in the event of an accidental personal injury resulting in disability or death.
Personal lines: Insurance coverage for individuals and families, such as car insurance, home insurance, and personal liability insurance.
Personal money: Cash, bank notes, and coins that are owned by an individual.
Phased retirement: A retirement plan in which an employee gradually reduces their working hours and transitions to full retirement over a period of time.
Policy: The insurance contract between an insurance business and the policyholder that outlines the terms and conditions of the insurance coverage.
Policy holder: The individual or entity that owns an insurance policy.
Policy schedule: The document that provides the specific details of an insurance policy, including the coverage, limits, and exclusions.
Pool re: An insurance company that provides coverage for catastrophic events, such as acts of terrorism or natural disasters, that other insurers may not be willing to cover.
Pre-existing medical condition: A health condition that existed prior to the start of an insurance policy.
Premium: The amount paid by the policyholder to the insurance company for insurance protection and coverage.
Product liability policy: An insurance policy that provides coverage for liability claims resulting from products sold or manufactured by a business.
Profit and loss account: A financial statement that shows a company's revenue, expenses, and net income or loss over a specific period of time.
Property: A physical or intangible asset that is owned by an individual or entity.
Proposal form: The document completed by an applicant for insurance coverage that provides the details of the risk to be insured.
Proposer: The individual or entity that completes the proposal form and applies for insurance coverage.
Public Liability: An insurance policy that provides coverage for liability claims resulting from the insured's negligence that causes bodily injury or property damage to a third party.
Purchased life annuity: An annuity purchased with a lump sum payment that provides regular income payments for the remainder of the annuitant's life.
Q
Quote: An estimate of the cost of insurance coverage provided by an insurer.
Quote Summary: A document that provides a summary of the key terms and conditions of an insurance policy, including the coverage and cost.
R
Rate: The amount charged by the insurer for the insurance policy, often calculated based on the level of risk associated with the policyholder or the property being insured.
Rebuild value: The estimated cost of rebuilding or repairing a damaged property to its pre-loss condition, which is used to determine the coverage limit of property insurance policies.
Regular premium: The amount of premium paid by the policyholder at regular intervals, such as monthly, quarterly, or annually, throughout the term of the insurance policy.
Regulatory capital requirement: The minimum amount of capital that an insurance company is required to hold by the regulatory authority to ensure that the company has sufficient financial resources to meet its obligations to policyholders.
Reimbursement: The payment made by the insurer to the policyholder or the third party for the loss or damage covered under the insurance policy.
Reinstatement: The process of restoring an insurance policy that has lapsed or been cancelled due to non-payment of premiums, by paying the outstanding premiums and meeting any other requirements set by the insurer.
Reinsurance: The process of transferring a portion of the risk assumed by the primary insurer to another insurer, known as the reinsurer, in exchange for a premium.
Renewal notice: The written communication sent by the insurer to the policyholder before the expiration of the insurance policy, informing them of the upcoming renewal and the details of the new premium and coverage terms.
Reserves: The amount of money set aside by the insurer to meet future claims and other obligations.
Responsible party: The person or entity responsible for causing or being liable for the loss or damage covered under the insurance policy.
Rider: An additional provision or endorsement added to the insurance policy that modifies or expands the coverage provided under the policy.
Risk: The potential for loss or damage to occur, which is the basis of the insurance contract.
Risk Management: The process of identifying, assessing, and mitigating risks to minimise the potential impact of loss.
S
Salvage: The value of damaged property that has been written off by the insurance company and transferred to them in return for payment of a claim.
Schedule: A document that sets out the details of an insurance policy, including the terms, conditions, and coverage.
Selected pension age: The age at which an individual chooses to start receiving their pension benefits.
Self-invested personal pension: A type of personal pension plan that allows individuals to make their own investment decisions and gives them greater control over their pension investments.
Single-life annuity: An annuity that provides regular income payments for the life of the named individual only.
Solvency II: A set of regulations governing the capital requirements and risk management practices of insurance companies in the European Union.
Solvency ratio: A measure of an insurance company's ability to meet its financial obligations, calculated as the ratio of its capital and surplus to its liabilities.
Stakeholder pension: A type of personal pension plan that is designed to be simple, low-cost, and flexible.
State earnings-related pension scheme: A UK government-run pension scheme that provides additional retirement benefits based on an individual's earnings.
State pension: A UK government-run pension scheme that provides a basic level of retirement income to eligible individuals.
State pension age: The age at which an individual becomes eligible to receive their state pension.
State second pension: A UK government-run pension scheme that provides additional retirement benefits based on an individual's earnings.
Statement of fact: A document that provides information about the policyholder or the risk being insured, and which the insurer uses to assess the risk and determine the premium.
Statutory money purchase illustration: A document that provides an illustration of the potential benefits that can be obtained from a personal pension plan.
Subject to survey: A condition in an insurance policy that requires the insurer to inspect the property being insured before coverage can be provided.
Subrogation: The legal process by which an insurance company can seek to recover the amount it has paid out in claims from a third party who is responsible for the loss.
Subsidence claim: A claim made under an insurance policy for damage caused by subsidence, which is the sinking or settling of the ground beneath a building.
Sum insured: The maximum amount that an insurance policy will pay out in the event of a claim.
Surety: A party who guarantees the performance of another party's contractual obligations.
Surety bond: A type of insurance policy that guarantees the performance of a specific obligation, such as the completion of a construction project.
T
Tangible asset: A physical or real asset that can be touched, such as property, machinery, or inventory.
Tax-free lump sum: A one-time payment of a portion of a pension fund that is not subject to tax.
Tax relief: A reduction in the amount of tax payable by an individual or business. It is usually given to encourage certain types of behaviour, such as investing in a pension.
Telematics-based Motor Insurance: A type of car insurance that uses technology to monitor the driving habits of the policyholder. The data collected is used to adjust the policyholder's premiums based on their driving behaviour.
Temporary claim: A claim that is paid out for a limited period of time, typically until the policyholder is able to return to work or until a specific date.
Terminal bonus: A bonus paid out to a policyholder when their life insurance policy matures or when they surrender the policy.
Third party: A person or entity other than the policyholder and the insurer who may be affected by the policy, such as someone who is injured in a car accident caused by the policyholder.
Third party administrator: A company that provides administrative services, such as claims processing and policy management, to an insurance company.
Third Party liability: Liability coverage that protects the insured against claims made by third parties for property damage or bodily injury caused by the insured.
Tied agent: An insurance agent who works exclusively for one insurance company and can only sell that company's products.
Total permanent disability: A condition that renders an individual unable to work for the rest of their life due to a bodily injury or illness. Some insurance policies include particular coverage for total permanent disability.
Trading result: A company's financial performance over a specific period of time, typically a year. It takes into account revenue, expenses, and other factors to determine the company's net income or loss for that period.
U
Underinsurance: A situation where an individual or entity has inadequate insurance coverage to protect their assets or interests against loss or damage. In such a case, the amount of the claim may not be fully paid by the insurer, leaving the policyholder to cover the shortfall.
Underlying Insurance: An insurance policy that provides the primary coverage for a particular risk.
Underpinning: A process that involves strengthening or stabilising a building or other structure by adding additional support to its foundation or structural elements.
Underwriter: A person or company that assesses risk and determines the terms and conditions of an insurance policy.
Uninsurable risk: A potential loss or liability that cannot be covered by insurance due to its high likelihood of occurring or the extreme cost of such an event.
Unit trust: A type of investment fund that pools money from individual investors to purchase a diversified portfolio of securities, such as stocks and bonds. Investors receive units in the trust, which represent their ownership share in the underlying assets.
Unitised with-profit: A type of investment fund that combines the features of a with-profit fund with unitisation.
Unit-linked annuity: A type of annuity that invests the annuitant's premiums in a range of investment funds, with the income paid out linked to the performance of those funds.
Utmost good faith: A legal principle that requires all parties to an insurance contract to act honestly and disclose all material facts that could influence the insurer's decision to accept or decline the risk. This principle is also known as uberrimae fidei.
V
Valuables: Items of personal property that are of great worth and may include jewellery, watches, precious stones and metals, furs, fine art, and antiques.
Void: Invalid or having no legal effect. In the insurance context, a policy may be void if it was obtained through fraud or misrepresentation or if the insured fails to meet certain requirements.
Voluntary excess: An optional amount that the policyholder agrees to pay towards the cost of a claim. The higher the voluntary excess, the lower the premium.
W
Warranty: A clause in an insurance policy that requires the insured to meet certain conditions for the policy to remain in effect.
Wear and tear: The gradual deterioration of property due to normal usage and exposure to the elements. Most insurance policies exclude coverage for damage caused by wear and tear.
Weather claim: A claim made under an insurance policy for damage or loss caused by adverse weather conditions such as hurricanes, tornadoes, or floods.
With-profits annuity: A type of annuity that allows the policyholder to receive a guaranteed income for life, with the potential for additional income through bonuses paid by insurance providers.
With-profits policy: A type of life insurance policy that provides a guaranteed benefit along with the potential for additional returns through bonuses paid by the insurance company.
Write-off or written loss: A situation where an asset is so severely damaged that it is no longer considered viable or repairable, and the insurance company declares it a total loss. The policyholder may be paid the current market value of the asset, less any applicable deductible or excess.