Insurance Glossary

Act of God The expression Act of God refers to natural events that can't be foreseen or predicted. Insurance policies often exclude large-scale disasters or acts of war, however it is not true to say that insurance will exclude what are known as Acts of God.

All risks An insurance policy that covers all risks - except those not listed under its exclusions. An all risks section of a home policy, for example, covers possessions such as cameras and watches when taken outside the house. Covers additional risks not normally covered under standard contents cover. Customers can specify certain possessions, such as a camera, as all risk on their policies. Will cover the items away from home, in the car, on holidays, etc.

Accidental damage cover Insurance against damage to goods rather than for example by loss or theft. Home insurance will replace possessions that are stolen or damaged by a fire or a flood, but it doesn't protect against more minor and frankly, more common hazards including errant pets, angry children or dangerous DIY-ers. A policy including full accidental damage cover will include such occurrences.

Annual Premium Premium due on renewal date or at inception of an annual policy.

Annual policy A policy renewable annually. For travel, an insurance policy that applies all year round rather than just for a single journey or holiday. (Some policies are not renewable.)

Authorised Advisor Category of Intermediary as regulated by Irish Financial Services Regulatory Authority. The principal distinction is that Authorised Advisor must recommend the most suitable product on the market for the client irrespective of the appointments (agencies) he holds.

Average Clause Applies in the case of under insurance. See under insurance below

Full Bonus Protection Where for an additional premium the insurer will protect the entire no claim bonus in the event of a claim. Subject to conditions, ask for full details. See also step back bonus

Buildings insurance A policy covering the structure of a house or other building against a number of different risks.

Breakdown cover A policy that provides recovery and repair services for motorists. Traditionally, breakdown services were provided by the RAC and the AA, but more recently insurance companies have come in on the act, offering recovery alongside car or bike insurance.

Broker Term was traditionally used to describe an independent intermediary who sells policies from several insurance companies, particularly as opposed to a tied agent. See Multi Agency Intermediary, Authorised Advisor, Mortgage Intermediary.

Buildings insurance A policy that covers the fabric of a building against damage from hazards such as flood, fire or subsidence. A policy will pay to rebuild or repair the property. Buildings insurance is usually a requirement if you have a mortgage.

Business equipment Anything used for a business was traditionally excluded from a standard home insurance policy, however Insurers are now offering limited cover in some cases. This can cover valuable items such as faxes and computers. If you work from home, it pays to check the exact conditions of a policy to make sure you are covered. Home computers that are not used for business - for example for games - are covered as standard.

Car insurance Third party only covers legal liabilities arising from the use of a motor vehicle. Third party is compulsory under the road traffic acts. Fire and theft covers your own vehicle for fire or theft risk, and Comprehensive policies also cover accidental damage to your own vehicle.

Certificate Document issued by insurers as evidence that insurance is in force to meet the requirements of the law (notably for car insurance).

Claim When a policyholder or beneficiary seeks payment or settlement under the terms of a policy. The term used to describe the process of getting an insurance company to pay out on the policy you bought from them.

Combined policy A policy, which combines different covers, which were once traditionally sold separately. Example Commercial combined policy covering Fire & Perils, Loss of Profits, Burglary, Glass, Employers and Public Liability would up to the 1970's often been issued as separate policies. There are now issued on one document is the majority of cases.

Comprehensive insurance A policy covering a number of types of loss or damage. The term is used mainly in car insurance, in which case it refers to a policy covering third party, and also fire theft and accidental damage to your own car. Open driving may or may not be included.

Consequential Loss Insurance Now more often called loss of profits cover, see loss of profits below.

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.

Contents insurance (Home) Cover for household possessions. As a general rule, contents cover insures anything that can be moved while buildings cover insures anything that can't, such as the windows or bathroom fittings. Contents cover doesn't always include jewellery and cash as standard, or items while removed from the home. Review your requirements as necessary. Remember to increase your sums insured when additional contents are purchased.

Cover Note A document giving temporary evidence of cover while the policy and certificate are being prepared. Seldom issued nowadays as full yearly documents are usually issued immediately.

Domestic Outbuildings Home policy buildings sum insured is deemed to include domestic outbuildings. However outbuildings used for business must be advised to the broker / insurer, as these are not insured and may involve material fact. See also Material fact

Dual Life Type of life policy, covering two lives, where both lives are insured independently on one policy and where policy could have two payouts. See also Joint Life

Employers Liability cover Covers an employer's Legal Liability for injury to employees. This used to be referred to as workman's compensation policy not so long ago!

Endorsement Refers to a document issued to amend a policy / schedule, which when received should be kept with the policy document.

Excess The amount of a claim a policyholder agrees to pay if he or she suffers a loss. An excess is often standard with some policies such as car insurance or travel. So if you have an excess of €100 and agreed cost of repairing your car is €1,200 the insurance company pay €1,100 and you pay €100. Voluntary excess cuts the cost of most insurance premiums.

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

Financial Regulator, the The regulator in Rep. Of Ireland for Financial and Insurance services.

Financial Services Ombudsman, the In the event that you remain dissatisfied with a regulated firm’s handling of and response to a complaint, contact may be made with The Financial Services Ombudsman, 32 Upper Merrion St., Dublin 2, lo–call 1890 88 20 90

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 EU policies.

High-risk occupation A job that makes a person statistically more likely to have an accident. Travel and motor insurance can exclude people with some jobs, or charge higher premiums.

Government levy An Irish Government tax and levy imposed on most non-life insurance premiums, presently 2 per cent.

Income Protection Policy Was previously referred to as permanent health insurance. Policy geared towards protecting the policyholder's income up to retirement age from risks of accident or illness. Benefits usually payable to age 60, or 65, can be indexed. The premium for this cover depends on the age, occupation and income of the Proposer.

Insurable Interest This must exist for a valid policy to be taken out. A simple example is that you could not insure your neighbour's house (unless you bought the house first)

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

I.F.S.R.A. Irish Financial Services Regulatory Authority, re-named “The Financial Regulator” in 2005.

Joint Life Related to life policies. Joint life first death covers one payout only, i.e. the first party on the joint life policy to die. See also Dual Life

The Insured A person covered by an insurance policy, the policyholder

Knock for knock An agreement between some insurance companies to cut down on paperwork and legal action. Where accident involves two vehicles insured by participating insurers, both insurers might pay for the costs of claims for their own customers, and do not seek recovery of outlay from the other participating insurer.

Legal expenses insurance Insurance that covers the costs of private legal action, for example disputes with neighbours or trades people. Sometimes available as an add-on to home insurance. Covers the cost of legal proceedings in circumstances defined in the policy.

Liability Legal responsibility for causing loss or damage to or injury to someone else.

Lloyds of London An insurance market organised into syndicates, which underwrite most types of policy.

Public Loss Adjuster A person who negotiates claims on behalf of policyholders, and is paid a fee by the policyholder for this service. Not to be confused with Loss Adjustor, whose aim is precisely the opposite - i.e. to reduce insurance company payouts.

Loss of Profits Insurance Commercial Product, covers a business for the loss of profit resulting from the operation of an insured peril, e.g. fire. The business can obtain additional covers for temporary alternative premises and additional expenses under this section. The premium is based on the type of business and the amount of profit covered.

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.

Material fact Information that would affect an insurance company's willingness to accept a policy, or the premium it would charge. Failing to disclose a material fact could invalidate a policy. Typical examples include previous driving convictions or a history of subsidence in a house. See also utmost good faith

Mechanical breakdown insurance

MBI policies are better known as extended warranties for cars. They are not really warranties at all, but insurance policies that pay out if certain faults arise with a car.

Mortgage Protection A life policy designed to cover the outstanding balance on a mortgage should the mortgage holder die during the term of the mortgage. The cover reduced throughout the term and therefore this cover is low cost. Premium remains same throughout the term. Also called reducing term insurance

Mortgage Intermediary Category of Intermediary as regulated by Irish Financial Services Regulatory Authority. The Mortgage Intermediary must recommend the most suitable product on the market for the client available from the product producer's appointments (agencies) he holds. He must give the client a list of these agencies.

Multi trip Another term used to describe Travel insurance that covers multiple holiday or business trips, for a specified length of time, normally one year.

Multi Agency Intermediary Category of Intermediary as regulated by Irish Financial Services Regulatory Authority. The Multi Agency Intermediary must recommend the most suitable product on the market for the client available from the product producer's appointments (agencies) he holds. He must give the client a list of these agencies.

Mineral Felt Felt roofs are a problem for insurers due to their almost inevitable failure in the Irish weather. Insurers will normally cover felt roofs up to a small percentage of overall roof area, however, the felt roof details must be advised to the insurer. See material fact and also see Standard Construction

Mutual An insurance company (or Building Society, etc) that is owned by its policyholders.

Named driver

A driver specified on an insurance policy who is not the vehicle's owner. Named additional drivers is a cheaper option than open driving insurance.

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.

No claims bonus A discount that grows for every year without a claim. No claims bonuses are most common with motor insurance, but they are also sometimes available on home insurance. See also step back bonus, full bonus protection

Open Driving Insurance that allows anyone to drive a vehicle, not just the owner / policyholder. Can be restricted to drivers over 30, or over 25, etc. Unrestricted open driving is available in some limited cases. But, open driving policies only cover drivers if they have permission to use the car. Some people still confuse open driving with fully comprehensive.

Personal possessions cover Insurance for personal items such as money, jewellery and luggage. Normally an all risk type policy, see all risks above

Personal Accident Cover Policy covering specific benefits if the insured person is injured and unable to work as a result of an accident. Optional covers for Weekly Income and larger lump sum payouts for death, loss of limb, etc. These policies usually pay weekly benefit for shorter terms e.g. 2 years.

Personal Accident and Sickness Cover More expensive policy, covering specific benefits if the insured person is injured and unable to work as a result of an accident or as a result of illness. Optional covers for Weekly Income and larger lump sum payouts for death, loss of limb, etc. These policies usually pay weekly benefit for shorter terms e.g. 2 years.

Pluvius Insurance Covers against losses arising as a result of bad weather, principally rain. Also known as event insurance'. Typically taken out by event managers or promoters for spectator events.

Policy The document that details the contract between the insurer and the policyholder.

Policyholder Person to whom the insurer issues the policy. Normally this is the person who benefits from an insurance policy.

Pre Accident Value (P.A.V.) Refers to the value of for example, a vehicle before the damage occurred. A loss adjuster using Trade handbooks and market data calculates this value. The P.A.V has no bearing on the price paid for the car, and can sometimes highlight cases where too much was paid for a car, or generally lead to disputes.

Premium The amount a customer has to pay in return for insurance cover.

Proposer Person or company proposing to take out a policy.

Professional Indemnity Insurance

Protects professionals, such as lawyers, against liability claims resulting from negligent work.

Public Liability Policy Covers the insured's legal liability for injury or damage caused to others.

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

Roadside rescue See breakdown cover.

Schedule Pages inserted in policy containing the policyholder's unique details, terms, and conditions, and which refers to and forms part of the policy document.

Settlement When an insurer pays a claim.

Single trip Travel insurance that covers one holiday or business trip, for a specified length of time. See also multi trip, or annual travel

Step Back Bonus Sounds like something negative, but is an added benefit in the event of a claim, some of your bonus is protected. See also full protected bonus

Standard Construction Refers to the type of construction of buildings proposed for insurance. Normally means walls of concrete or stone , and roof of slate, tiles, or sometimes steel construction. It is essential that full details of construction must be advised to the broker or insurer, especially details of any felt or other flat roof or non-standard construction. See also mineral felt

Terrorism Now generally excluded from all property damage insurances.

Term Assurance Classification of life policy. Taken out for a pre-selected term, e.g. 20 years. Premiums are lower because the policy is for a specific term rather than for example whole of life. See also Joint life, Dual Life.

Third party only A cheap and basic form of motor insurance. Third party covers damage to others' cars but not to your own. It's cheaper than comprehensive cover or third party fire and theft cover. If you can afford comprehensive insurance, this is almost always a better option, unless vehicle is very old and of low value.

The Third Party Someone involved in a claim who is neither the policyholder nor the insurer. Usually refers to the other person or party involved in an accident.

Sum Insured The maximum an insurance company will pay for a claim. Some policies, such as travel insurance, come with built-in sums insured. Others, such as home insurance, leave it for the customer to choose the appropriate level of cover, and work out the cost accordingly. In life insurance, the amount which is guaranteed to be paid and to which bonuses may be added.

Under-insurance When a customer takes out too little insurance, paying smaller premiums than they should. Insurance companies take a dim view on under-insurance, and they will almost always scale down a claim as a result. So, if you insure a House for €100,000 when it's correct sum insured should be €150,000, they will only pay out €100,000 for a total loss, Furthermore, if the home sustains more minor damage, the insurer would only pay two thirds of the claim in the above example.

Underwriter Person employed by an insurance company who decides whether to accept a risk and calculates the premium to be charged.

Utmost Good Faith And Material Facts The insurance company depends on you acting with the utmost good faith. This means that you must tell the insurance company about any material fact' (i.e. any fact which could affect your cover, your premium or the underwriter's decision to cover you). This is very important since one of the most common reasons why insurers don't pay claims is that they don't have all the material facts.

Warranty A policy condition, which, if not met, invalidates the cover.

Write Off A damaged vehicle, which is not repairable, or one, which would cost more to repair than the car was worth before the damage occurred. Also known as a total loss'. This means that the cost of repairing the vehicle is more than it is worth at today's market value. Your insurance company's assessor will look at the car and work out what it was worth before the accident, taking into account the mileage and condition of the car. The amount paid to you will be what the car was worth before the accident, less its scrap value and any excess that applies to your policy.