A-Z Insurance Terms

1Act of God (Force Majeure):
Unpredictable and severe events that are caused by natural forces without any human interference. Such happenings cannot be prevented by any amount of foresight, pains or care reasonably to have been expected.

This term is associated with a document setting out any agreed alterations to an insurance contract.

3Additional Premium:

A further premium payable by the insured as a result of policy amendment, that may have increased the risk or changed the policy conditions or sum insured.


A person who investigates and assesses claims on behalf of an insurance company.

5Advance Profits Insurance:

Business interruption insurance of the anticipated profits of a new enterprise or an extension to an existing business.

An individual who acts for another person (the principal) usually for reward. There are four main classes of agent that may be involved in the underwriting of insurance and reinsurance risks: members’ agents, managing agents, brokers and coverholders. In addition, there are agents which are independent businesses that provide surveys and loss adjusting services to managing agents, insurance companies and others on a worldwide basis. Furthermore, in some situations one underwriter may act as the agent of other underwriters.
7Aggrieved party:
A party who has been wronged or a person who is said to be a victim and is therefore aggrieved by an unfortunate act.
8Agreed Value Policy:
This term is most commonly associated with motor insurance. A vehicles agreed value is set at the beginning of each period of cover typically based on the fair value given for the cars make and model in the motor trade’s most commonly accepted price handbook (Car Buyers Guide). The value does not change for the period of cover.
9All Risks:
Terminology used to describe insurance against loss of or damage to property arising from any unexpected cause except those that are specifically excluded.
10Amount covered:
The current amount covered is shown on the most recent insurance schedule and the renewal notice. It is the most the insurer will pay, less any excess, for a claim that is covered by the policy.
11Annual Premium:
An annual insurance premium is defined as “the amount that someone is required to pay each year in order to keep his or her insurance policy active”. Most insurance companies offer a grace period after the due date, and if the premium is paid in this time frame, the policy is reinstated i.e. renewed for the coming year.
A system of deciding legal disputes between the insurer and the insured by use of a private tribunal outside of the court system.
Any unlawful setting fire to property.
Terminology used to describe a Public Loss Assessor or Claims Specialist. This person represents the interests of the Insurance Policyholder when they have a claim typically involving damage to physical property and loss of profits.
A term interchangeable with insurance but generally used in connection with life cover as assurance implies the certainty of an event and insurance is the probability.
This is another name used for the insured personnel.
A condition in a non-marine property insurance that if the property value has been understated the insured’s claim is reduced respectively to the understatement.
An authority given by an insurer to an intermediary to enter into, as agent for the insurer, contracts of insurance on behalf of the insurer. Some binders give an intermediary authority to deal with and settle claims against the insurer, as agent for the insurer.
A type of liability wording that expands the cover for personal injury outside physical injury, disease or death to contain other causes including mental injury or anguish, fright, false arrest, malicious prosecution, libel, slander, defamation, wrongful entry, eviction or other invasion of the right of private property, assault and battery which occurs during the period of the policy.
A person who provides advice to people on their insurance requirements and negotiates insurance contracts on their behalf with insurers in return for a fee or commission.
21Business Description:
Full disclosure of business activities as all types of activity are material fact to the insurer. Some activities may be unusual or infrequent to the business but they still need to be disclosed as these activities may be deemed a higher risk in the eyes of an insurer or underwriter. 
Termination of a policy before the expiry date.
23Caveat Emptor:
Caveat emptor is a Latin term that means “let the buyer beware.”however, Insurance contracts are NOT Caveat emptor (buyer beware) contracts. The contracts are Uberrima Fidei which is the latin terminology for “Utmost Good Faith”.
Insurers that transfer all or part of a risk to a reinsurer.
Transferring risk from an insurer to a reinsurer. A ‘cession’ is a specific reinsurance transaction. Normally, this refers to the comparative insurance of risk involved.
26Ceding Insurer:
This term is associated with the original insurer. It is the business which deals with the client, and reinsures part or all of the risk.
27Certificate of Insurance:
Proof that a policy has been issued.
28Claim Notification:
Formal notice to the insurer by or on behalf of a claimant stating that an event likely to be covered by a policy has occurred.
The party declaring a right of recovery under a contract of insurance.
30Claims History:
The history of losses suffered by an insured which have been covered by insurance. Some claims histories also record events notified to the insurer which did not result in actual claims pay-outs. These events are typically provided below the policy excess.
31Claims Ratio:
The cost of claims ratio relative to earned premiums.
A document sent by a broker to an insurer confirming and finalising an insurance policy/cover that has been arranged by the broker.
33Co-insurance (average):
Coinsurance is your share of the costs of an insurance policy typically figured as a percentage of the amount allowed to be charged for services. Individuals start paying coinsurance once they have paid their Insurance plan’s deductible. 
34Collection or Set:
A grouping of items of a sufficiently collective type, appearance or nature and which reasonably belong together though they are devalued if one or more of the group is lost or damaged.
A fee typically included within the Insurer’s premium charged by a broker or agent for services in the sale of an insurance contract.
36Common Law:
Principles of law arising from court decisions.
37Condition precedent to liability:
Full disclosure of business activities as all types of activity are material fact to the insurer. Some activities may be unusual or infrequent to the business but they still need to be disclosed as these activities may be deemed a higher risk in the eyes of an insurer or underwriter.
38Conditions precedent to policy:
Offers loss of income coverage for your business by replacing your operating income during the period when damage to the properties or other premises which prevents income from being earned.
39Conditions subsequent to policy:
Theft resulting from forceful or violent entry to the premises.
40Consequential Loss:
A number of policies normally required by a company are combined into one policy or package. For example: fire damage to property, burglary, liability, etc. Company packs are occasionally tailored to cover the risks of a specific industry or business e.g. Motor dealers, builders, etc.
Unpredictable and severe events that are caused by natural forces without any human interference. Such happenings cannot be prevented by any amount of foresight, pains or care reasonably to have been expected.
42Contra Proferentum Rule:

Legal rule by which the words of an author are to be construed against the author. Any ambiguity in an insurer’s proposal form or policy wording will be construed against the insurer. Note: This rule will only be applied where there is a real ambiguity.


An agreement between two or more parties which is enforceable by law.


An insured party who has two or more insurance policies which are covering the same interest against the same peril, the insured can make his/her claim in full against one or other of the insurers. The chosen insurer can then require the other insurers to make a proportional contribution towards that loss.

45Cooling off period:
A Cooling-off period (not less than 14 days) which stipulates that the buyer may cancel a purchase. During this period a client may return the policy and receive a full refund of premium unless a claim has been made.
46Cover and Covers:
The protection provided by the policy.
Compensation for loss endured, which is awarded by courts and endeavours to place an individual/claimant in the position that they would have been in had the loss not been suffered.
48Days of Grace:
A period of time after the renewal date of a policy has passed that allows cover to continue provided that the premium is paid before the end of the period of grace and the insured has not indicated an intention not to renew with the insurer.
49Declaration Adjustment:
A lot of liability policies are set up on the basis of expected wages and turnover for the next year. An insured is required to complete, at the end of the insurance year, actual wages and turnover for the business insured and if that is more than originally estimated, the insurer has the right to charge the surplus premium that should have been payable at the start of the year.
An insurance company may decide not to accept an insurance proposal or they may also decide to decline the acceptance of a claim.
The amount the insured party is responsible for paying for covered perils/expenses before your insurance plan begins to pay for the loss each year. This is often referred to as the “excess” on the policy.
This term refers to the individual or entity that is being sued by the plaintiff.
53Deferred Premium:
The portion of a premium which, following agreement with insurer/underwriter, is payable by instalments, usually periodical or half yearly.
54Deposit premium:
Sum paid by a client as an initial premium under an insurance policy. The deposit sum is subject to adjustment at the end of the policy period based on circumstances such as a client’s claims experience. Subsequent to any adjustment, the insured obtains a refund or is required to pay an additional premium, as the case may be.
A reduction in the worth of any type of property over a period of time as a result of use, wear and tear, or obsolescence.
56Direct Insurer:
An insurer that is directly accountable to the insured, without involving an intermediary or agent.
A disaster is said to have occurred when the normal community and organisational arrangements cannot cope with a hazard impact.
In terms of insurance, a disclaimer can be defined as “a legal statement that provides for limits on the responsibilities of an insurance agent or insurance company giving information about the policy. As a result, legal liability is reduced and sometimes even avoided”.
59Doctrine Of Precedent:
Reliance by judges on prior judicial verdicts when determining similar cases.
60Due date:
The date a policy is in force to and by when a renewal premium must be paid.
61Duty of Disclosure:
The insured has a duty to divulge all material known to be pertinent to the insurer, or that a reasonable individual in the environment could be expected to know that this information would be to be relevant for the insurer to know. The duty of disclosure applies up until a contract is entered into, and when it is renewed, varied, reinstated or extended. A person who is intending to take on insurance coverage with an organisation must be instructed about their duty to disclose all material facts before the commencement of an insurance policy.
62Effective date:
The date that your insurance policy commences with your insurance company.
63Eighths system:
A technique to calculate unearned premium, typically under a proportional reinsurance treaty where premium details are provided periodically. Risks are expected to attach typically on the middle day of each quarter. Hence, at the end of a calendar year, 7/8ths of premiums on policies accepted in the first quarter are assumed to be earned, with 1/8th unearned, etc.
Any content appearing on a policy, or supplementary citations attaching to a policy, whereby the printed terms of the policy, the parties to it, or other particulars, are wide-ranging.
65Escape of water:
Normally an insured peril which can involve the escape of water from pipes, radiators, boilers, drains and tanks.
An occurrence or situation, happening in a specific place during a particular interval of time.
An excess on an insurance policy is the first amount that must be contributed by the insured towards each claim.
A provision in a policy that excludes the insurer’s liability in certain conditions or for identified types of loss.
69Ex-Gratia payment:
A sum made by an insurer to a claimant as an act of grace, where no contractual entitlement to the claim exists. The insurer in this circumstance will make an ex gratia payment to maintain good will, public relations, or as a matter of social justice or some other non-contractual motive.
70Expiry date:
The date when your insurance policy ends.
71Facultative reinsurance:
Reinsurance that is negotiated and placed on a case-by-case basis, as opposed to the automatic protection provided under a reinsurance treaty. All facultative reinsurance arrangements are subject to a process of offer and acceptance between the parties involved.
72Financial Services & Pensions Ombudsman:
If a policyholder is dissatisfied with the outcome of his or her encounter with an insurer, they can contact the Financial Services & Pensions Ombudsman to intervene.
73First party:
The first and second parties are merely the parties to an insurance contract while a third party is not a party to the contract, but a party who seeks to be compensated for some injury or loss caused by the policyholder.
This term is associated with the saturation or covering of typically dry land by water which has escaped or overflown from another source of water meaning that the land etc. cannot be entered into due to this escape of water. A flood does not mean a storm water runoff from areas surrounding the site or water escaping from any water main, pipe, and street gutter, guttering or surface.
75Fortuitous loss:
An unanticipated loss is called a fortuitous loss. Insurers will only insure fortuitous losses. Whilst an insurer knows that there will be motor accidents, they cannot predict which insureds will suffer a loss.
A type of excess whereby claims under a certain volume are not paid. Though, claims over the franchise amount are paid in full.
The terminology “fraud or dishonesty” includes all risks of loss that may arise through dishonest acts or omissions.
78Fronting Arrangement:
The issuing of a policy by one insurer on behalf of a second insurer because the second insurer is not licensed or admitted in the state of jurisdiction for the line of business being written. The first insurer essentially issues the policy to the insured and retains legal responsibility for meeting claim payments under it, but is reinsures 100% of its exposure to the second insurer.
79Gross Premium:
This is a general term for an amount made up of the net premium plus expenses and commissions.
A circumstance that increases the probability of the happening of loss arising from a peril, or that may affect the level of the loss e.g. slippery floors, flammable liquids, and poor roads are hazards.
A significant risk assessment issue for underwriters, housekeeping concerns an impartial assessment of the extent to which an insurance policyholder upholds the general cleanliness, appearance, utility and up-keep of properties. Poor housekeeping would be demonstrated by excessive rubbish, congestion in work areas, delayed maintenance of machines, and over-all clutter.
82IBA which is now Broker Ireland:
The Irish Brokers Association is the principal representative body for Insurance brokers in Ireland.
Typically defined in insurance as: “incurred but not reported (IBNR) claims is the amount owed by an insurer to all valid claimants who have had a covered loss but have not yet reported it. Since the insurer knows neither how many of these losses have occurred, nor the severity of each loss, IBNR is necessarily an estimate”.
84Implied condition:
A condition that the law reads into a contract but which does not appear in the policy document however it is implied that the subject matter of the insurance does exist.
85Inception date:
The commencement date on which an insurance policy comes into force.
86Increased costs of working:
Normally under a business interruption policy some cover is provided for extra expenditure experienced by the insured solely for the purpose of decreasing the shortage in production following an insured occurrence.
A circumstance where an individual is incapable of paying his/her debts as and when they fall due for payment.
An establishment may not be able to settle its debts in full due to its assets being worth less than the liabilities that must be paid off.
89Insurable interest:
An individual has an insurable interest in something when loss of or damage to that thing would cause the person to suffer a financial or other kind of loss. Characteristically, insurable interest is recognised by ownership, possession, or direct relationship.
Insurance can be defined as “an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium”.
The person or business (Policyholder) covered by insurance.
An individual or business that underwrites an insurance risk; the party in an insurance contract undertaking to pay compensation.
Brokers or agents who represent clients in insurance transactions. Insurance intermediaries are contracted with multiple insurance companies and they focus on matching their client’s needs with the most suitable insurance options available on the market.
A term used to describe which courts have the power or authority to decide a specific matter.
95Jurisdiction Clause:
The parties to a contract elect which courts will have the right to adjudicate disputes under the contract.
96Knock-for-knock agreement:
An arrangement amongst motor insurers whereby each agrees to pay for its own repair costs and will forego subrogation recovery action against the other signatories, regardless of questions of fault.
97Lapsed Policy:
A policy will lapse when premium payments are missed and cash surrender value is exhausted on an insurance policy. The term lapse refers to a “lapse in coverage”, meaning that the insurance contract will no longer pay out in the event of a claim or provide any insurance coverage for the insured person at all.
98Leading underwriter:
The insurer who regulates the terms and rating applicable to large insurance placements including involvement by several insurers. The lead usually takes the largest share of a risk, with other insurers following the lead..
99Letter of Credit:
A financial instrument acquired from a bank guaranteeing the accessibility of funds to be collected in the future under a reinsurance agreement. Frequently necessary in overseas markets where currency restrictions or apprehensions about a re-insurer’s solvency exist.
The policyholder’s maximum liability under an insurance cover, which may be expressed ‘per accident’, ‘per event’, ‘per occurrence’, ‘per annum’, etc
101Line A line:
 This term is associated with the quantity an insurer retains on a risk under a proportional treaty. It is also used to refer to the amount of risk a reinsurer will accept on a piece of business. 
102London Market:
 Typically defined as “international insurance and reinsurance business written in London. It consists of the following segments: international reinsurance; marine and aviation; US excess and surplus lines business; and direct overseas business written in the UK”
103Long tail business:
 This describes a risk or class of business that may have claims reported or settled long after risks have expired. The financial result for these classes will not be known with certainty for several years. 
 From an insurance perspective, this term usually refers to the quantity of reduction in the value of an insured’s property triggered by an insured peril. 
105Loss Adjuster:
A person appointed to investigate the surroundings of a claim under an insurance policy and to advise on the sum that is payable to the policyholder in order to settle that claim. Loss adjusters are usually appointed by underwriters but sometimes policyholders appoint their own loss adjuster to negotiate claims on their behalf.
106Loss Assessor:
A person who, in return for a fee (usually a percentage of the amount claimed), acts for the claimant in negotiating the claim.
107Loss history:
A clients history of losses suffered by a policyholder or intending insured.
108Loss of License:
To function in a business you may require a licence from a regulator or an authority. There are times whereby that licence may be under danger of being lost, revoked or suspended and in which case certain insurance policies will deliver coverage that will allow certain legal costs to be paid to protect that licence. You must ensure that all the claims conditions are followed within a policy and there may be certain exclusions or parameters to the insurance coverage which requires a full understanding of the cover details provided and this can be found in the policy wording documentations.
109Loss Occurrence:
Insurance arranged on a “per occurrence” basis permits the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the one location.
110Loss Ratio:
Insurance arranged on a “per occurrence” basis permits the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the one location.
111Loss Reserve:
An amount set aside to provide for unsettled claims.
112Material facts:
A material fact is an occurrence, event, or information that is appropriately significant to influence an underwriter’s decision in acting in a certain way regarding a claim or premium. An example of this would be within the Motor Insurance section where a client may have several parking fines or penalty points, this would need to be disclosed. A similar example would be for a House Insurance policy where a client may live in an area of subsidence and is extremely relevant in whether an insurer can write the risk or not.  A proposing insured customer is required to reveal facts which a “reasonable person” would think are applicable.
113Maximum probable loss (MPL):
Terminology used in property insurance. It represents an estimation of the probable loss to be experienced in a “worst case” scenario, not including catastrophe events. Some definitions assume that all firefighting equipment, structural fire protection (e.g. fire doors) and alarms for a particular risk will fail. Other descriptions assume that these items will function normally. Insurers use MPL explanations in order to organise their reinsurance and decide how much of a risk they can retain. It can also apply to reinsurance. Businesses calculate estimations of the maximum probable loss that they could get out of a disaster, for example: fire, storm, earthquake and buy a suitable amount of reinsurance
This happens when the insured policyholder has provided information to an insurer but that information is inaccurate
115Fraudulent misrepresentation:
A fraudulent misrepresentation will allow an insurer to avoid a contract from its inception.
116Innocent misrepresentation:
This does not let an insurer to escape a contract but the insurer can cancel the contract, and may decrease any claim by the extent of the prejudice grieved by the insurer..
117Moral hazard:
Certain risks regarding the basic honesty and integrity of a person who is seeking insurance e.g. a person who has been convicted of theft may be more likely to lodge a dishonest claim.
118Morale hazard:
The attitudes of individuals e.g. are they inconsiderate, lacking interest, discouraged etc.
119Motor Assessor:
An individual who values and agrees repair costs of motor vehicles.
120New for Old:
Replacing your existing old damaged items or equipment with new ones.
121No claim bonuses and no claim discounts:
A no claims bonus (NCB), or no claims discount, is a count of the number of years in which you haven’t made a claim on your insurance policy. It’s worth varies from insurer to insurer, but a NCB of five years or more, for example, could give you anything up to 60-75% discount on your insurance premium.
122Non-admitted Insurer:
An insurance business that has not been licensed to write insurance in a given jurisdiction.
The fact or practice of not making relevant information known.
124Non-Standard Construction:
A property that is not made of a pitched, tiled, or slate roof nor with concrete/breeze block or brick walls.
125Occurrence wording:
Usually a term used in a liability insurance policy referring to a plan under which the conditions giving rise to a claim must occur during the period of insurance. Claims under such a contract may arise many years after the occurrence of an event and this created problems for insurers both in terms of rating sufficiency and claims reserving. These complications gave rise to the development of “claims made” dictions, under which claims must be made against the insured during the period of insurance in order for the insurer to offer an indemnity.
126Open policy:
Delivers protection for all risks of a certain type during a set period of time. The sum insured is then adjusted for the actual total sum insured. Normally used for marine cargo policies and construction policies.
127Operating statements:
Details of revenues, expenses and profits for a specific accounting period.
128Operative clause:
In contract law, operative provisions or clauses are the terms of the contract which legally bind the parties.
129Outstanding claims:
In contract law, operative provisions or clauses are the terms of the contract which legally bind the parties.
130Over insured:
This is when an insured party has purchased more coverage than the actual value or replacement cost of the subject of insurance.
A particular risk or cause of loss that is covered by an insurance policy e.g. as a fire, theft, etc.
132Period of cover:
The current period that is agreed to provide insurance cover which can be found on your schedule of insurance documentation and on a renewal notice.
A plaintiff can be defined as “a person who brings a case against another in a court of law”.
A policy is a contract or policy schedule outlining the terms of insurance between the insurer and the insured (also known as the policyholder).
135Policy schedule:
A notification document showing the specific details of an insurance policy.
Commonly used to describe the insured party and/or policy owner.
This is when a judge has made a decision which can later be considered applicable to a similar case.
138Precedent condition:
This refers to a condition that must be met before a policy is issued or before a claim will be considered.
A premium is the amount to be paid for a contract of insurance.
140Premium financing:
Premium financing offers a short term loan for businesses and/or individuals to use specifically to pay for their insurance policy. An arrangement must be agreed prior to the insurance policy commencement date and the premiums are paid directly to the insurer by the financier and repaid to the financier by the policyholder under the agreed credit terms.
141Pro rata cancellation:
Cancellation of an insurance contract with the premiums adjusted/refunded to reflect the amount of time the contract has been in effect. This pro rata refund will be calculated on the basis of the period of insurance unearned by the insurer at the date of cancellation.
142Products liability insurance:
Insurance required by manufacturers and/or suppliers where goods are covered for liability claims that arise from their products.
143Professional indemnity Insurance:
This covers a professional for his or her legal liability to others in the event of professional negligence.
144Proposal Form:
A proposal form is a form that is required for completion by the policyholder when applying for insurance. The intended insured will need to fill in all relevant information about the risk needing insurance e.g. the rebuild cost value of a house or type of vehicle.
An individual who proposes for insurance. If/when the proposal is accepted then the person becomes the insured or policyholder.
146Proximate Cause:
Proximate cause can be defined as a key principle of insurance and is concerned with how the loss or damage actually occurred and whether it is indeed as a result of an insured peril.
147Pure risk premium:
The percentage of the premium required to compensate for losses/claims.
A declaration by an insurer of the premium that is required for payment in order to begin an insurance cover with a company.
The cost of insurance, broken down to a price per unit cost.
150Reinstatement of cover:
The reinstatement of cover following its lapse as a result of a loss by payment of an extra premium. Making good. Where insured property is damaged, it is usual for settlement to be effected through the payment of a sum of money, but a policy may give either the insured or insurer the option to restore or rebuild instead.
It is a method whereby one entity (the re-insurer) takes on all or part of the risk covered under an insurance policy and issued by the insurance company in respect of a premium fee.
152Reinsurance treaty:
An arrangement in writing among an insurance company and one or more re-insurers. The insurance company agrees to pass on some of the risk, and the re-insurers agree to accept, within pre-arranged limits.
153Renewal Certificate or Schedule:
A notice which is used to renew a policy. It refers to the original policy, keeping all of its provisions, without restraining all of the insuring agreements, exclusions, and conditions.
154Renewal Premium:
The amount of money that is paid for a renewed insurance policy.
Funds that are set aside from an insurance company’s premiums or profits to meet known or expected claims in the future.
156Residual risk:
The remaining level of risk subsequent to risk handling measures that have been taken.
The remaining level of risk subsequent to risk handling measures that have been taken.
Retrocession can be defined as “The practice of one reinsurance company essentially insuring another reinsurance company by accepting business that the other company had agreed to underwrite”.
Commonly known as the thing or person that is insured.
160Risk Management:
Managing of risks that a company is potentially exposed to. It includes analysing all exposures to the likelihood of loss and defining how to handle these exposures by using practices such as avoidance, reducing the risk, retaining the risk, or transferring the risk.
A provision in a claims-made policy stating that the insurer remains liable for claims caused by wrongful acts that took place under an expired or cancelled policy, for a particular period of time.
Property taken over by an insurer to lower its loss.
Policy Documentation showing the insured party’s details of cover.
An individual or business which has a large number of risk units, identifies that a risk exists and makes a conscious choice to bear that risk without insurance.
165Short tail business:
Short-tail business commonly describes product lines for which losses are usually known and paid shortly after the loss actually occurs.
166Signed Line:
The proportion expressed on a signing slip which specifies the reinsurer’s share of the contract liability.
167Signing Down:
The method of decreasing written lines on a placing slip so that when applied to the sum insured, the total amount placed equals 100% of the broker’s order. Frequently done on a proportionate basis.
168Simple contract:
A simple contract can be defined as “a contract made orally or in writing, rather than a contract made under seal”. Simple contracts require consideration to be valid, but they may be implied from the conduct of parties bound by the contract.
A simple contract can be defined as “a contract made orally or in writing, rather than a contract made under seal”. Simple contracts require consideration to be valid, but they may be implied from the conduct of parties bound by the contract.
170Solvency test or margin:
The insurer’s assets must exceed its liabilities by a certain amount.
171Statement of fact:
A statement provided by the insurer clarifying the basis on which insurance is accepted and what conditions apply.
172Statute law:
Written law which changes the common law.
173Stop loss reinsurance:
Reinsurance that protects the reinsured from a loss in excess of a given percentage of its net premium income.
violent wind, thunderstorm or a heavy fall of rain.
175Subject matter:
The item which forms the basis of the contract of insurance.
Subrogation takes place in insurance when a company pays one of its insured’s for damages, then makes its own claim against others who may have caused the loss, insured the loss, or contributed to it e.g. if another driver runs a red light and your car is totalled.
The downward movement of the site on which a building stands, where the movement is unconnected with the weight of the building. Basically the soil beneath the building foundations are unstable.
178Sum insured:
The maximum liability of the insurer’s liability under an insurance agreement.
A group of companies or underwriters who join together to insure very high-valued property or high-hazard liability exposures. Lloyd’s of London is an example of this.
180Third party:
An individual or entity who is not a party to an insurance agreement but who has alleged to take action against the insured policyholder for injury or damages under the contract of insurance.
181Uberrima Fidei:
This term is the Latin term for utmost good faith. All contracts must be entered into using this principal.
182Umbrella Cover:
Reinsurance cover for numerous classes of business, typically arranged by combining the retentions and/or deductibles of the different classes and protecting them by one excess of loss contract.
A situation where not enough insurance is held to cover the value of the insured property.
An underwriter decides how much cover the client should receive, how much the premium should be and whether to even accept a risk and insure the client. They are specifically trained to evaluate these risks.
185Unearned Premium:
This term can be defined as “an insurance premium that is paid by the customer in advance and which the insurance company has not earned. In the event the customer policy is cancelled, a full refund of the unearned amount is due back to the customer”.
186Unenforceable contract:
An agreement that has all the requirements of a valid contract, but cannot be legally enforced for various reasons.
187Unfunded reserve:
When the provision made for anticipated losses is not backed by any assets set aside for such losses.
188Uninsured perils:
Items not mentioned in the policy schedule and are clearly outside of the standard cover provided.
189Utmost good faith:
This principle requires that all parties who enter into a contract of insurance has a legal responsibility to act with utmost good faith towards at all times to the company offering the insurance agreement.
A policy or other contract that has no legal validity is described as void. When an insurance company voids an insurance policy, it is usually due to the discovery of misrepresentation of material facts by the policyholder insured.
A policy guarantee or promise which offers assurance by insurance company to the insured that specific facts or conditions of the insurance policy are true or will be fulfilled. The warranty can also affirm that certain facts exist.
A vehicle is declared a write-off when the car is so badly damaged that it would not be either safe or economical to repair or when the vehicle has not been found within 14 days of reporting its theft to an insurer.
193Written premiums:
The total premiums on all policies written by an insurer during an indicated time frame, irrespective of what amount has been received.