Introduction - there are many terms in
every day use with regard to the insurance
building and contents
. Whether you wish to insure your own property or obtain cover for a holiday
home, the terms tend to have the same meaning.
All Risks - This term is used to describe
a wider form of cover usually attached to valuables or personal possessions. It
can be used to cover items such as watches & jewellery against accidental breakage
or loss away from the home- Be careful though, it does not actually mean that
every eventuality will be covered.
Average - In the event of under insurance
and if your policy contains this clause, your insurers may reduce the amount of
your settlement following a claim in proportion with the amount of the loss.
Betterment - A term that is not so widely
used today as many policies are written on a new for old or reinstatement basis.
In the past polices that were written on the old style indemnity basis (The
principle of indemnity is to leave you in the same position after a loss as you
were in before it) may have involved an amount of betterment following a claim,
In these cases, you were often requested to make a contribution towards costs.
Ex Gratia Payment - Sometimes, when an
event is not covered by a policy or if it is not clear if it is covered or not
an insurer may agree to pay a claim without an admission of liability.
Excess - This is the portion of the loss
that the policyholder has to pay. It is always the first portion of the loss so
a £500.00 claim under a policy with a £50.00 excess will result in £450.00 being
paid. Excess can be either compulsory or voluntary, in return for a discount.
Under a building insurance policy, £50.00 is a typical excess.
Indemnity - As stated above, the
principle of indemnity is to leave a person in the same position after a loss as
they were in before. If an insurance company grants indemnity, it means they are
going to pay a claim.
Insurers Interest – The contract rights
act states that for anyone to receive the benefit of a policy, they must have
their interest noted on the schedule of cover. Lenders require their interest to
be noted on a policy so as they can be notified in the event of a claim.
Index Linking - This is a method under
building & contents insurance that helps to guard against under insurance. Each
year, the insurers will increase the policy sum insured in line with an index
that is usually linked to the rate of inflation. Whilst index linking helps to
keep your sums insured up to date, no amount of index linking will help if the
sums insured are inadequate to start with.
Loss Adjuster - Usually independent or
they can be attached to insurance companies, they are appointed after a claim to
help quantify the amount of the loss. You can of course appoint your own loss
adjuster who can help formulate a claim on your behalf.
Material Fact - Information that you must
disclose to your insurance company or broker that is likely to effect their
assessment of your insurance proposal. An example would be telling them that
your building is located on a flood plain or had previous subsidence problems.
Failure to notify a material fact may result in a claim not being paid.
Mortgagee - This is the name given to a
lender that provides
finance to buy property, it can be a bank or building
society or other organization
Mortgagor - This is the name given to a
person that borrows money from an organization to the finance the purchase of
property.
New for Old - A cover that is very
popular under contents insurance, in the event of a claim, no deduction is made
for wear and tear. To receive the benefit of this cover, you have to have
insured all your contents for their replacement as new cost.
No Claims Bonus - As with car insurance,
many building & contents polices now provide a discount each year if no claims
have been made in the previous twelve months
Non Standard Construction - A building is
said to be of standard construction if it is built of brick, stone or concrete
and roofed with slate or tiles. Anything out side of this is often classed as
non standard construction.
Occupiers Liability - Covers Legal
liability to pay claims for which you are liable arising out of the occupation
of a building.
Owners Liability - Also called Property
Owners Liability – Covers legal liability to pay compensation for accidents
arising out of ownership of a building.
Personal Liability - A cover that is
normally provided as part of a Contents policy, it will provide cover for
accidents happening in the course of ones private life.
Proposal Form - This document forms the
basis of an insurance contract. Often these are no longer used and are gradually
being replaced by statements of fact
Reinstatement - this term is applied to
the insurance of buildings to mean that no deduction will be made for wear and
tear; to obtain this cover you will have to insured the property for its full
reinstatement or rebuilding cost.
Sum Insured - This is the maximum amount
that the insurer will pay in respect of claims under a building and/or contents
policy
Tenants Liability - A cover that is
provided under a contents insurance to Tenants for damage to rented buildings
Under Insurance - This relates to
instances where sums insured are not adequate to meet the full costs of
reinstating the buildings or contents
Underwriting - The process by which
insurers calculate insurance premiums, usually a set of questions are asked and
at the end a premium or quotation is provided
Warranty - A stipulation placed under a
policy wording that the policyholder must comply with. If a warranty is not
complied with, a claim may not be paid.
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Copyright Assetsure Limited
2007
Glossary
of Building Insurance Terms