Take the confusion out of insurance!
Insurance can be perplexing and the jargon used in policies often adds an additional layer of confusion on top of it all. At Ausure Horizon we work hard to ensure you understand everything about your policy.
Here are a few keywords you may find in your insurance policy and what they mean.
Disclaimer of liability- The definitions and information provided on this page are only intended for general use. Although providing correct and up to date information is very important to us, Ausure Horizon will not take responsibility for any accidental mistakes, variances in accuracy, or availability. This is a general guide. Do not make any legal or life decisions based on the information provided on this page. Any reliance or reading of this material must be done at your own risk.
Insurance Definitions
Actuary-
An Actuary is a specialist that deals with statistics to determine the likelihood of risks and uncertainties for insurance premium costs. Actuaries work with insurance companies to assist them to create insurance cover and advise on the level of risk versus cost.
Adjuster/Assessor-
The terms adjuster and assessor are used somewhat interchangeably. Both terms refer to a representative of the insurer that verifies claims to check their validity and decide the extent of the insurer’s liability. They often consult the terms of policy and may investigate the claim thoroughly.
Aggrieved Party-
An aggrieved party is a person or group that has been wronged or has suffered. This includes financial loss, injury, and damage to property.
Aggregate-
The aggregate is a limit the insurance company is willing to compensate over the course of a set period. Typically the insurance company is only willing to reimburse the policyholder a set amount of money over the course of a year.
Agreed Value-
Agreed Value policies typically refer to motor vehicle insurance and pertain to the car’s value. The car’s value is determined by the make and model and age. Agreed value policies can differ in price to market value policies and deciding which is right for you may depend on your circumstances.
Arbitration-
This refers to legal disputes that are settled out of court between an insurance company and the insured party. They are typically settled by private tribunals.
Asset-
Assert is a term used to describe objects with economic value that can be covered by insurance, like property, vehicles, and even cash.
Beneficiary-
This word refers to an individual who may be entitled to receive the contents or payout of a will, insurance policy, or any contract.
Blanket Coverage-
This is a type of insurance cover for property or liability insurance that includes multiple people or properties at different locations.
Broker-
An insurance broker is a specialist that acts as an intermediary on behalf of someone applying for insurance and attempts to find the best policies available on the market. They are required to collect quotes and negotiate with insurance companies on your behalf. They receive a commission from the insurer.
Burner-
Also known as the ‘burning cost’. It is a premium cost that has not been finalised by the organisation. The burning cost is used to study past insurance experience and estimate future costs.
Claim-
A claim is a formal request and notification to an insurance company that the insured party has suffered a loss that is covered by their insurance policy. A claim means the insured party is requesting action and compensation from their insurer.
Claims Made Wordings-
This specific kind of policy covers all claims that are made with it, no matter when the claim and event happened. This kind of coverage is often used when there has been significant time between a claim being filed and the event.
A retroactive date will cover any claim subsequent to the retroactive date but the trigger for insurance is when the claim is made.
Claimant-
This is the insured party that has a right to claim under the insurance policy contract.
Closing-
A protection letter or document that confirms the contract between insurance underwriters, or brokers, and lenders that finalises insurance coverage.
Compensation-
Compensation is awarded to someone as a result of loss, injury, or suffering. Assessors typically decide if the insurer must cover the loss and if it is included in the insurance policy.
Compulsory Insurance-
A type of insurance that individuals or businesses are required to buy by law. Common examples include compulsory third party car insurance and workers compensation insurance.
Contractual liability-
Refers to liability that is assumed on someone else behalf under a legally binding contract.It protects the policyholder against liabilities that they assume by entering the aforementioned contract.
Cooling off-
This is a period of time following a policy agreement in which the consumer can cancel their policy for any reason. Most insurance companies allow a window of time for a change of mind and the consumer is entitled to a full refund.
Coverage-
Coverage is the terms of what is included in the insurance policy.
Deductible-
Also known as the excess. It is a portion of a loss that is paid by a policyholder out of pocket before they are able to claim. A common example is for car insurance, so if a repair claim is $1000, and the deductible is $200, then the insurance company will cover $800 while you pay the remaining $200 excess.
Defined events-
A policy that comprehensively outlines the events that the policyholder is covered for, including events like flood, fire, theft.
Depreciation-
This refers to a loss of value over time of any asset resulting from age, wear and tear, damage, or use.
Disclaimer-
Disclaimers are used to minimise a person or business’ degree of liability for events that may occur. It is also a legal statement that outlines the limits of an insurance company/agents responsibility when providing advice about policies.
Dividend-
This is a partial refund of a premium to the policyholder due to an insurer’s surplus or the insured party’s loss.
Effective Date-
This is the date on which the insurance policy will apply and begin coverage.
Embargo-
An embargo is a restriction applied by an insurer in regard to accepting new insurance policies in certain locations or for specific circumstances. For example, many embargos prevent coverage for events that are already having an impact, like international pandemics.
Errors and Omissions-
This form of liability insurance was made to cover companies that offer advice or consultancy services. It protects them from potential lawsuits or insurance claims made by their customers and clients. Typically this includes lawyers, consultants, financial advisors, and insurance agents.
Excess-
Refer to deductible.
Excess layer-
A type of insurance that can supply additional levels of liability cover on top of a primary insurance policy.
Exposure –
Is the amount of risk for possible losses the policyholder may experience. Each policy will outline different limits for kinds of exposure.
First Party-
The first party is the person or people that are covered under the insurance contract. First party policies also cover the insured person’s property.
Fraud-
Fraud is a serious crime that is committed when a policyholder deliberately misleads an insurance company in order to receive money. Fraud can result in fines and gaol time.
General Insurance-
General insurance is distinct and different to life insurance. This coverage protects assets that could incur a financial loss due to an occurrence.
Gross Premium –
The total premium paid for insurance policy including additional commissions, operating expenses, and more depending on the requirements of each insurer.
Hazard-
Circumstances or conditions that increase the likelihood of risk or chance that losses may occur. Hazards can include things like fire, chemicals, electricity, water and so much more.
Indemnity-
Indemnity is a feature under insurance policies that ensure coverage and protection against injury, loss, and damage.
Alternatively, the principle of indemnity is a legal principle that means an insured party should be compensated enough to reach the financial position they were in before a loss.
Inefficacy-
Also known as efficacy cover, this coverage insures people for any liability they may be on the hook for due to injury or damage to a third party from a faulty product or service.
More of an exclusion than a cover- efficacy is an exclusion commonly applied to manufacturing risks when people are selling critical components that will reduce coverage for claims due to failures of the products from meeting expectations of its function. For example smoke alarms have inefficacy cover. Failure of your product to perform its function.
Insurer-
The party that underwrites the risk of insuring someone and is bound by contract to possibly pay compensation.
Intermediary-
Someone, typically a broker or agent, that acts as a bridge between insurance companies and customers. They offer assistance and advice to members of the general public who need insurance.
Jurisdiction-
The power held by the courts and their power to hear matters and make legal decisions.
Lapse-
Period of time in which the policyholder fails to pay for insurance coverage and therefore terminates the policy.
Lease
A legally binding contract between two parties that allows one party use of an asset, for a specific time period, in exchange for money.
Levy-
A levy is a tax and additional fee that is added to insurance premiums by the government.
Liability-
In insurance terms liability refers to an organisation or individual that is responsible for something, and must cover loss and damages.
Market Value-
Value of a property and what it may be worth in its current state if sold on the open real estate market.
Mitigation-
It refers to measures that are taken to lessen potential hazards to a property, asset or person. An example includes if a car’s window was damaged in an accident, mitigation would be fixing it before the water ruins a vehicle’s interior.
Misrepresentation-
False information or statements provided to the insurer for the purpose of fraud.
Negligence-
Negligence occurs when a person does not exercise a degree of ‘reasonable care’ in any situation where they have responsibilities for another person.
Non-disclosure-
This is when the policyholder fails, whether on purpose or by omission, to share all relevant information with their insurance provider. This can result in the insurance company not being legally obliged to honour any policy claims.
Occurrence Wording-
An event that leads to loss, injury, or damage, that was not expected by the policyholder and may result in liability. For example, this could include accidents, natural disasters, or even robbery. Means that the claim will be triggered from when the claim took place
Regardless of when negligence takes place it will be triggered. If the claim occurred prior to retro date you wouldn’t be covered
Payout-
A payout occurs when an insurance company compensates the policyholder for their insurance claim.
Personal property-
In essence, personal property is any asset, not including real estate, that can be easily moved. Including but not limited to items like clothing, furniture, and household items like a TV.
Policy-
The written and legally binding insurance agreement that acts as a contract between the policyholder and insurance company.
Premium-
The cost of a policy cover for outlined hazards and potential risks for a certain time period.
Qualifying event-
An occurrence that falls under the outlined possible circumstances discussed within the insurance policy.
Rebate–
A partial or full refund of the premium policy payment.
Re insurance-
A complex practice that involves the insurance company sharing portions of their portfolios with other companies willing to shoulder the risk.
Renewal-
The process of continuing an existing insurance policy.
Resilience-
The durability and strength of an asset or person to recover and withstand stressful events.
Retroactive date-
Date put on the policy and applied to claims made wording. It is the very earliest date where an occurrence of a claim can be considered under the claims made policy. Unlimited retroactive policies are also available.
Security-
Refer to insurer.
Settlement-
A settlement involves the insurance company paying out or compensating the policyholder when they make a claim that was covered under their policy.
Signatory-
Typically the signatory is someone responsible for signing a policy or insurance contract to declare that they agree and accept all terms and conditions. On rare occasions, a signatory is a person selected to sign on someone else’s behalf, although this is rare.
Stamp Duty-
Certain products and services, including insurance, may incur an additional tax set by the government.
Title-
The proof of purchase and a legal certificate that declares ownership of a vehicle.
Underwriter-
An insurance underwriter considers and establishes potential risks that the insurance company may have to pay out if they accept a new policy and how much the policy should therefore cost.
Warranty-
This is a written guarantee written by the manufacturer of an item that promises to repair or compensate the customer for any faults with a product. For example, a car may come with a three-year warranty.
Still confused?
If you’re still feeling confused then why not give the team at Ausure Horizon a call. Our helpful team members are always willing to explain or help you with any question.
