Reference

Insurance Glossary.

Plain-language definitions for every term you'll encounter in your policy. 186 terms · 16 sections

Policy Basics

Policy: The contract that explains what your insurance covers and what it does not.
Policyholder: The person or business that owns the insurance policy.
Insurer: The company providing the insurance cover.
Insured: The person, item, property, or risk protected by the policy.
Premium: The amount you pay for your insurance.
Coverage: The protection your policy gives you.
Claim: A request for payment after a loss or insured event.
Benefit: The money or service paid out under the policy.
Sum Insured: The maximum amount your insurer will pay for a covered item or event.
Limit of Liability: The highest amount the insurer will pay under a section of the policy.
Policy Period: The start and end dates of your cover.
Schedule: The summary section showing the specific details of your cover.
Policy Wording: The full set of rules, definitions, conditions, and exclusions in the policy.
Declarations Page: The page that summarises key policy details like the insured person, cover, and premium.
Schedule of Insurance: The section listing the items, risks, or sections that are insured.
Cover Note: A temporary document confirming that insurance is in place while the full policy is being prepared.

Valuation & Amounts

Excess: The part of a claim you must pay yourself first.
Deductible: Another word for excess; the amount you pay before the insurer pays the rest.
Co-payment: A fixed share of the cost that you must pay along with the insurer.
Contribution: When more than one insurer shares the cost of the same claim.
Indemnity: Insurance should put you back where you were financially before the loss — not better off.
Actual Cash Value: The current value of an item after age and wear are taken into account.
Replacement Value: The cost to replace something with a similar new item.
Market Value: What the item was worth just before it was lost or damaged.
Depreciation: The decrease in value over time due to age, wear, or use.
Underinsurance: When you insure something for less than what it is really worth.
Overinsurance: When you insure something for more than its true value.
Average Clause: A rule that can reduce your payout if you were underinsured.
First Loss Cover: A policy that covers losses up to a set amount without requiring full insurance value.
Reinstatement of Cover: Restoring your sum insured after a claim, sometimes with conditions.
Salvage: Damaged property that still has some value after a loss.
Betterment: When repairs leave you with something better than before the loss.

Risk & Hazard

Risk: The chance that something may go wrong and cause a loss.
Exposure: How likely you are to face a particular risk.
Peril: The actual cause of loss, like fire, theft, or flood.
Hazard: Anything that increases the chance or severity of a loss.
Physical Hazard: A visible condition that increases risk, like faulty wiring.
Moral Hazard: When someone acts less carefully because they know they are insured.
Adverse Selection: When people with higher risk are more likely to buy insurance.
Loss: The financial damage caused by an insured event.
Catastrophe: A major event causing widespread damage and many claims.
Act of God: A natural event outside human control, like a storm or earthquake.
Proximate Cause: The main cause of the loss used to decide if the policy responds.
Accumulation Risk: The risk that a single event, like a flood or earthquake, triggers many claims from different policyholders at the same time.

Claims

Claim Notification: Telling the insurer that something happened and you want to claim.
Claim Assessment: The insurer's process of checking what happened and whether it is covered.
Claim Settlement: The final payment or resolution of a claim.
Claim Rejection: When the insurer declines to pay the claim.
Partial Settlement: When only part of the claim is approved and paid.
Claims History: Your record of past insurance claims.
Proof of Loss: Documents or evidence you give to support your claim.
Loss Adjuster: A professional who investigates a loss and helps assess the claim.
Assessor: Someone who evaluates the damage or value involved in a claim.
Fraud: Dishonest action taken to get money from an insurer unfairly.
Ex Gratia Payment: A payment made by the insurer as goodwill, even when not strictly required.
Constructive Total Loss: When repair is possible, but it would cost more than the item is worth.
Total Loss: When the item is completely destroyed or uneconomical to repair.
Partial Loss: When only some of the damage is claimable or repairable.
Subrogation: After paying you, the insurer may recover money from the person responsible.
Recovery: Money the insurer gets back from another party after paying a claim.
Repudiation: The formal refusal by an insurer to honour a claim, usually due to a breach of policy conditions or non-disclosure.

Legal Principles

Insurable Interest: You must stand to suffer a financial loss if the thing insured is damaged or lost.
Utmost Good Faith: You and the insurer must be honest and share important information.
Disclosure: Giving the insurer all relevant information when applying for cover.
Non-Disclosure: Failing to tell the insurer something important.
Material Fact: Any fact that could affect the insurer's decision to insure you or set the premium.
Material Non-Disclosure: Leaving out important information that matters to the insurer.
Misrepresentation: Giving incorrect or misleading information.
Warranty: A strict promise in the policy that must be true or followed.
Condition: A rule in the policy that must be met for cover to apply.
Condition Precedent: Something that must happen before the insurer will pay.
Condition Subsequent: A rule that applies after a loss or during the policy.
Breach of Warranty: Failing to keep a policy promise, which may affect cover.
Void Policy: A policy treated as if it never existed.
Voidable Policy: A policy the insurer may cancel because of certain problems, like misrepresentation.
Negligence: Failing to take reasonable care and causing harm or loss.
Damages: Money paid as compensation to someone who suffered loss or injury.

Policy Terms & Conditions

Endorsement: An official change to the policy.
Rider: An optional add-on that changes or extends cover.
Exclusion: Something the policy specifically says it will not cover.
Exception: A special situation where cover may be limited or not apply.
Covered Event: Something your policy says it will pay for.
Excluded Event: Something your policy says it will not pay for.
Waiver: The giving up of a right or condition, usually in writing, agreed to by the insurer.

Underwriting

Underwriting: The process insurers use to assess risk and decide on cover and price.
Underwriter: The person or team deciding whether a risk can be insured.
Rating: How the insurer calculates your premium based on your risk.
Loadings: Extra charges added to a premium because the risk is higher.
Standard Risk: A person or asset that fits normal insurance expectations.
High Risk: A person or asset more likely to result in a claim.
Declinature: When an insurer refuses to offer cover.
Acceptance Terms: The conditions on which an insurer agrees to provide cover.
Risk Pooling: Many people pay into one pool so the losses of a few can be paid.
Retention: The part of a risk the insurer keeps instead of passing on.
Actuarial Assessment: The use of statistics and probability by specialist mathematicians to estimate risk levels and set premiums.
Proposal Form: The application document completed by a prospective policyholder, containing the information an insurer uses to decide on cover and price.

Personal Lines – Home & Contents

Buildings Insurance: Cover for the physical structure of a home or building.
Contents Insurance: Cover for the belongings inside a property.
All Risks Cover: Cover for personal items against a wide range of accidental losses.
Specified Items: Items individually listed on the policy, usually with their values.
Unspecified Items: Items covered without listing each one individually.
Accidental Damage: Sudden and unexpected damage caused by an accident.
Theft Cover: Protection if something is stolen.
Burglary: Theft involving unlawful entry into a property.
Fire Damage: Loss caused by flames, smoke, or heat.
Water Damage: Loss caused by leaks, burst pipes, or other water-related events.
Storm Damage: Damage caused by strong wind, rain, hail, or severe weather.
Wear and Tear: Gradual damage from normal use, which is usually not covered.
Maintenance: Keeping property in good condition to prevent avoidable loss.
Subsidence: The downward movement of the ground beneath a building, which can cause structural damage and may be covered under buildings insurance.

Personal Lines – Motor

Comprehensive Cover: Broad motor cover for your car and damage you cause to others.
Third-Party Cover: Cover for damage or injury you cause to other people or their property.
Third-Party, Fire and Theft: Cover for third-party damage plus fire or theft of your own vehicle.
Own Damage: Damage to your own vehicle.
Write-Off: When a damaged car is not worth repairing.
Retail Value: The price a dealer may sell the vehicle for.
Trade Value: The lower value a dealer may pay for the vehicle.
Car Hire Cover: Cover for a temporary replacement car after certain insured events.
Tracker Requirement: A condition requiring an approved tracking device on a vehicle.
Regular Driver: The person who drives the insured car most often.
Named Driver: A person specifically listed as allowed to drive the vehicle.
Roadside Assistance: Help for breakdowns, towing, or other emergency roadside problems.
Excess Waiver: An optional extra that reduces or removes your excess in some cases.
Uninsured Motorist Cover: Protection if you are involved in an accident with a driver who has no valid insurance.

Liability Insurance

Liability: Legal responsibility for damage, injury, or loss caused to someone else.
Legal Liability: Responsibility recognised by law.
Public Liability: Cover if a third party is injured or their property is damaged because of you or your business.
Personal Liability: Cover for accidental harm you cause to others in your private life.
Employer's Liability: Cover for claims from employees who are injured or become ill because of work.
Product Liability: Cover for claims caused by products you made, sold, or supplied.
Professional Indemnity: Cover for claims that your advice or service caused financial loss.
Third Party: Someone other than you and the insurer who may be affected by a loss.

Life, Disability & Health

Life Insurance: Cover that pays out when the insured person dies, if policy conditions are met.
Death Benefit: The amount paid when the insured person passes away.
Beneficiary: The person who receives the policy payout.
Term Life Insurance: Life cover for a set number of years.
Whole Life Insurance: Life cover designed to remain in place for life.
Funeral Cover: Insurance that helps pay funeral-related costs.
Disability Cover: Insurance that pays if illness or injury leaves you disabled.
Income Protection: Insurance that replaces part of your income if you cannot work.
Critical Illness Cover: Cover for specific serious illnesses listed in the policy.
Permanent Disability: A lasting disability that may trigger a payout if the policy includes it.
Temporary Disability: A disability for a limited time that may trigger short-term benefits.
Waiting Period: The time you must wait before benefits can start.
Survival Period: A minimum time the insured must survive after diagnosis for some benefits to be paid.
Pre-Existing Condition: A medical condition you had before taking out the policy.
Medical Underwriting: Health checks or questions used to decide cover and pricing.
Dread Disease Cover: Another term for critical illness cover, commonly used in South African insurance markets.

Business Insurance

Business Interruption: Cover for lost income when a business cannot operate after an insured event.
Gross Profit Cover: Business interruption insurance based on lost profit and fixed costs.
Indemnity Period: The maximum time business interruption losses will be covered.
Stock Cover: Insurance for goods held for sale or use in the business.
Office Contents Cover: Cover for furniture, equipment, and office items.
Money Cover: Insurance for cash lost through theft or another insured event.
Fidelity Guarantee: Cover for loss caused by employee dishonesty.
Cyber Insurance: Cover for certain losses caused by hacking, data breaches, or cyber attacks.
Data Breach Costs: Expenses linked to responding to a cyber incident.
Directors and Officers Cover: Protection for directors or managers against certain claims linked to their decisions.
Trade Credit Insurance: Cover that protects a business if a customer fails to pay an outstanding debt.
Machinery Breakdown: Cover for the sudden and unforeseen breakdown of mechanical or electrical equipment used in a business.

Reinsurance

Reinsurance: Insurance bought by insurers to protect themselves from large losses.
Reinsurer: The company that insures the insurer.
Ceding Insurer: The insurer passing some of its risk to a reinsurer.
Treaty Reinsurance: A reinsurance deal that automatically covers a group of risks.
Facultative Reinsurance: Reinsurance arranged for one specific risk.
Retrocession: When a reinsurer passes on part of its own risk to another reinsurer.

Insurance Finance & Metrics

Claims Ratio: The share of premium income that gets paid out in claims.
Loss Ratio: Another term comparing claims paid to premiums earned.
Combined Ratio: A measure of profitability using claims and expenses against premiums.
Reserve: Money set aside by an insurer to pay future claims.
Solvency: An insurer's ability to meet all its financial obligations, including future claims.

Cover Limits & Boundaries

Insured Value: The amount you chose or agreed to insure something for.
Policy Limit: The most the insurer will pay under a section or the whole policy.
Single Article Limit: The most the insurer will pay for one item unless it is specified.
Per Occurrence Limit: The maximum payable for one incident.
Aggregate Limit: The maximum payable for all claims during the policy period.

Policy Lifecycle & Administration

Renewal: Extending your policy for another term.
Cancellation: Ending your policy before the normal end date.
Lapse: When your policy ends because premiums were not paid.
Cooling-Off Period: A short time after buying a policy when you can usually cancel under set rules.
Grace Period: Extra time allowed to make a payment before the policy lapses.
No-Claim Bonus: A reward, discount, or benefit for not claiming over time.
Claims-Free History: Your record of not claiming, which may help lower premiums.
Broker: A licensed intermediary who shops around on your behalf to find suitable insurance cover and provides advice.
Agent: A person who sells or administers insurance on behalf of one or more insurers.
Intermediary: A broad term for anyone who sits between the insurer and the customer, including brokers and agents.