Understanding insurance terms

• A

  Accident (Insurance)

  An accident is defined as any bodily injury involuntarily suffered by the insured as a result of a suddenly occurring external factor. Events such as poisoning and drowning are regarded as accidents.

  Accident Statement

  The European accident statement and the Green Card should be kept in the glove compartment of your car during car journeys. In case of an accident the parties involved complete the statement together. The text of the statement is the same in all languages, which prevents translation problems. A correctly completed accident statement guarantees that all information necessary to process your claim is available.

  Approved repairer

  A garage approved by the insurance company to carry out a high standard of workmanship.

• B

  Beneficiary Clause

  A clause in Life and Accident insurance policies which names the beneficiaries of the insurance benefits that are due when an insured event occurs. The beneficiary may be appointed by the policyholder.

  Betterment

  A charge that may be made by your insurer if repairs covered by your policy result in your item ending up in a considerably better state than it was before.

  Broker

  An independent insurance expert who will provide you with impartial insurance advice on a wide range of insurance related matters.

  Buildings Insurance

  Buildings insurance covers damage to buildings including fixed glass, sanitary ware and signs, landlords' fixtures and fittings, central heating systems, and concrete, paved or asphalt forecourts, yards and terraces.

  Business Interruption Insurance

  Insurance against loss of net operating profit, fixed costs, staff costs, etc. arising from damage to property caused by fire, natural forces etc.

• C

  Certificate of Insurance

  Evidence of the existence of insurance as required by law e.g. Motor.

  Change of Ownership

  In the case of insurance against loss or damage or Liability insurance, the insurance contract can be transferred to the buyer if ownership of the insured items changes, unless the buyer makes use of the right of termination within 14 days.

  Claim

  Formal request for payment, usually requiring completion of a claim form.

  Commission

  Insurance agents receive commission for the inception and renewal of insurance contracts. The amount of commission depends on the line, type of contract and amount of premium paid.

  Comprehensive

  The widest cover usually available in which all parts of the policy apply.

  Comprehensive Insurance

  Comprehensive insurance usually relates to Motor insurance and provides cover for accidental loss or damage to the vehicle.

  Compulsory Insurance

  The law requires certain risks to be insured. These include Private Motor, Third Party and Employers' Liability.

  Conditions

  Rules stated within the policy that you and the insurer must abide by.

  Cover

  The precise description of an insured risk in the insurance contract that determines those losses or occurrences in the event of which insurance benefits are due.

  Current Market Value

  The amount required for repurchase of an item or rebuilding of a building, minus depreciation due to wear and tear or other causes (material value). As a rule, however, the replacement value is used as the sum insured for Property insurance.

• D

  Daily Benefits

  If you are temporarily unable to work due to illness or an accident, your lost salary is replaced by a daily allowance, as a rule after a certain waiting period. The daily allowance may only be claimed during a specific period of time. Daily Benefits insurance can be included in Health insurance, Accident insurance and Life insurance.

  Damage Caused by Natural Forces

  Damage caused by natural forces such as floods, storms, hail, earthquake, pressure of snow, or landslides can be covered by Property insurance usually after the deduction of a deductible.

  Damage to Goods in the Custody or Control

  Damage to goods belonging to third parties which are used, transported, stored or handled by the policyholder, his/her employees or relatives is usually not covered by Liability insurance. This can usually be covered under a Property insurance policy.

  Deductible

  A deductible or excess is the fixed amount agreed in the insurance policy that is paid by the insured per claim or per period.

  Disability

  Disability is the lasting loss of ability to work or ability to earn a living.

  Documentation

  A written record of an entire process.

  Dual insurance

  Dual insurance occurs when, in the case of insurance against loss or damage, the same items are insured against a certain risk under more than one insurance policy. In the event of loss or damage the benefits paid by the insurer will be reduced by the amount of the dual insurance.

  Due Diligence

  You are obliged to exercise due diligence. The infringement of self-evident loss prevention measures may result in a reduction in insurance benefits.

  Duty to Minimise Loss

  In the event of a claim you must do everything possible to restrict the damage as far as possible, and in particular to avoid any consequential damage.

• E

  Employers' Liability

  An employer's legal responsibility to protect employees in the event of injury whilst at work.

  Endorsement

  A written alteration or addition to the standard printed policy wording.

  Excess

  An amount paid by you towards a claim.

  Exclusion

  Any event or circumstance or item not insured.

  Exclusions All Risks

  In an All Risks insurance contract, the exclusions in the insurance contract are based on the principle that 'everything that is not specifically excluded from the insurance is considered to be included'. This should prevent any queries arising regarding the intention of the wording to pay in any circumstance giving rise to an insurance claim.

  Expiry Date

  The time and date on which cover ceases.

  Expiry of Claims

  The expiry period for claims arising from the insurance contract varies dependent on the type of claim and policy wording.

• F

  Financial Loss Insurance

  This covers financial loss as a result of an insured event. Examples of this insurance are Liability insurance, Legal Expenses insurance and Business Interruption insurance.

  Fire insurance

  Fire insurance covers damage caused by fire, lightning or explosion.

  Fixed-Sum Insurance

  In contrast to insurance against loss or damage, the agreed sum insured is paid out by the insurance company when an insured loss is sustained. Insurance of fixed sums is used in Life insurance, Accident insurance and Health insurance.

• G

  General Conditions

  The general conditions set out the rights and obligations of both you and the insurer with regard to all contracts for a specific type of insurance.

  Glass Insurance

  Glass insurance provides insurance cover against accidental damage to the glass listed in the policy (specified cover) or all glass in the building (unspecified cover).

  Green Card

  A document confirming you have at least the minimum compulsory Motor insurance necessary to drive in the countries named on the Green Card.

  Gross Negligence

  A serious violation of the obligation to exercise due care. This can result in the payment for a liability claim being substantially reduced.

  Group Insurance Scheme

  A group insurance policy covers a number of individuals and/or items that are included under the same contract. The main feature of group insurance is that covers, premium collections and contract management are not handled directly with the insured, but via a group representative (for example through the company).

• H

  Health Insurance

  Health insurance covers the material consequences of a disease. The main benefits paid by the Health insurance are daily sickness benefits, a hospital allowance, and medical expenses (inpatient and outpatient treatment).

  Hospital Charges; Daily Hospitalisation

  Accident and health insurers pay medical expenses as well as hospitalisation costs. Hospital charges are costs arising from hospital treatment that requires at least one night's stay in hospital (in contrast to outpatient treatment). A daily allowance during hospitalisation is paid separately for each day spent in hospital.

  Household contents insurance

  Household Contents insurance covers loss or damage to all household items that are not part of the building or building installations. Cover will usually be provided on a fire and perils or all risks basis, and on a "new for old" basis. The sum insured will usually be subject to average so it's important that your sum insured is up to date.

  Hull Insurance (partially comprehensive and fully comprehensive cover)

  Hull Insurance provides cover against damage to the policyholder's ship or aircraft resulting from an insured event.

• I

  Illness

  Disease is a medically determinable, involuntary disorder of the insured's normal bodily functions caused by pathological processes.

  Incapacity to Work

  When you are unable to practice your profession or other reasonable paid activity due to illness, accident or medical condition. The term "permanent incapacity to work" largely corresponds to the concept of disability in social insurance.

  Inception Date

  The time and date on which cover starts.

  Indemnity

  Putting you in the same financial position after the loss as you were in before the loss.

  Indexation

  For several lines, insurance is offered with the sum insured adjusted to specific indices (such as the consumer price index).

  Insurance Against Loss or Damage

  If an insured loss is sustained, the amount of the actual loss is compensated, but this amount may not exceed the agreed sum insured. Insurance against loss or damage is usually included with, among others, Liability insurance, Property insurance and Marine insurance.

  Insurance Agreement

  An insurance agreement is an agreement between the policyholder and the insurer to pay regular or single premiums and provide insurance benefits in the event of a loss respectively.

  Insurance Benefits

  When an insured event occurs, the insurer must pay a benefit. In Property and Casualty insurance, the maximum is the insured amount. In Fixed-Sum insurance it is the agreed-upon fixed amount including services.

  Insurance Certificate

  In several lines, the insurer issues a confirmation of the insurance contract to the policyholder as proof that insurance cover exists e.g. Employers' Liability.

  Insurance Line

  Insurance segments that each cover a specific risk, such as Accident or Life insurance.

  Insurance Premium Tax (IPT)

  A Government tax on your insurance premium.

  Insurance value

  The value of the insured item upon conclusion of the insurance contract. This amount usually has to be adjusted during the term of the policy due to inflation, new acquisitions etc., so that the insured sum always corresponds to the replacement value (see Replacement Value and Underinsurance).

  Insurer

  The insurance company.

• K

  Key person

  A Life Insurance Policy bought by a company, usually a small business, on the life of a key executive, with the company as beneficiary.

• L

  Legal Expenses Insurance

  Legal Expenses insurance protects your interests in the event of legal disputes and provides cover for the costs of attorneys, experts and court proceedings as well as any amount paid to the claimant.

  Loss

  An event which triggers insurance cover.

  Loss Adjuster

  Independent professional appointed by the insurer to negotiate claims payment.

  Loss Assessor

  Independent professional appointed by you to negotiate claims payment.

• M

  Marine Insurance

  Marine insurance provides insurance cover for moveable goods (goods, valuables, luggage) against risks during a voyage (the transport) and the attendant stops. This insurance normally covers all risks rather than individual risks such as fire, wetting of the goods or theft/robbery. The transport and traffic liability insurance sold by marine insurers covers the liability of the carrier or freight forwarder towards the transported goods.

  Medical Examination

  In Personal Lines insurance, especially Life and Medical insurance, taking out insurance is sometimes dependent on the results of a medical examination.

  Medical Expenses

  Medical expenses are costs resulting from treatment for a disease or an accident by a medical doctor or other medical practitioner, in the form of medication or therapy, in hospital (including hospital stay), medical practice or at home (outpatient treatment).

  Motor Liability Insurance

  The law requires the liability of the owner of a motor vehicle to be insured. This liability arises when a person is killed or injured or damage to property is caused by the use of the motor vehicle.

• N

  No Claims Bonus

  A premium discount where no claims have been made in previous years.

• O

  Obligation to Notify

  You must provide all information necessary for the insurer to analyse the risk and issue an insurance contract.

  Over insurance

  Over insurance occurs when the sum insured is higher than the replacement value. In the event of a claim only the replacement value is paid out.

• P

  Passenger Insurance

  In the event of an accident, passenger insurance covers injuries suffered by both the driver and passengers of a motor vehicle.

  Peril

  A term describing an event for which insurance cover is provided e.g. fire and theft.

  Personal Liability Insurance

  Personal Liability insurance (individual or family insurance) protects the insured against civil law claims that are brought against them on the basis of statutory liability provisions.

  Policy

  The document describing the cover provided by the insurer.

  Policyholder

  The customer. A person or company who has bought an insurance policy. Also known as the Insured.

  Premium

  The amount paid by the policyholder to the insurer as a consideration for covering the risk.

  Property Insurance

  Property insurance covers specified property, which may be damaged or destroyed by events of perils, such as fire, storm or theft.

  Proposal

  If you wish to take out insurance you must complete a Proposal. This will form the basis of the contract between you and the insurer.

  Proposal Form

  A form used to gather information.

  Prospectus

  An easy-to-read summary of insurance covers.

  Public Liability Insurance

  Liability insurance protects you from loss or damage resulting from a claim for damages by a third party arising from negligence on your part.

• R

  Reinstatement Cover

  Reinstatement cover is a form of Property insurance that covers an insured item for its new replacement value if it is lost or damaged. The new item should be substantially the same as but not better than the lost or damaged item.

  Reinsurance

  As the primary or direct insurer the insurance company is often unable to carry the entire risk assumed under an insurance contract itself. It must pass on part of the risk to a reinsurance company (or another direct insurer); this does not affect its relationship with the policyholder. The reinsurer can also pass on risks to other insurers.

  Replacement Cost

  Paying a claim without deducting an amount for wear and tear.

  Replacement Value

  Replacement value is the value of the insured items at the time when the loss occurred (see also Current Market Value).

  Restrictions on Benefits

  Particularly in the case of the insurance of people, the insurance company may have to bear a greater risk as a result of previous illnesses, accidents, or poor physical condition at the time the insurance contract is closed. This may lead to a reservation (proviso).

  Riot Insurance

  Riot will usually be covered in conjunction with civil commotion and malicious damage subject to the policy's general and special conditions.

  Risk

  The likelihood of incurring misfortune or loss.

• S

  Schedule

  A document describing who is insured, what is insured, and the cover provided.

  Social, domestic and pleasure

  Motor insurance cover that is restricted to non-business use. If you use the car in connection with your work you may invalidate your policy.

  Special Conditions

  In addition to the general conditions, any individual conditions applying to the sections of a policy are set out in the special conditions.

  Subrogation

  The insurance company that makes the initial payments (e.g. in the case of Motor Liability insurance) has recourse to the person responsible for the loss, or to the policyholder if the loss was due to a tortuous act (such as gross negligence) or if the insurance cover does not suffice.

  Sum Insured

  The amount that is paid out by the insurer when an insured event occurs.

  Supplementary Insurance

  Supplementary insurance or additional benefits may be added to all the usual types of insurance policies in order to fit your requirements. This would usually incur an increase in the premium.

  Surcharge

  Certain covers are subject to retrospective adjustment following declaration. Should a declaration not be received, the insurance company will often apply a surcharge to the previous year's premium. This then becomes payable by the policyholder.

• Theft Insurance

  Theft insurance covers loss caused by burglary, robbery and sometimes simple theft in the case of Household Contents insurance, and loss caused by burglary and robbery in the case of Property insurance. Simple theft is the appropriation, without the use of force, of property belonging to another. Burglary or qualified theft occurs when rooms or receptacles within the rooms have been broken into. The term 'robbery' is used when a person steals from another while using force or threatening to do so.

  Third Party Fire & Theft

  Covers you to the level of Third Party Only. It will pay if your vehicle is stolen and/or set on fire.

  Third Party Only

  This is the basic requirement by law. It covers your responsibility to any other person or property involved in an accident with your vehicle.

  Travel Insurance

  Insurance is available for the most important risks associated with travelling: Accident insurance, Health insurance, Loss of Baggage insurance, Theft insurance, travel assistance and cancellation fee insurance.

• U

  Underinsurance

  When the policy limit is lower than the replacement value of an item. In the case of Property insurance this can have serious consequences for the policyholder, as he/she is not fully compensated for the damage. In the case of partial damage, the insurance benefits are also reduced in proportion to the underinsurance.

• V

  Valuables Insurance

  Insurance of valuables covers damage to jewellery, furs, paintings, musical instruments and other personal valuables as a result of theft or burglary, robbery, fire, water, loss as well as damage. Specific terms may be requested. The insured items are usually listed individually.

• W

  Water Damage Insurance

  Water damage insurance covers damage to the insured items by water leaking from water pipes, rainwater, melted snow and ice coming in through the roof, backwater from the sewage system and ground water, frost damage to water pipes, oil leaking from heating systems and tanks.

  Watercraft/Aircraft Insurance

  This insurance is similar to Motor insurance, including Liability, Hull and Passenger Accident insurance.