Glossary of Terms


An unforeseen, unexpected, and unplanned event.

Accident Report Form:

A form used to record key information about the accident.

Accidental Bodily Injury:

Physical injury sustained resulting from the accident.

Accidental Damage:

Loss or damage by an unforeseen event that is outside the control of the Insured.

Act of God:

An accident or event arising out of natural causes without human intervention.

Adjuster / Loss Adjuster:

An independent professional appointed to act on behalf of an insurance company to investigate claims and recommend settlement options based on estimates of damage and terms of the insurance policies held.

Agent / Insurance Advisor:

Authorised representatives who sells, services, or negotiates insurance contracts on behalf of the company.

Aggregate Limit:

The maximum dollar amount or total amount of coverage payable for a single loss, or multiple losses, during a policy period, or on a single event.

All Risks:

Physical loss or damage to the property insured as a result of a broad range of causes other than those causes excluded by the policy.

Average Clause:

A condition introduced in an insurance contract whereby, if at the time of an accident or loss, the value of the property exceeds the value for which it is insured, the claim will be proportionately reduced. The Insured is responsible for the difference. To avoid the application of average, ensure adequacy of the sum insured at all times.


A term used to describe the amount to be paid to a claimant, assignee, or beneficiary upon the happening of an event.

Bodily Injury:

Physical injury including sickness or disease to a person.


A form of surety or debt security used to provide guarantee to pay a sum of money in the event of failure to deliver or perform as per the terms of the contract.


A full time insurance specialist who advises and arranges insurance normally as an agent of the insured, and generally sells insurance of various kinds for several companies.


The forcible and violent entry into or exit from premises in an attempt to remove or damage property by a perpetrator. In the legal sense, ‘burglary’ is committed during the hours of darkness.

Business Interruption:

Also known as consequential loss or loss of profit, the policy covers loss of income resulting from property damage arising out of the operation of an insured peril. There must be interruption for a period immediately after and in consequence of material damage of property in the trading activities of the business and during the interruption the business suffers a loss of or a reduction in turnover.


A demand to the insurer by, or on behalf of, the insured person for the payment of benefits under a policy.


Specific statements on a policy document as regarding any aspects of basic or extended cover, a distinct condition, stimulation or provision. Usually they give explicit details on the exact nature of such cover and the limitations and conditions under which they are given.


An arrangement by which the insurer and other insurance companies share, in specific ratios, insurance coverage on a property and payment for losses covered by the policy, after the deductible is met.

Commercial Motor Vehicles (Private):

Vehicles used for the carriage of the insured’s own goods for his business purposes.

Commercial Motor Vehicles (Public):

Vehicles used for haulage of goods for hire or reward but exclude the carriage of fare paying passengers.

Comprehensive Cover:

Cover provided to the policyholders for damage to the motor vehicle caused by collision, fire, theft, falling objects, vandalism and other perils covered by the policy.


Terms or requirements to which the policy is subject.

Contents (Household):

Personal belongings, appliances, electronic equipment, furniture, valuable property including jewellery, fixtures and fittings, including interior decorations within the boundaries of the premises.

Contents (Commercial):

Machinery, plant, equipment, tools, office and other furniture, fixtures, fittings and office supplies, and tenants improvements.


An amount for which the insured is responsible in respect of each and every claim made for loss or damage to the property. It is expressed as either a flat amount or a percentage of the value of the property or the loss.


The decline in an object’s value due to age, wear and tear, or obsolescence.


Property coverage for loss or damage resulting from a sudden shaking or trembling of the earth caused by rock shifting below the earth surface, including that caused by volcanic eruption. Loss from earthquake will be paid if there had been a measurement on the Richter Scale.

Effective Date:

Date the insurance cover begins or takes effect.

Electrical Clause:

Serves to highlight the fact that damage to electrical apparatus, equipment, etc., due to short-circuiting, arcing, overrunning, etc. is excluded although damage to surrounding property due to resulting fire is not.

Employers’ Liability:

Covers the potential legal liability of employers to compensate an employee for injury sustained during the period of employment.


Written evidence of changes made to the original insurance contract.


An amount for which the insured is responsible in respect of each and every claim made for loss or damage to the property. It is expressed as either a flat amount or a percentage of the value of the property or the loss.

Exclusions / Exceptions:

Specified events that are not covered by the insurance policy.

Expiration Date:

The date insurance cover ceases.


Clauses that give the details of addition cover provided. Eg. Removal of Debris, Capital Additions, etc.


The accumulation of water where it ought not to accumulate, or the escape of water from its natural or non-natural confines.


Factors that may influence the outcome of an increase or loss.

Homeowners Insurance:

An ‘all risks’ package policy that combines real and personal property with personal liability coverage. Coverage applies to dwellings, contents and other buildings or structures on the insured premises.


The forcible and violent entry into or exit from premises in an attempt to remove or damage property by a perpetrator. In the legal sense, ‘housebreaking’ is committed during daylight hours.

Insurable Interest:

In life insurance, a person’s or party’s interest whether financial or emotional, in the continuing life of the insured.

A beneficiary has an insurable interest in the life of the persons insured if he has a reasonable expectation of benefit from the continuance of the insured’s life or of suffering a loss if the insured should die.


A risk transfer mechanism whereby the Insured transfer the risk of loss or damage to property, or potential legal liability to an insurance company in exchange for an agreed premium.

Insurance Certificate:

A document issued to provide evidence of the existence of insurance.

Insurance Policy:

The written evidence of the contract between an insurance company and Insured.


The person and dependent(s) covered for insurance under a policy and to whom, or on behalf of whom, the insurer agrees to pay benefits.


An entity authorised to issue insurance contracts/policies.


A final decision rendered by a Court of Law.

Limit of Liability:

The maximum amount payable under an insurance policy to third parties for property damage, bodily injury or death.

Loss of Use:

A benefit provided under a motor insurance policy to compensate for the cost of alternative transportation following an accident.

Named Drivers:

Person(s) named in a motor insurance policy as the driver(s) permitted to drive the vehicle.

No Claim Discount/Bonus:

A progressive discount given by an insurance company to policyholders for claim-free and/or accident free driving.

Non-participating Polices:

Policies under which policyholders are not entitled to policy dividends.

Participating Policies:

Policies under which policyholders are entitled to share in the surplus earnings of the company through policy dividends.


Prime cause giving rise to a loss. Eg. Fire, Flood and Earthquake.


The payment that a policyholders makes to own an insurance policy.

Private Motor Vehicle:

Motor vehicle used for social domestic and pleasure purposes in addition to the insured’s personal business but excluding commercial travelling and use for hire and reward.


The prospective insured that is the party proposing to effect the insurance.

Proposal Form:

A form presented for completion to the party seeking insurance cover. It forms the basis of the contract between the proposer and the insurance company.


Continuation of cover beyond the original term (usually one year) by acceptance of a premium for a new term.


The restoration of a lapsed policy to full force.


An amount set aside by the insurance company as a liability in the financial statement to provide for future obligations to policyholders.


The probable amount of loss foreseen by an insurer in issuing a policy.  The term sometimes applies to the person or subject matter.

Sum Insured:

The maximum amount that an insurer will pay out in the event of a claim. It is the proposer’s responsibility to determine the sum insured.

Third Party:

The person or entity that has a claim against the insured by alleging a breach of legal duty by the insured.


Terms or requirements specified in the insurance contract that must be strictly upheld by the insured to qualify for indemnity.