Glossary   Glossary of Insurance Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Select the first letter of the word from the list above to jump to appropriate section of the glossary.

 - A -

 accident
- an unforeseen and unintended event which results in injury or damage.

accident insurance
- insurance against loss due to accidental event

accidental bodily injury
 - injury to the body as a result of an accident.

accidental death
- compensation payable to your estate should you sustain an injury that results in your death.

agent
- a person authorised to carry on business or affairs for another person.

application
- a request or claim, often on a prepared form.

 arson
- the wilful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.

aviation insurance
- aircraft insurance including coverage of aircraft, or the contents, the owners liability, and accident insurance on its passengers.

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- B -

 benefits
- the amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.

boat owner’s package
 - a special package policy for boat owners that combines physical damage insurance, with public liability insurance and other cover in the one contract; the package also covers sailboards, jet-skis and canoes.

broker
- represents the insured to determine the insurance needs of the insured and places the insurance at the best rate commensurate with security.

burglary
- forcible entry into another person’s property with the intention of stealing.

business insurance
- a special package policy designed for the needs of business, with buildings, stock, money, public liability and other cover in the one contract.

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 - C -

 cancellation
- the discontinuation of an insurance policy before its normal expiration date, either by the insured or by the insurance company.

car insurance
- insurance to cover the owners of private motor vehicles against a variety of hazards.

catastrophe
- an event, such as a hurricane or tornado, which causes a loss of extraordinary magnitude.

certificate of insurance
- a statement of coverage issued to the insured by the insurer.

claim
- a request for payment of a loss which may be covered under the terms of an insurance contract.

claims adjuster
- a person who settles claims.

commission
- the part of an insurance premium paid by the insurer to an agent or broker for services in procuring and servicing insurance.

comprehensive car insurance
- a policy designed to protect the owner of a motor vehicle against a comprehensive range of risks involving their own car as well as the property of a third party; this type of insurance is sometimes known as full cover.

compulsory insurance
- any form of insurance which is required by law.

compulsory third party bodily injury
- a policy designed to cover any costs involved in the bodily injury to a third party; this insurance is compulsory in all states of Australia and is generally linked to the vehicle's certificate of registration.

commercial vehicle insurance
- a policy designed to protect the owners of all types of commercial motor vehicle.

commercial property owner’s insurance
-a policy designed to protect the owners of commercial properties such as shops, office buildings and factories.

conditions
- provisions inserted in an insurance contract that qualify or place limitations on the insurer’s promise to perform.

contract
- a binding agreement between two or more parties for doing, or not doing, certain things; a contract of insurance is embodied in a written document called the policy.

construction insurance
- a policy designed to protect the hazards involved with a building under construction.

cargo insurance
- sometimes known as "goods in transit" insurance, designed to cover all types of goods whilst in transit.

cover
- the scope of protection provided under a contract of insurance; any of several risks covered by a policy.

crop insurance
-a policy designed to cover hazards encountered by the primary producer, such as fire and hail.

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- D -

depreciation
- a decrease in the value of property over a period of time due to wear and tear, or obsolescence.

disability
- a physical or mental condition that makes an insured person incapable of performing one or more duties of their occupation.

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- E -

effective date
- the date on which the insurance provided by a policy begins.

electronic equipment insurance
- often part of an office, surgery or business policy designed to protect against a variety of hazards involved with computers, X-ray, electromechanical, laboratory, dental and similar equipment.

embezzlement
- fraudulent use or taking of another’s property or money which has been entrusted to one’s care.

employee dishonesty
sometimes known as fidelity guarantee, covers against embezzlement of cash or goods by an employee.

excess
- the first portion of any claim that the insured agrees to pay.

excess buy out
- the removal of an excess by the payment of an extra premium.

exclusions
- items, events or circumstances which an insurance company will not pay for.

existing medical conditions
- an option within a travel policy for travellers who have seen a doctor within 60 days, or have an existing medical condition and require cover for that condition.

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- F -

farm insurance package
- a package policy designed to meet the needs of the primary producer.

fidelity guarantee insurance
- covers against embezzlement of cash and goods by employees.

fire
- a combustion accompanied by a flame or glow, which escapes from its normal confines to cause damage.

fire insurance
- coverage for loss caused by fire and lightning, plus resultant damage caused by smoke and water.

flood insurance
- coverage against loss resulting from flood.

full cover
- see comprehensive car insurance.

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- -G- -

glass
- protection for loss or damage to glass and its appurtances such as signage and security tapes.

goods in transit
- coverage for all types of goods moving from one place to another, against a variety of risks.

goods sold liability
- coverage for liability to a third party for damage caused by goods sold.

grace period
- a specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection for the policy continues.

gross premium
- the total premium paid by the policyholder.

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- H -

hazard
- a condition that creates or increases the chance of loss.

homeowner’s insurance
- a package of insurance providing home owners with a broad range of property and liability coverage.

hurricane
- a tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 120 km/h or more.

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- I -

indemnity
- a legal principle that specifies that an insured should not collect more than the actual cash value of a loss, but should be restored to approximately the same financial position as before the loss.

insolvent
- having insufficient financial resources (assets) to meet financial obligations (liabilities).

institute cargo clauses
- clauses which define various risks in goods in transit insurance.

insurance
- a system under which individuals, businesses, and or other organisations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation.

insurance company
- an organisation licensed to operate as an insurer.

insurance contracts act
- the commonwealth act which regulates the majority of the general insurance industry.

Insurance Enquiries and Complaints Ltd
-a company established to assist in improving and maintaining good relations between the insurance companies and their clients under a code of practice.

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- J -

joint tenants
- a form of joint property ownership with right of survivorship, in which the survivors automatically own the share of a deceased co-owner.

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- K -

knock for knock
- an arrangement between insurance companies where each company pays for its own clients' claims and does not cross claim from the other company, even if the driver at fault is insured with the other company.

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- L -

lapse
- the termination or discontinuance of an insurance policy due to non-payment of premium.

larceny
- the unlawful taking, carrying, leading, or driving away of another person’s property.

liability
- any legally enforceable obligation.

liability insurance
- insurance covering the policyholder’s legal liability resulting from injuries to other persons or damage to their property.

liquidation
- dissolving a company by selling its assets for cash.

loss
- the happening of the event for which insurance pays.

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- M -

malingering
- the practice of feigning illness or inability to work in order to collect insurance benefits.

marine (cargo) insurance
- a form of insurance primarily concerned with means of transportation and communication, and with goods in transit.

market value
- the price at which an item can be bought or sold at any particular time.

medical examination
- the examination given by a qualified medical practitioner to determine the insurability of an applicant; a medical examination may also be used to determine whether an insured person claiming disability is actually disabled.

minimum premium
- the lowest premium a company is prepared to accept, to underwrite a risk.


misrepresentation

- a false, incorrect, improper or incomplete statement of material fact, made in an application for a policy or in a statement of claim.

missed connection

- part of a Travel policy - covers for alternative travel costs, if a missed connection means you will be late for various specified events.

mode of premium payment
- the frequency with which premiums are paid, for example, monthly, quarterly, half yearly or yearly.

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- N -

net premium
- that portion of the gross premium which covers the benefits of the policy but does not include items such as government stamp duty or fire service levy.

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- O -

out-of-pocket expenses
- provides a sum of money for each day that you are confined to hospital overseas.

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- P -

package policy
- a combination of two or more individual policies or coverage into a single policy.

peril
- the cause of a possible loss, such as fire, storm, theft or explosion.

personal accident and illness insurance
- a policy designed to replace the income of a person who has been disabled due to accident or illness.

personal liability insurance
- cover for your legal liability in respect of accidental damage to other people’s property, or injury to a third party, and is usually part of a homeowners policy.

personal luggage
- part of a Travel policy - covers personal belongings that are taken on, or purchased during your trip - includes cover for travel documents and an emergency travel allowance.

physical damage
- damage to an item resulting from fire, theft, collision or other perils.

pleasure craft insurance
- also known as boat insurance, protects the boat owner against a variety of hazards.

policy
- the printed legal document which states the terms of the insurance contract that is issued to the policyholder by the company.

policy term
- that period for which an insurance policy provides coverage.

policyholder
- the person, persons, company or entity which owns an insurance policy.

pre-existing condition
- a physical and/or mental condition of an insured person which first manifests itself prior to the issuance of a policy for insurance.

premium

- the payment, or one of the periodic payments, a policyholder makes to keep an insurance policy in force.

product liability
- legal liability incurred by a manufacturer, merchant or distributor because of injury or damage resulting from the use of that product.

professional indemnity insurance
- a policy designed to protect the professional against claims due to some negligent act, error or omission.

provision
- a part (clause, sentence, paragraph etc) of an insurance contract that describes or explains a feature, benefit, - condition, requirement etc, of the insurance protection afforded by the contract.

public liability insurance
- a policy designed to protect a business against claims by third parties for negligent acts.

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- Q -

qualification period
- the period during which the insured must be totally disabled before becoming eligible for disability benefits.

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- R -

rate
- the pricing factor on which the insurance buyer’s premium is based.

regulation
- supervision of business practices by a government body.

reinstatement
- the resumption of coverage under a policy which has lapsed.

re-insurance
- assumption by one or more insurance companies for all, or part of a risk, originally underwritten by another insurance company.

renewal
- continuation of coverage provided by a policy, beyond its original term, by the insurer accepting a premium for a new policy term.

replacement cost
- the cost to repair or replace property at costs prevailing at the time of loss.

reserve
- an amount set aside by an insurance company as a liability to fulfil future obligations.

resumption of journey
- part of a Travel policy - should you need to return home early following the death of a relative, a benefit is paid towards the cost of resuming your trip.

retail business insurance
- a policy designed to give protection to a retail business.

return air fare
- part of a Travel policy - if you suffer an accident while travelling and miss more than a specified part of your trip, the cost of the air fare is reimbursed.

risk
- any chance of loss.

risk management
- any conscious action intended to reduce risk.

robbery
- taking property from a person by force or threat of violence.

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- S -

salvage
- recovery made by an insurance company by the sale of property which has been taken over from the insured as a part-loss of settlement.

self-insurance
- a form of risk financing through which a person or firm assumes all, or part of its own losses.

sickness insurance
- a form of health insurance providing benefits for loss resulting from illness or disease.

special risk insurance
- coverage for risks or hazards of a special or unusual nature.

specified contents
- items such as works of art, curios, furs, coins or collectables which need to be specified when taking out a contents policy.

specified personal property
- personal items,such as cameras, watches, jewellery and mobile phones, that are to be covered outside the home.

sub-standard risk
- an individual who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.

surgery insurance
- a policy designed to give protection for a variety of risks to those who operate surgeries and the like.

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- T -

tax audit insurance
- covers professional fees necessarily incurred during taxation audits relating to income tax, fringe benefits tax, or sales tax returns.

tenants in common

- a form of joint ownership in which the owners may have unequal shares and which does not involve a right of survivorship.

theft
- any act of stealing.

third party
- the claimant under an insurance policy, so called because the person making the claim is not one of the two parties (insured or insurer) to the insurance contract.

third party property damage
- a car policy designed to cover the owner for damage they may cause to the property of a third party.

third party fire & theft
- a policy designed to cover the owner for damage they may cause to the property of a third party, plus the loss by fire or theft of their own vehicle.

time limit
- the period of time during which a notice of claim, or proof of loss, must be submitted.

travel delay
- part of a Travel policy - covers for reasonable additional meals and accommodation expenses if your journey is delayed for more than a specified number of hours.

travel insurance
- coverage for risks which may occur while travelling.

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- U -

underwriting
- the process of selecting risk for insurance and determining in what amounts, and on what terms, the insurance company will accept the risk.

uninsurable risk
- person, event or item not acceptable for insurance due to excessive risk.

unspecified personal property
- personal items,such as cameras, watches and jewellery to be covered outside the home, but not specified on the policy - usually limited to a total sum insured, for instance $4,000 with a maximum for any one item of, for instance, $750. Usually part of a Contents policy

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- V -

valuation
- a certificate issued by a competent authority to confirm the value of an item.

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- W -

waiting period
- the length of time the insured must wait before a benefit is paid under a sickness and accident policy.

will
- the legal statement of a person’s wishes concerning the disposal of his or her property after death.

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- X -

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- Y -

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- Z -

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