Confused?

Insurance can be a bit confusing sometimes, which is why we've picked some of the most common terms to put an explanation to!

ABI See Association of British Insurers.

Accidental Damage In insurance terms, accidental damage happens to either a building or its contents. An example of accidental damage to a building would be putting a foot through a wall, which would require a buildings insurance   claim. Accidental damage to contents would be something like dropping paint on a rug, which would require a contents insurance claim.

Accidental Damage Protection This type of cover protects your property against damage caused by an accident. Many standard buildings insurance and   contents insurance   policies will already include a level of accidental damage protection, so check the small print to see exactly how much. You can always extend the level of accident protection if you need more.

Association of British Insurers (ABI) Formed in 1985, the   ABI   is the UK insurance industry's trade body, and has around 400 companies in membership.

Act of God In insurance terms, Acts of God refer to unpreventable and unpredictable events that cause damage to property. These can include such things as earthquakes, lightning, and damage caused by war.

Alarm An alarm is a security device that is fixed in a visible position on an external wall to act as a deterrent against break in. Basic devices emit a loud, piercing alarm when triggered, whilst more sophisticated ones also alert the police or a security firm. Having an approved burglar alarm fitted could reduce the cost of   insurance.

All risks This type of insurance protects certain contents for when they are taken outside of your home, e.g. laptop, MP3 player, digital camera or jewellery.

Amendment If you change your original policy, this is called an amendment. For example, if a new extension requires more cover, your existing policy can be amended to take this into account.

Annual Premium Quite simply, the annual premium is the amount of money your home insurance costs for a year.

Broker An independent insurance expert. Many insurance companies and syndicates, such as Lloyds of London, sell their services through intermediaries known as brokers.

Buildings The term ‘buildings' refers to your entire property, not just the part you work or live in, i.e. such things as garages and any other outbuildings, plus fences, gates and walls, will also be included.

Buildings Cover See Buildings Insurance

Buildings Insurance Buildings insurance covers the structure, fixtures and fittings of your property, e.g. roof, walls, ceilings, floors, doors and windows, fitted kitchens, built-in cupboards and bathroom suites. Most buildings insurance policies will also cover certain outdoor structures such as sheds, garages, gazebos and greenhouses.

Cancellation You are free to end an insurance policy whenever you like, even before the date it's due to finish. However, you may still have to pay charges for doing so, e.g. a cancellation fee, a percentage of the annual premium, or continued payments until the end of the next full month.

Certificate of Insurance Once you've signed up for an insurance product online, you will then be sent a paper certificate as hard-copy proof of insurance, although increasingly, companies are moving to electronic certificates.

Claim A claim is what you make to an insurance company after suffering a loss that is covered under the policy. In effect, you are ‘claiming' for compensation for your lost, stolen or damaged property. A claim requires that you complete a claim form.

Claim Form The form that a claimant needs to complete when seeking compensation for lost, stolen or damaged property from an insurance company.

Claims History The number of claims you've made in the past, plus the value of those claims, make up your claims history. If you've made many claims, insurance companies may consider you a higher risk and charge higher premiums for cover. Likewise, if you have no claims history (i.e. you've never made a claim), premiums could be lower.

Conditions All insurance policies contain a list of conditions. These conditions are the framework within which insurance policies are valid. If you break these conditions, the policy could be rendered invalid and any claims might not be paid out.

Contents The term ‘contents' refers to the possessions you keep in your property, such as electronic goods, CDS/DVDS, furniture, jewellery, clothing etc.

Contents Cover See Contents Insurance

Contents Insurance Contents insurance provides protection for your household possessions – items such as electronic goods, CDS/DVDS, furniture, jewellery, clothing etc. High value items – such as expensive antiques, electronic goods and jewellery – may need additional cover. To find out the extent of the contents cover, always read the insurance policy small print. If you want to protect the actual structure, fixtures and fittings of your home, you will require buildings insurance.

Cover Limits This refers to the maximum cash limits that you are covered for under an insurance policy. Any payments from the insurer will not exceed these limits.

Depreciation When making a claim, depreciation refers to the amount of reasonable wear and tear an item you're claiming on will have suffered since its purchase. Unless you have a new-for-old clause in your policy, the amount of depreciation will be taken into account, and that amount deducted from any payout. When a single item is covered by two separate insurance policies, it is said to have dual insurance.

Due Diligence Due Diligence refers to the reasonable care that you are expected to take in looking after insured property. For example, if you leave jewellery next to an open window that's easily reachable from the street, you are not showing due diligence with regards to its care. If it's found that due diligence wasn't exercised after a claim is made, your insurer may deny compensation.

Duty of Disclosure Insurance providers require that you give accurate and honest information when taking out home cover and that you keep them notified of any incidents or changes to your details during the life of the policy. This obligation is known as a duty of disclosure.

Duty to Minimise Loss If damage occurs within your home and you make a claim, you have a duty to ensure that things don't get worse and the claim grows. For example, if a bathroom is leaking through to the living room below, you have a duty to move any furniture that could be affected.

Endorsement If your policy needs to be modified in any way, it is done so with the addition of what is known as an endorsement.

Excess Excess is the amount of money that you pay in the event of a claim. Offering to pay an excess will result in cheaper premiums, and the higher the excess you opt to pay, the lower the premiums could be.

Exclusions Insurance exclusions will be set out in the policy small print, and refer to anything that is not covered. For example, a typical insurance exclusion would be ‘properties left unoccupied for a 30-day period or more would not be insured during this time'. This means that if a property burns down or is burgled during a month or more when it's left empty, you would not be able to claim. Read the policy terms and conditions to see the full list of exclusions.

Expiry Date The last day that your insurance protection is valid. Beyond this date, you may not be covered. See also Renewal Date.

Financial Ombudsman Service Financial Ombudsman Service is the official body that settles complaints between customers and financial service providers (such as insurance companies).

Financial Services Authority (FSA) The   FSA   is the financial regulator of all UK providers of financial services (such as insurance companies).

Force Majeure In insurance terms, Force Majeure refers to an extraordinary or unforeseeable event (e.g. earthquake, war, riot) that causes damage and is therefore nobody's fault. See also Act of God.

Freezer Cover Freezer cover is a type of home insurance ancillary that covers your food should your freezer malfunction or if there's a power cut.

Garden Cover Many buildings and contents insurance policies will already have a level of cover for outdoor structures like sheds, garages, gazebos and greenhouses (check the policy small print to see exactly what's covered). However, if you require more protection, garden cover can insure specific valuable items such as expensive tools or an expensive bicycle.

General Terms and Conditions The terms and conditions are the clauses set out in the policy small print that detail your exact level of cover, and the rights and obligations of both parties (i.e. you and the insurance company) with regards to the insurance contract.

Good State of Repair Many insurance companies will not insure a property unless it's in a good state of repair – meaning it should be structurally sound with no incomplete building works, and it should have no evidence of dry rot, damp, infestation, faulty wiring or plumbing, or roof /chimney damage.

High-Risk Items In general, high-risk items are possessions which burglars are particularly likely to target during a break in. They include such things as: antiques; audio/visual equipment; coin, stamps and medals; computers (including components and accessories); curios; artwork; furs; watches and clocks; jewellery; cameras and games consoles.

Home Contents Insurance See Contents Insurance.

Home emergency cover Home emergency cover is a type of additional feature that can be added to home insurance. It can take care of 24-hour emergency call outs (plumbers, electricians etc), call-out fees, cost of labour, and the cost of parts (usually up to a specified cash limit).

Home Insurance The collective term for both buildings insurance and contents insurance.

Home/Property This is the place that is being insured, and includes the entire property, which can include garages, any other outbuildings, fences, gates and walls.

Home Security Home security refers to such things as burglar, door locks, window locks, external lighting, and neighbourhood watch scheme etc. Insurance premiums may be cheaper if your home is very secure as it will be more difficult to burgle, therefore presenting a lower risk to the insurer.

Inception date See Policy Start Date

Indemnity This is the main principle of insurance. Insurance exists to replace something that has been lost or damaged, and an indemnity seeks to restore the insured person to the same financial position after the loss as immediately before.

Insurance Documents Even though you are buying car insurance online, you will still be sent a paper hard copy of your insurance policy. This paperwork comprises your insurance documents and should be kept in a safe place.

Insured Incident If your property is damaged, or contents stolen or damaged, and this theft/damage is covered by your insurance, the event is known as the insured incident.

Insured Value This refers to the maximum amount the insurance company will pay out on your property if stolen or damaged. If you have a like-for-like policy, stolen goods will be replaced as new; otherwise, depreciation will be deducted from any payout.

Intermediary See Broker

Insurance premium See Premium

Insurance Premium Tax (IPT) IPT is a government tax on insurance. The standard rate is 5% and is automatically added onto the insurance quotes you receive.

Joint Proposer If you are buying home insurance with a partner or with someone else you share the home with, you are both joint proposers.

Legal Expenses Insurance (LEC) Legal Expenses Cover is included in some insurance policies or it can be added as an upgrade. If someone is injured at your place of business or home, it can cover you for costs of being sued, or it could finance your claim against someone else.

Liability If you're to blame for an accident at your property, you are liable for the costs. Or put another way, if the liability of an incident lies with you, then you are responsible both legally and financially for paying any damages.

Loss A loss is something that causes you to seek compensation from your insurance company – such as property damage or theft. Literally speaking, it refers to a loss in value to your overall wealth, due to the devaluation of your property through damage or theft.

Loss Adjustor A person employed by an insurance company to investigate and settle insurance claims.

Loss Assessor An insurance company employee whose job it is to assess the level of risk of an undertaking, and then make a decision as to whether it is insurable, and if so, what the premium should be. For example, the ‘undertaking' would mean ‘whether to insure you as a homeowner', and the rating factors would include such things as your postcode or claims history. In practice, much of the loss assessor's job is automated, which is how you are able to receive online quotes within minutes.

Material Fact This is any factor that might affect an underwriter's decision to provide you with insurance. You are obliged to advise your insurance company of any material facts, such as previous claims. If a Proposer withheld or gave inaccurate material facts when applying for home insurance, if a claim is later made, the insurer could refuse payment.

New-For-Old If your contents insurance policy has this feature, then you are entitled to a brand new replacement for any insured items that are stolen or damaged, regardless of age. However, some exclusions may apply so make sure you read the policy terms and conditions.

No Claims Bonus (NCB) Insurance deals can include a no claims bonus feature. This is a discount that you might receive on your insurance premium as a reward for extended periods without making a claim. The discount tends to increase the more years that the policyholder remains claim-free.

No Claims Discount See No Claims Bonus.

Obligation to Notify Insurance providers require that you give accurate and honest information when taking out home cover and that you keep them notified of any incidents or changes to your details over the life of the policy. This is your obligation to notify.

Over insured Over insurance occurs when you buy more insurance than you actually need. For instance, you only need buildings insurance cover up to the rebuild value of the home, and not its market value – which could be the difference of tens of thousands of pounds. Likewise, don't buy too much contents cover. Walk room to room in your home and tot up the value of all your contents, then get insurance to match that value.

Period of Cover This is basically how long your insurance lasts. When buying home insurance you usually pay for 12 months of cover, in which case, your period of cover is 12 months from the policy start date.

Personal Possessions Cover See All Risks Cover.

Policy Your policy is the type of home insurance you have bought from the insurance company, as detailed in the insurance contract that will be sent to you as part of your insurance documents.

Policy Documents See Insurance Documents.

Policyholder Once you get an insurance policy in your name, you become the policyholder.

Policy Schedule See Schedule.

Policy Start Date This is the date from which you become protected with insurance.

Policy Summary This is a summary of the key points of an insurance policy, outlining such things as level of cover, period of cover, names of the insured etc.

Premium The premium is the amount you pay for insurance. You usually buy 12 months of insurance at a time, which can be paid for up front in one go, or spread over monthly instalments. There is often a discount if you pay the entire premium up front.

Proposal Form The proposal form is the old fashioned name for the online form you fill in to apply for insurance.

Proposer Before your insurance application is approved, you are known to the insurance company as the proposer. Once you pay for the policy, you become the policyholder.

Pro Rata Rates Some insurance policies will refund you money at a pro-rata rate if you cancel your cover. E.g. if you have to cancel your insurance after nine months, you will receive a refund equal to three months of premiums, less any cancellation fee.

Premises Another name for the property that is to be insured. This address will be shown in the policy schedule, which will be sent to you once you've bought the cover.

Quote After applying for cover, the insurance company will assess your details and then tell you how much money they will charge you for cover. This amount of money is known as a quote.

Rating Factors Various factors are used by underwriters to determine the price of your insurance. Rating factors include such things as your postcode, claims history, securities etc. If an insurance company considers your proposal a high risk due to rating factors, then you will pay more for insurance. However, don't be tempted to give false information to get cheaper quotes. In the event of a claim, this could backfire if found out and your claim could be dismissed.

Rebuild Cost This is what it will cost to rebuild your property in the event it is destroyed. You can use a rebuild calculator or a surveyor to find the cost.

Renewal Renewal refers to continuing an insurance policy once the policy period has expired. Many home insurance policies will be automatically renewed unless you notify your insurance company that you intend to change provider.

Renewal Date Your insurance renewal date is the date your existing insurance runs out. You will need to renew your insurance by this date in order to remain covered, unless your insurance provider automatically renews you.

Renewal Notice Your renewal notice is generally sent out by your insurance company 21 days before your renewal date. This notice will give you details of your renewal quote. Often your insurance company will automatically renew your policy (if you paid by Direct Debit previously), which means there is no risk of a gap in cover.

Replacement as New See New-For-Old.

Risk All insurance in the UK is offered after assessing the property's risk. Risk is the likelihood that a claim will be made on your property. If an insurance company thinks it's very likely a claim will be made, then it's classed as a higher risk, if it's less likely, then it's a lower risk. Insurers assess risk by looking at the details provided in your application (proposal) form.

Risk Address This refers to the address of the property that is to be insured.

Risk Factors See Rating Factors.

Schedule Your insurance documents are usually made up of the policy wording and the policy schedule. The schedule will probably include such information as the sum insured, any discount details, the period of insurance, details of premiums etc.

Security See Home Security.

Settlement The amount an insurance company agrees to pay out on a claim.

Single Article Limit This is the maximum amount a single item can be insured for in your home under an insurance company's standard policy. The limits can vary between home insurers. Valuables can still be insured separately with additional insurance.

Special Conditions In addition to its General Conditions, an insurance company can also impose Special Conditions on an insurance policy. Always check the policy's small print to read the conditions of your cover.

Subsidence A problem affecting the structural soundness of some homes. Subsidence happens when the land a home is built on gives way under the weight of the property. Whether this subsidence is very slight or very major, the property would probably require underpinning for it to remain structurally safe. Because of the increased risk caused by subsidence, some insurers may not to cover an affected home and special insurance may be needed.

Sum Insured This refers to the maximum amount of money your buildings and contents are insured for, and the insurance company will not pay out more than this amount in the event of damage or theft.

Under insured Being under insured happens when you undervalue your property when applying for insurance. In contents insurance terms, it's very important not to under insure as insurance providers might not pay out a full claim if you are not properly covered for your total contents. In buildings insurance terms, homeowners can become under insured if they add an extension but then fail to up their insurance to cover the new, increased value of the property. It's possible that, if part of the new extension gets damaged, a claim could be denied as it wasn't covered under the original policy.

Underwriter An underwriter assesses the risk of a person who has made an insurance application on a particular property, decides whether to accept that risk, and then sets the terms of acceptance (i.e. conditions and premiums).

Valuables Valuables refers to expensive possessions that are considered high-risk by an insurance company, and will therefore require additional insurance. Valuables typically include expensive jewellery, artwork or valuable antiques.

Voluntary excess See Excess.

Warranty Another term for a special condition that an insurer might apply to a policy in order for it to be acceptable. For example, if a Take-Away has deep fat fryers these must be serviced annually.

Wear and Tear See Depreciation.

Year Built As insurance companies will need to know the age of the property that they're being asked to insure, you will be asked for the year the home was built on the insurance application form.

Yearly Premium See Annual Premium.