Glossary of Insurance Terms

The insurance industry uses quite a number of technical terms, usually fir reasons of precise meaning, which are not necessarily easy understood by the layman. This section clarifies what the key words and phrases that you’ll find in insurance documents mean.

VIS MAJOR (ACT OF GOD): Nugent v Smith (1876) “Natural causes directly and without human intervention and that could not have been prevented by any amount of foresight and pains and care reasonably to have been expected”

ADDENDUM: A document setting out agreed alterations to an insurance contract.(see also endorsement)

ADDITIONAL PREMIUM: A further premium payable by the insured as a result of policy endorsement, that may have increased the risk or amended the policy conditions or sum insured

ADJUSTER: One who investigates and assesses claims on behalf of insurers, (Claims Adjuster or Loss Adjuster)

AGGREGATE LIMIT OF INDEMNITY: The maximum amount an insurer will pay under a policy in respect of all accumulated claims arising within a specified period of insurance.

ALL RISKS: Term used to describe insurance against loss of or damage to property arising from any fortuitous cause except those that are specifically excluded

AVERAGE: A clause in insurance policies whereby, in the event of under-insurance, the claim paid out by the insurer is restricted to the same proportion of the loss as the sum insured under the policy bears to the total value of the sum insured.