A

Accident

An event that is sudden, unforeseen and unintended

Aggregate

The total amount an insurer will pay in claims costs during any one period of cover

Agreed Value

The value placed on an insured asset that has been agreed upon by both the insurer and the insured

Assessor

Also known as a loss adjustor, this is a person who investigates a claim on behalf of the insurer

B

Broker

A person or company that acts as an intermediary between the insurer and the insured

Brokerage

A set commission amount that a broker receives from an insurer when a policy is placed with that insurer

Burglary

Where assets are stolen from a building or vehicle where force, violence or threat of violence has been used to gain entry

Business Interruption

Insurance cover for loss of income or additional costs incurred in the event of a material damage loss

C

Cancellation

The termination of an insurance policy before the expiry date

Claim

Notification to the insurer of a loss that is covered by the policy

Claimant

The person who makes a claim, usually the insured

Cover

The scope of protection an insurer provides with an insurance policy

D

Deductible

Also known as the excess, this is the portion of any insurance claim that the insured is responsible for paying first, before the insurer will make any payment

Depreciation

The reduction in the value of an asset due to time, wear and tear

Duty of Disclosure

The duty of the insured to inform the insurer of all facts that are considered material

E

Earthquake Commission (EQC)

A government agency of New Zealand that provides cover under residential home and contents policies in the event of an earthquake or natural disaster

Endorsement

A change to an existing insurance policy made during the period of cover, usually to add or reduce the current cover

EQC Premium

A compulsory premium charged on all residential home and contents policies by EQC

Ex Gratia

A payment made by an insurer as a gesture of goodwill when they are not required to make payment under the policy

Excess

Also known as the deductible, this is the portion of any insurance claim that the insured is responsible for paying first, before the insurer will make any payment

Exclusion

A term in an insurance policy which excludes a particular circumstance from cover

Expiry Date

The date that an insurance policy will cease

F

Fair Insurance Code

A code of practice that must be adhered to by all members of the Insurance Council, which sets standards for insurance companies to abide by

Fire Services Levy

A compulsory premium charged by the New Zealand Fire Service on all policies where fire cover is provided

I

Inception Date

The date that an insurance policy comes into effect

Indemnity Value

The current value of an asset, taking into account its age and current condition

Indemnity Period

A time period during which cover is provided under a policy for losses incurred due to disruption to your business activities, usually found in a business interruption policy

Insurance Contract

A formal agreement between the insured and the insurer, agreeing to the cover being provided. Usually an insurance contract is made based on a written application or declaration in return for a policy schedule and policy wording

Insured

A person who is insured under the insurance contract

Insurer

The provider of insurance cover under the insurance contract

K

Knock-for-Knock Agreement

An agreement formed between some insurers in relation to motor vehicle claims, where each insurer pays the repair costs for their own customers, without attempting to recover from the insurer of the at fault party

L

Lapsed Policy

A policy that has expired at the end of the period of cover without being renewed

Liability

The responsibility of a person or entity for injury or damage caused to a third party

Loss

Damage, injury, financial loss or liability suffered by the insured

Loss Adjuster

Also known as an assessor, this is a person who investigates a claim on behalf of the insurer

M

Market Value

The value of the asset (usually a vehicle) in today’s market, prior to a loss occurring

Material Damage

An insurance policy that provides cover for physical loss or damage to business assets

Material Fact

A fact that would influence an insurer when determining whether they would offer cover, or when determining the terms and conditions of that cover

N

Natural Disaster

An earthquake, natural landslip, volcanic eruption, hydrothermal activity or tsunami

Negligence

When a person or entity fails to exercise reasonable care so as not to cause injury, damage or loss to another person or property

No Claims Bonus

A discount to an insurance premium earned when no claims are made by the insured in a given period of time

Non-Disclosure

When the insured fails to inform the insurer of a material fact

P

Peril

An event that causes a loss, such as fire, burglary, flood etc

Period of Cover

The time period in which an insurance policy is valid

Policyholder

A person who is insured under the insurance contract

Policy Limit

The maximum amount the Insured will pay under the insurance policy

Policy Schedule

A document issued by the insurer outlining the limits, terms and conditions of the insurance contract

Policy Summary

A document issued to the insured summarising the terms and conditions of the insurance contract. This is usually provided by a broker, and does not always have the full information provided by a policy schedule.

Premium

The amount paid by the insured to confirm acceptance of the cover offered by the insurer

Present Value

The cost to repair or replace an asset to return it to its condition prior to the loss, taking into account its age and condition

Q

Quote

An estimate of the premium required to confirm an offer of an insurance policy

R

Reinstatement or Replacement Value

The cost to repair or replace an asset, using current building standards or equivalents

Reinsurance

Insurance cover purchased by insurance companies

Reinsurer

A company that provides insurance to insurance companies

Renewal

When both the insurer and the insured agree to continue a policy past the expiry date

Risk

An exposure that has the possibility of resulting in a loss

S

Specified Item

An item that is listed separately on the policy with a specified sum insured

Sub-Limit

A limitation on the policy for a particular event or loss, even though the sum insured may be higher than the sub-limit

Sum Insured

The maximum amount of cover provided under the policy for an insured item

T

Theft

Where assets are stolen without any sign of forced entry, violence or threat of violence

Third Party

Any person or entity that suffers a loss other than the insured

Third Party Liability

Cover for your liability in relation to damage, injury or loss caused to a third party

Total Loss

When the asset is uneconomical to repair, or the repair costs exceeds the value of the asset

U

Underinsurance

When the sum insured on the policy is less than the value of the insured item

Underwrite

The process an insurer undertakes to assess the risk and determine premiums and policy conditions

Underwriter

The person or entity who underwrites insurance policies. Is often used when referring to an insurer

Uneconomic to Repair

When the repair cost of the asset exceeds the market value

Utmost Good Faith

A legal principle where each party in a contract is required to act in good faith towards each other. In insurance, this refers to the insured and the insurer

W

Warranty

A condition on a policy that states certain conditions that must be fulfilled in order for cover to apply