Insurance Definitions

Material Fact

Any fact that would influence the insurer in accepting or declining a risk or in fixing the premium or terms and conditions of the contract is material and must be disclosed by a proposer to the insurer

Non-Disclosure

The failure by the insured to disclose a material fact or circumstance to the insurer before acceptance of the risk

Period of Risk

The time period during which the insurer can incur liability under the terms of the policy

Peril

A contingency of fortuitous happening which may be covered or excluded by a policy of insurance.

Policy

A document detailing the terms and conditions applicable to an insurance contract and constituting legal evidence of the agreement to insure. An insurer issues it for the first period of risk. On renewal a new policy may well not be issued although the same conditions would apply and the current wording would be evidence by the renewal receipt.

Policy Holder

The person or organisation in whose name the policy is issued. (See also insured).

Premium

The consideration paid for a contract of insurance. An insurance premium is the money the policyholder pays to the insurer for insurance protection for the period of risk.

Proposal Form

An application form completed by a person requiring insurance so as to provide sufficient information to allow the insurer to decide whether or not to accept a risk and what conditions to apply if accepted.

Quote

A statement by an insurer of the premium they will require for a particular insurance.

Reinstatement

Making good. Where insured property is damaged, it is usual for settlement to be effected through the payment of a sum of money, but a policy may give either the insured or insurer the option to restore or rebuild instead.

Renewal

The process of continuing an insurance from one period of risk to a succeeding one.

Risk

The peril insured against or an individual exposure.

Risk Management

The identification, measurement and economic control of risks that threaten the assets and earnings of a business.

Schedule

The part of a policy containing information peculiar to a specified Insured.

Statement of Fact

An alternative to a completed proposal form. A statement provided by the insurer clarifying the basis on which insurance is accepted and what conditions apply

Subject to Survey

Phrase used by an insurer to signify provisional acceptance of an insurance pending inspection by a surveyor whose report is necessary to determine the rate and conditions applicable.

Sum Insured

The maximum amount payable in the event of a claim under contract of insurance.

Third Party

A person claiming against an insured. In insurance terminology the first party is the insurer and the second party is the insured.

Third Party Liability

Liability of the insured to persons who are not parties to the contract of insurance and are not employees of the insured

Underwriter

A person who accepts business on behalf of an insurer.