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A
  • ABI

    Association of British Insurers, the principal representative body for companies, including some foreign companies, authorised to carry on insurance business in the UK.

  • Acceleration clause

    The part of a contract that says when a loan may be declared due and payable.

  • Acceptance

    The agreement by an insurer to accept a proposal for insurance which ordinarily concludes the contract even though the policy may not be issued until later (see also notification).

  • Accident basis

    A basis of reporting for general insurance business in the Accounting and Statements Rules, according to the calendar or accounting year in which an accident or loss occurred (compare with underwriting basis).

  • Accidental damage

    Damage caused by accidental means as opposed to fire, theft or reckless conduct on your part. Accidental damage is usually subject to a policy excess for each claim.

  • Accidental death benefit

    In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions as well as time and age limits.

  • Acquisition cost

    Cost associated with the underwriting of new business, including commission paid to brokers and agents (and to the cedant company in the case of reinsurance)

  • Active participant

    Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.

  • Actuary

    A person qualified to apply the mathematical doctrines of probability and compound interest to the statistics on which life insurance and pension business etc. are based; in the UK an actuary will normally have qualified as a member of the Institute of Actuaries.

  • Adjuster (loss)

    An independent professional individual who is engaged by insurers to settle large or complex claims.

  • Agent (insurance)

    A person who introduces insurance business to the insurer, in law an insurance agent is agent, if at all, for the prospective policy holder although remunerated by the insurer; the term is also used of the employees of an insurance company who seek business for the company.

  • Aggregate excess of loss

    A form of excess of loss reinsurance which indemnifies the ceding company against the amount by which the ceding company's losses incurred during a specified period exceeds either a predetermined sum or a percentage of the premium income for the class of business concerned; also known as stop loss or excess of loss ratio reinsurance.

  • Agreed Value

    The value of the insured items is agreed by you and the underwriters at the start of the period of insurance. This value then applies at the time of a claim.

  • All risks

    All risks cover provides the broadest form of insurance cover. Such policies do not name the risks covered but list the exclusions and all unnamed risks are automatically covered.

  • Annual allowance

    This is the maximum amount of money you can put into your pension funds in a given tax year, and still claim tax relief.

  • Annual basis

    Accounting for general insurance business whereby a result is determined at the end of the accounting period reflecting the profit or loss from providing insurance cover in that period (compare with fund basis).

  • Annuity

    At retirement – but before you reach age 75 – you have to buy an annuity with your pension fund. It’s a payment that’s usually paid monthly, which you’ll receive as a guaranteed regular income during your retirement.

  • APR

    Annual Percentage Rate. The figure next to this abbreviation shows you the total cost of taking out a loan, as a percentage, taking into account the term, interest rate and other costs.

  • Arbitration

    An alternative to litigation for the settlement of insurance disputes; contracts often specify the place of arbitration in the event of a dispute.

  • Asset allocation

    Asset allocation is the process of putting your investment into a range of different investments such as equities, gilts, property and bonds. By diversifying the assets into which you invest, you can protect against any reduction in value of any one or more asset class. Asset allocation depends on your investment plans and attitude to risk.

  • Assignment

    The transfer of rights under an insurance policy to a third party, often as security for a loan, in English law, obligations under an insurance policy may not normally be assigned without the consent of the insured, such a transaction being known as novation.

  • Average

    Condition of average is the insurance term used when calculating a payout against a claim where the policy undervalues the sum insured.

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B
  • Balance sheet

    An accounting term referring to a listing of a company's assets, liabilities and surplus as of a specific date.

  • Basic state pension

    This is the pension you receive from the government as a result of paying National Insurance (NI) contributions throughout your working life.

  • Beneficiary

    A beneficiary is a person named in a will or under a trust as entitled to receive a bequest or benefit.

  • Benefit period

    In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a calendar year consist of the days beginning on Jan. 1 and ending on Dec. 31 of each year.

  • Betterment

    Refers to insurance coverage that a tenant in a rental property carries to cover any additions or modifications to the leased space that are made to fit his or her, or a business's, particular needs.

  • BIBA

    The British Insurance Brokers Association (BIBA) is the UK's leading general insurance intermediary organisation.

  • Bonds

    A bond is a type of security held on a debt or a single premium life assurance investment bond. Bonds are sold to investors by companies.

  • Bordereau

    Information submitted by a cedant to a reinsurer giving details of individual risks insured under a reinsurance treaty.

  • Broker

    A professional adviser who assists a client to obtain the insurance cover he/she needs; although strictly an agent for the insured, the broker is remunerated by way of commission from the insurer.

  • Buildings insurance

    Buildings insurance covers the fabric of the actual building and the cost of damage to the structure of your property. This includes the roof, walls, ceilings, floors, doors and windows. Outdoor structures such as garages and fences are also included.

  • Business Interruption

    Covers lost income while a business is out of commission or you are unable to trade. And also includes the costs of repair necessary to get your business back up and running.

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C
  • Capital

    Equity of shareholders of a stock insurance company. The company's capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company's policyowners in the event it develops financial problems; the policyowners' benefits are thus protected by the insurance company's capital. Shareholders' interest is second to that of policyowners.

  • Capital gains tax (CGT)

    If the value of assets that you own increase in value, then you may need to pay Capital Gains Tax (CGT). For example, selling shares for more than you paid for them could involve paying some CGT. You get an annual allowance for capital gains and only pay CGT on any gain over this amount.

  • Capitalization or Leverage

    Measures the exposure of a company's surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.

  • Captive Agent

    Representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first refusal rights on a sale. In exchange, that insurer usually provides its captive agents with an allowance for office expenses as well as an extensive list of employee benefits such as pensions, life insurance, health insurance, and credit unions.

  • Cedant

    The company which cedes the business covered by a reinsurance contract.

  • Certificate of insurance

    This document is legal evidence of your insurance. This is an important document which you may need to produce in the event of a claim and will be provided to you by your insurer with your policy documentation.

  • Chancery

    Chancery is a division of the High Court that deals in the administration of wills, probate and the execution of trusts.

  • Cherished car

    A vehicle that is older than 20 years (25 years in the case of classic commercials) and to standard factory specification. A very limited selection of vehicles between 10 and 15 years old are also deemed to be 'cherished', but are subject to underwriting approval.

  • Cherished number plate

    Registration numbers issued by DVLA in the UK, which may be rare or unusual, often spelling names or places. Some may be very valuable as they are able to be transferred from car to car, but in some instances following a total loss this may be disallowed.

  • CII

    The Chartered Insurance Institute (CII) is the premier professional organisation in the insurance and financial services industry.

  • Claim

    Any report of an incident in which the policy holder requests a payout or indemnity from the insurer under the conditions of the policy.

  • Commission

    This is the payment that’s made to a broker for services that he or she provides, based on a percentage of the value of the premiums paid. It’s paid to the broker by the product provider.

  • Common law

    An area of law built upon principles taken from previous cases rather than created by statutes enacted by Parliament.

  • Contents insurance

    Covers the items in your home which are not fitted to the main structure of the building such as clothes, appliances, furniture, jewellery and other items of value. If you were to turn your house upside down, anything that fell out would be classed as 'contents'.

  • Contribution

    Insurers which have similar obligations to the insured contribute in the indemnification. For example, if you have 2 policies that cover the same incident e.g. home and travel cover – each will pay its own proportion (not necessarily a 50/50 split).

  • Conveyancing

    This is the process of transferring legal ownership of property from one person to another.

  • Cover note

    A cover note is a temporary form of certificate, usually valid for 30 days only.

  • CPI

    The Consumer Price Index (CPI) is a measure of inflation used by the British Government for its UK inflation target. It measures changes in a ‘basket’ of goods and services purchased by households.

  • Critical illness cover

    This is an insurance policy that you take out so that you can rely on having a lump sum paid if you're diagnosed with a specified critical illness.

  • Current market value

    The current market value is the price which your property would sell for on the open market.

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D
  • Damages

    Financial compensation for loss suffered.

  • Defamation

    Defamation is the publication of a statement that lowers the estimation of an individual in the eyes of the public.

  • Direct insurer

    An immediate insurer of a risk, as opposed to a reinsurer who insures derivative risks, that is the risks assumed by a direct insurer.

  • Diversification

    This is the process of spreading – or ‘diversifying’ – your investments over a range of assets, so that you reduce your exposure to risk. By diversifying your investment, if one type of investment falls in value, then the remaining ones may not fall at the same rate, or at all.

  • Dividends

    These are payments that are made to shareholders by a company from any profits that the business has made.

  • D & O

    Directors' and Officers' liability.

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E
  • Endorsements

    An endorsement refers to any variation or addition to the terms of your policy. You can refer to your policy statement for a list of any endorsements that apply in your case. Don't worry - there is nothing untoward about having endorsements on your statement - and you can always speak to an Adler advisor for further clarification.

  • Equity

    This is a term that’s used to describe a company’s issued stocks and shares. If you own shares in a company you own some of the company's equity. It can also be used to describe the amount, or value, of your home that you own. If you ‘have equity’ in a property, it means that you own a portion of it above the value of any debts secured on that property, such as a mortgage.

  • Escape of water

    Escape of water refers to leakage from fixed water tanks, apparatus (e.g. washing machine) or pipes.

  • Estate Planning

    For inheritance tax (IHT) purposes, an individual's estate is calculated as being his or her total assets less any liabilities at the time of their death. Proper estate planning could save your family hundreds of thousands of pounds, because IHT (sometimes called ‘death duty’) will be charged on what you leave behind, over the IHT threshold at time of death. Currently, IHT is due at 40% of the value of all the assets you leave behind on death above the IHT threshold.

  • Excess

    Generally a policy will have an excess applied to it. This indicates the initial amount of any claim that you will pay. For example, if the value of your claim is deemed to be £600 and your excess is £100 - you will pay the first £100 and the insurer will pay the difference, in this case £500. Excesses can often be increased or decreased to affect the premium (the amount you pay for your insurance). Increasing your excess will often result in a lower premium as the insurance company decreases the potential payout in the event of a claim.

  • Exclusion

    Cases for which the insurance company does not provide coverage.

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F
  • Final salary schemes

    A final salary pension scheme is another description of a defined benefit scheme.

  • Financial Conduct Authority (FCA)

    Previously called the Financial Services Authority (FSA). An independent body that regulates the financial services industry in the UK; it was set up by the Financial Services and Markets Act 2000 and is accountable to Treasury Ministers; it is financed by the financial services industry; its statutory objectives are to maintain confidence in the financial system, promote public understanding of the financial system, secure appropriate degrees of consumer protection for consumers, and reduce financial crime.

  • Financial Ombudsman Service (FOS)

    The Financial Ombudsman Service has been set up by law to help settle individual disputes between consumers and financial firms. It gives consumers a free, independent service to help resolve disputes, but you usually have to have first taken your complaint to the financial firm yourself before the Ombudsman can step in.

  • Fraud (Insurance)

    An illegal act on the part of either the buyer or seller of an insurance contract.

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G
  • General conditions

    Conditions which apply to all sections of the policy. These must be read in conjunction with other sections.

  • Gilts

    These may also be called gilt-edged or Treasury bonds. They’re bonds that are issued by the UK government. They’re regarded as being very low-risk, secure investments because it’s the government that promises to pay you back.

  • Group Personal Pension

    If you work for a company, you may have a Group Personal Pension. It’s the name given to a group of personal pension plans offered by employers to employees.

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H
  • Hazard

    A condition which may create or increase the likelihood of a loss arising from a given peril.

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I
  • Inception of insurance

    The day your insurance policy starts

  • Incident

    Something to report but not necessarily a claim – e.g. employee injury.

  • Indemnity

    Security against financial loss, a policy of indemnity is designed to place the insured in the same financial position as he/she would have been in had the insured peril not occurred.

  • Income protection

    This is an insurance policy that pays you a monthly income if you're unable to work due to illness or injury, until you are able to return to work, or you retire, whichever is the sooner.

  • Independent financial adviser (IFA)

    An intermediary who provides potential investors and policy holders with advice on a range of products from different companies (contrast tied agent).

  • Index linking

    Index linking ensures that the sum you insure your building or property for is updated every year to reflect economic variations - giving you the reassurance of knowing your insurance value is going up in line with inflation, not down. This feature comes as standard on all our property insurance policies.

  • Inheritance tax (IHT)

    Inheritance tax (IHT) is charged on an estate after a person’s death. It’s currently charged at 40% on amounts above the IHT threshold, which can change every year. A person's estate includes the total of everything owned, less any liabilities at the time of their death. If this amount is less than the threshold, no IHT is payable.

  • Insolvency

    Insolvency is usually defined as a financial state in which a company can no longer pay its bills or other obligations on time. It happens when liabilities – or debts – are greater than assets and cash flow.

  • Insurable Interest

    A person has an insurable interest in something when loss-of or damage-to that thing would cause the person to suffer a financial loss or other kind of loss.

  • Insurance

    An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.

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L
  • Laid up cover

    Cover for a vehicle that does not include road risks. Vehicles covered by this type of policy cannot be driven on the public highway or any other area to which the public have access. Often used for winter storage.

  • Libel

    Libel is the act of publishing something about somebody that is not true and that causes them damage.

  • Limit of liability

    Practically all liability insurance policies contain limitations on the maximum amount of a judgment payable under the contract.

  • Limited mileage

    The term given to a motor policy that restricts the maximum mileage you are allowed to cover, in return for a reduced premium. The Adler cherished car policy allows for up to 7,500 miles in certain cases, or as little as 1500, according to individual requirements.

  • Loan-to-value (LTV)

    This is the percentage of mortgage money you want to borrow compared to the cost of a property. If the LTV exceeds a stated amount, then some mortgage lenders will charge a higher rate of interest or impose some other penalty to accept the higher risk.

  • Loss adjuster

    An independent expert who negotiates claims settlements as an intermediary between the insurer and the insured.

  • Loss assessor

    Like a loss adjuster, but appointed by client not insurers.

  • Loss ratio

    The proportion of claims paid or payable to the premiums earned or written.

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M
  • Mandate

    A legal document that provides the authorised to pay / liaise with someone other than the policyholder.

  • Material fact

    A material fact is a piece of information that would directly influence an insurer in assessing and setting your premium - and must be disclosed. Failure to divulge any material fact could void your policy. If you're in any doubt as to whether something constitutes a material fact, talk to an adviser.

  • MID

    The Motor Insurance Database is an independently operated database of all insured cars in the UK. It is accessible by the police, and insurers are required by law to supply certain data to the MID within a maximum of 14 days from inception of insurance cover.

  • Mispresentation / Non-disclosure

    Where an insurer says a consumer did not "disclose" (tell the insurer) everything they should have when taking out an insurance policy.

  • Moral hazard

    A factor arising from the character or circumstances of the policy holder, including carelessness or the nature of the business, which may increase the risk assumed by the insurer.

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N
  • New for old cover

    This type of cover means you will receive a brand new 'like for like' replacement of your insured item in the event of a total loss claim.

  • No-claims bonus

    A premium discount that rewards drivers for a number of years of claim-free driving. It is important to note it is a no-claim, not no blame bonus, meaning if your insurer pays out for a loss and the outlay is not recoverable, then the bonus will be lost. It is often possible to protect against this for a small additional premium. Adler cherished car policies are not subject to a no-claims bonus.

  • Non standard

    Refers to a risk that may be outside the insurer's usual limit of acceptance and often refers to a modification made to your insured items.

  • Non standard construction

    Any property which includes an element of construction which causes the property to require specialist cover. Examples include; thatched roofs, steel framed houses, timber framed houses and flat roofed houses.

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O
  • Occupier's liability

    As occupier (irrespective of whether you own the property) you carry a duty of care to protect your safety and the safety of other occupants of the property. It is your responsibility to ensure that the premises are reasonably safe and free from danger.

  • Overseas use

    Use of insured items outside of the UK and Northern Ireland.

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P
  • Package policy

    A policy covering several different types of insurance.

  • Personal lines

    Insurance bought by individuals for their personal insurance needs, for example, private car, household, holiday etc.

  • PI

    Professional indemnity (insurance).

  • PMI

    Private medical insurance.

  • Policy

    Policy is the name sometimes given to your contract of insurance. It refers to the level of cover that you have agreed with your insurer, outlines the terms, and details any particular conditions that you need to be made aware of, or that you need to make your insurer aware of.

  • Portfolio

    (1) an identifiable and usually homogeneous group of risks for which an insurer has assumed liability; (2) a parcel of investments associated with such a collection of risks.

  • Premium

    The insurance premium is the amount you pay for your insurance, normally on an annual basis (or by instalments).

  • Professional negligence

    This area of law covers claims against any professional whose work has not met the standards that can reasonably be expected. Medical professionals, surveyors, architects, accountants, solicitors, financial advisers, builders, plumbers – these kinds of profession run the risk of professional negligence.

  • Proposal form

    The basis of the contract between you and insurer. An insurance contract is based on utmost good faith, which means you are duty bound to answer all questions correctly to the best of your knowledge. Failure to do so may void your cover.

  • Proximate Cause

    The cause of loss (the peril) must be covered under the insuring agreement of the policy, and the dominant cause must not be excluded.

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R
  • Rebuild value

    Buildings insurance covers the cost of rebuilding your property as it stands - not in as-new condition or the value of the land on which it stands. This is a different valuation than the current market value of your home which is the price you would sell your property for. Outbuildings including sheds, garages, swimming pools, tennis courts, terraces and patios should be taken into consideration when deciding on the rebuild value of your property.

  • Reinsurance

    The insurance of the risks assumed by or potential losses of another insurer (the direct insurer) whereby the latter covers a proportion of the risks assumed or the eventuality of atypically large losses (see also retrocession).

  • Renewal

    The point at which you as a policyholder are invited to reinsure for a further year. Normally terms will be issued at least 6 weeks prior to your renewal date.

  • Retention

    The maximum liability an underwriter is prepared to assume on his/her own account; the proportion of risk retained by a ceding company.

  • Risk

    (1) The possibility of adverse deviation from the predicted outcome of underwriting; (2) the peril or adverse contingency insured.

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S
  • Salvage

    Following the settlement that's paid out at the resolution of a claim, you will usually be allowed to retain the vehicle salvage at a nominal cost, subject to prevailing legislation regarding motor vehicle salvage. This is especially important where the vehicle is rare or of historical importance.

  • Settlement

    The settlement is the payout you receive at the resolution of a claim, and in line with the stipulations of your policy. A settlement is affected by the excess you choose, and is dependent on you supplying your insurer with accurate and up-to-date information.

  • Stakeholder Pensions

    Stakeholder pension schemes were introduced in the UK on the 6th April in 2001 to encourage more long term saving for retirement, particularly among those on low to moderate earnings. They are required to meet a number of conditions set out in legislation, including a cap on charges, low minimum contributions, and flexibility in relation to stopping and starting contributions. They are designed to be straightforward, flexible, and inexpensive.

  • Structural survey

    A thorough examination of the property usually carried out by a qualified surveyor, who will check that the interior and exterior match the minimum requirements for a lender to make a mortgage offer.

  • Subrogation

    The insurance company acquires legal rights to pursue recoveries on behalf of the insured; for example, the insurer may sue those liable for the insured's loss.

  • Subsidence

    Subsidence refers to movements in the earth caused by geological or man-made factors. If your house is a subsidence risk it can make it harder to insure.

  • Sum insured

    The sum expressed in a policy as the amount payable on the occurrence of the contingency insured against, or as the maximum amount of the insurer's liability under a contract of indemnity.

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T
  • Third party liability

    Liability incurred by the insured to another party but excluding contractual liability.

  • Tort

    A civil breach of a personal duty owed to one's fellow citizens in general, as opposed to breach of contract; the injured person has a potential right to damages from the wrongdoer (the tortfeasor).

  • Total Loss

    The situation where the repair cost versus the item's value renders repairs uneconomic, thus 'writing off' the property as a total loss.

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U
  • Under-insurance

    The situation where the sums insured represent less than the total value of the property at risk.

  • Underwriting

    Underwriting is the process that insurers go through when assessing any new risk for insurance cover.

  • ULR

    Stands for uninsured loss recovery. The process by which your uninsured losses in the event of a no-fault accident are recovered for you. For example, your excess is an uninsured loss and you would not wish to have to forfeit this if the accident was not your fault.

  • Unit Trusts

    An investment fund shared by a large number of different investors who pool their money. The fund is divided into segments called ‘units’. Investors take a stake in the fund by buying these units, the price of which will vary as the value of the investments the trust has invested in increase or decrease.

  • Utmost Good Faith

    The insured and the insurer are bound by a good faith bond of honesty and fairness. Material facts must be disclosed.

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V
  • Vacant Possession

    If your holiday property specifies vacant possession, it simply means that it will be unoccupied on, or before the sale completion date, ready for you to move in.

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W
  • Warranty

    A policy condition that must be complied with to the letter, for example, a garaging warranty, whereby the vehicle must be in a locked garage between the hours of 2200 and 0600 unless in the course of a journey. No cover would operate if this strict warranty was not complied with.

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Y
  • Yield

    Yield is a general term for the rate of income that comes from an investment, expressed as an annualised percentage and based on its current capital value.

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