Like most industries, insurance has a language all of its own. There are good reasons for it, but it’s handy to know a bit of the lingo.
At EBM RentCover we are committed to guiding you through the maze of insurance jargon. While we are here to answer any queries you might have about policy wording, here’s a cheat sheet outlining the meaning of a few commonly used and misunderstood insurance terms:
Actuary - a person who uses mathematics and statistics to evaluate the risk of something happening, how much it costs to finance that risk, and how much your premium should cost.
Accidental damage - an unintentional one-off incident that causes damage to your property or its contents.
Actual total loss - where the property insured is completely destroyed or so badly damaged that it is beyond economic repair.
Arbitration - a system of deciding legal disputes between an insured and an insurer by use of a private tribunal outside of the court system.
Assessor (aka loss adjuster) - a representative of the insurer who seeks to determine the extent of the insurer’s liability for loss when a claim is submitted by checking the details to see if the claim is valid and meets the terms and conditions of your policy.
Consequential loss - a loss of property may also result in a “loss of profits” and/or additional expenses. This is a loss which is a consequence of the property loss.
Cooling-off period - a period (min. 14 days) during which you may cancel your policy if you change your mind and receive a full refund of the premium unless a claim has been made.
Depreciation - the loss in value that your property and most of its contents loses over time due to factors such as age and wear and tear.
Duty of disclosure - as the insured, when you apply for an insurance policy or renew or extend an existing policy, you have a duty to tell the insurer everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you.
Defined events (aka insured events) - occurrences that cause loss and damage which are listed in your policy.
Embargo - a restriction applied by an insurer on accepting new policies in certain areas or under some circumstances. An embargo prevents insurance being purchased when an event is known to be extremely likely or is already having an impact (e.g. during a natural disaster).
Insurable interest - when making a claim you must be able to demonstrate at the time of the loss you suffered a pecuniary (money) or economic (includes loss of use) loss.
Malicious damage - damage that has been caused by ‘malicious intent’ (carried out with vindictiveness or spite); that is, the tenant must have been motivated by malice and intended to cause damage.
Mitigation - what you might be able to do to lessen the impact of something happening to you or your property.
Negligent (or negligence) - when you don’t use reasonable care in a situation where you have an obligation to another person.
Non-disclosure - where you have not told your insurer all of the information that should have been given and not complied with your duty of disclosure when you applied for an insurance policy. This may result in your insurer not being obliged to pay all or a portion of a claim.
Peril - something or a situation that might cause harm or loss,such as a cyclone.
Reinsurance - is insurance for insurance companies. In exchange for the premium paid, the reinsurer agrees to indemnify the reinsured for part or all of the liability assumed by the reinsured under a policy of insurance.
Risk - the likelihood of something happening that might cause injury or financial loss; the exposure to a specific threat, hazard or peril.
Sum insured - the maximum amount that your insurer will pay for a claim under the policy.
Third party - a person apart from those that are parties to a contract.
Underwriting - the way an insurance company works out how much risk exposure it has and then calculates the premiums it will need to charge to insure that risk.
Utmost Good Faith - all parties to an insurance contract are required to act with fairness and honesty in their dealings with each other.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions.
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