Insurance Jargon Explained

Sometimes it’s not until you come to make an insurance claim that you discover that you don’t have the level of cover you thought you had. From ‘addendum’ to ‘without prejudice’, we’ve put together this jargon-busting list of key insurance terms. That way you can be clear what’s covered (and what’s not), and put an end to those nasty little small-print surprises.


If you’re still not sure, contact us. We’ll be happy to help.



An addendum is a document that sets out in writing any agreed alterations to an insurance contract (see also endorsement).


This is someone who will investigate and assess a claim on behalf of the insurance company. Also known as a loss adjuster or claims adjuster.

Aggregate limit of indemnity

Some insurers state a maximum amount that can be paid out through multiple claims within a specified period. This is called the aggregate limit of indemnity.

All risks

‘All risks’ means you’re covered for any accidental loss or damage – unless the cause of the damage or loss has been explicitly excluded from the policy.


You might find ‘assurance’ used instead of ‘insurance’. Typically it’s used when referring to life cover.


Claims are the name given to a formal request from the policyholder to the insurance company for payment.


Concealment is the deliberate failure to give relevant information relating to the insurance policy. If there is considered to be concealment, it usually voids a policy.

Cover note

The cover note is the document that confirms the details of the insurance policy that has been arranged.

Deferred premium

Paying for your insurance in instalments. For example, monthly payments


This is wording in the policy that can extend (or restrict) the level of cover provided. You’ll find it on the Policy Schedule.


The excess is an amount of money that you will have to pay if you make a claim. This can be both compulsory and voluntary. For example, the insurance company may set a mandatory (no option) amount that must be paid for every claim. You can also choose to set a voluntary excess.

Ex-gratia payment

A ‘goodwill’ payment made to a policyholder by an insurer even if they do not have to by contract.

Gross premium

The full premium before any discounts are applied.


A ‘hazard’ is something that leads to or increases risk.


An indemnity protects against financial loss with the promise of a payment that will reinstate you to the same situation you were in before the loss.

Insurance broker

A professional who acts as an intermediary between you (the customer) and an insurance company. An insurance broker works for you but receives payment, in the form of commission, from the insurance company.

Financial Ombudsman Service

An independent body set up to resolve disputes between the public and financial services companies, including insurance companies and brokers.


If a policy has not been renewed, it has lapsed.


The maximum amount an insurance company may pay. The threshold may be set ‘per claim’, ‘per year’ etc.


Another word used for a ‘claim’.

Material fact

The term for any circumstance that could make an insurer decide to accept or refuse to provide insurance cover. Failing to disclose a material fact can void an insurance policy.


Failing to take proper care over something. For example, if your car is stolen because you left the keys in it, that would be considered negligence.

New for old

If this is specified, your insurer will pay for a new replacement item, with no adjustment for age or condition, if the original is lost, damaged or stolen.

No claims bonus

Also called a no claims discount. This is a reduction in the cost of the insurance premium, which is given if you have not claimed for a specified length of time, usually a year. The longer the period of time with no claims, the bigger the discount is likely to be.


The failure to make an insurance company aware of a material fact.


The formal contract document between you and the insurance company.


The amount that the insurance policy costs.

Proposal form

A form either sent in the post or set out online that you fill in when you want to take out insurance. This gives the insurance company the information they need to decide whether to take on the risk or not.


The amount you will pay for the policy if you decide to go ahead.


The recovery of all or part of the value of an insured item after a claim has been paid. For example, if a stolen car is recovered after a claim has been paid, the insurer will generally dispose of the vehicle and use the proceeds to reduce the cost of the claim.


The policy schedule sets out all the details, including policyholder details and what is insured as well as excesses and exemptions.

Sum insured

The maximum amount that will be paid under a claim.

Third party

Someone claiming against the policyholder. For example, you have a car accident and you are to blame. The person you crashed into is the third-party.


A warranty is the promise made by the policyholder that the statements made when taking out an insurance policy are true.

Wear and tear

If this is specified in your policy, an amount will be deducted from any payment for a claim to take account of depreciation. For example, if your mobile phone is two years old, the amount paid out if it is stolen will be the market value for a phone of that age, not the amount you paid for it.

Without prejudice

If correspondence is marked as ‘without prejudice’ it means the insurance company is making it clear that they are settling the claim without formally admitting responsibility.


The clear way to get the best value insurance

We hope that this article will help you understand what these words mean when you see them in your insurance policy document. For a clear explanation and the best value price on all your insurance needs, call 0117 955 6835 or contact us.


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