Not quite sure what a term that you've come across on this site means? Insurance can be a complex subject at times. Therefore for your benefit, we've assembled a list of terms and definitions to help keep you up to date.


Ab Initio

Latin for 'from the start/beginning'.


An event or occurrence that is unintended, unforeseen and unexpected.

Accidental Bodily Injury

Bodily injury to a person or persons that has been caused accidentally and with unforeseen results.

Accidental Damage

Unexpected and unintended physical damage caused by sudden and external means.

Act of God

An event that is not the fault of any individual. Liability claims for injury or damage attributable to ‘Acts of God’, for example, not involving any responsibility on the part of a person or an organisation, would not be payable.

Additional Premium (AP)

An extra premium, which may be charged in addition to the annual premium for changes affecting the insurance arrangements, for example, adding another employee.


The calculation of a variable premium, which involves making an additional charge or allowing a partial refund. Premiums can also be adjusted to take account of changes in the risk that take place during the period of insurance. In connection with claims, adjustment means the calculation of the amount of a loss.

Aggregate Limit of Indemnity

The maximum amount payable by an insurer under a liability policy, for all valid claims in total, arising during a specified period of insurance.

Bodily Injury

Injury, sickness or disease sustained by a person, including death at any time resulting therefrom.


Termination of a contract before its expiry.


A document providing evidence of insurance, for example, an employer’s liability insurance certificate shows cover is in force to meet the requirements of the law.


A request for indemnity, which is payment or settlement under the terms of a policy.

Claim Settlement

Full payment or repair or replacement of the lost or damaged insured item or reimbursement for the insured loss, made by the insurer, to settle the policyholder's or third party's claim.


A statement made by the insured or proposer (and usually signed) to confirm certain things, for example, the truth of the answers on a proposal form.


The duty of disclosure arises from common law. It requires the proposer to disclose to (tell) the insurer all material facts.

Effective Date

The date from which the insurance is in force.

Employers' Liability

Compulsory insurance in the UK for employers to cover them against claims from their employees who are injured at work.


A written document issued by insurers to expand or modify the policy cover, to alter the content of standard documents or to show changes to the information previously noted.


An amount of money the policyholder must pay in the event of an insured claim, for example, the first £100 for repairs to a damaged vehicle.


A specified person, event or property, which the policy does not cover. made to a policyholder following a loss, which is not strictly covered under the policy.

Legal Liabilities

Are responsibilities imposed upon all individuals and businesses, to safeguard others by law.

Liability Insurance

Insurance in respect of legal responsibility for causing loss to someone else (a third party), most commonly for injuring them or causing damage to their property.

Liability or Liable

Legal responsibility for causing loss to someone else by injuring them or causing damage to their property.


The maximum amount the insurers will pay in the event of a claim, for example, audio equipment under a motor insurance policy.


When an individual or group of individuals suffer financially or materially due to an insured event of misfortune.

Material Facts

A material fact is any information that could affect the underwriter's assessment of the risk.

Mid-term Adjustments

These are changes in circumstances that affect the policy during period of insurance. Such changes are usually set out in an endorsement to the policy.

Minimum Premium

The smallest amount the insurer will charge for a period of cover in order to cover their administration costs. If the insurance is altered, adjusted or cancelled that results in a refund, the insurer will always retain at least the minimum premium.


Failure by the policyholder or proposer to inform insurers of all relevant material facts, which affect the insured risk. Non-disclosure is serious and insurers are entitled to refuse to deal with any claims or void the policy from the start of cover.


This term is often used in insurance to refer to a risk to which the standard rates and terms cannot be applied.

Period of Cover/Insurance

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


Is the document or wording, which states the full conditions and stipulations of the insurance contract between the policyholder and insurer.

Policy Wording

The legal wording, which states in full, the details of the insurance contract agreed by the two parties to the contract, the insurer and policyholder.


Person or organisation to which the insurer issues the policy and normally benefits are paid.


The amount paid by the policyholder to the insurer for insurance.

Proposal Form

An application form for insurance that forms the basis of the contract.


The price and terms of the insurance, which is dependent upon material facts being confirmed as accurate at a later date, once cover is arranged.

Renewal Notice/Invitation

Notice sent to the policyholder inviting them to renew the policy for a further period, stating the premium payable and any changes to the cover.


To reject something as valid, for example, an insurer may repudiate a claim and consequently, refuse to settle it.


The possibility of loss or damage from which insurance underwriter's assess the frequency and severity of occurrence.


Gives specific information about the policyholder and the scope of the insurance.

Statement of Fact

A form, similar to a proposal form, which states the material facts and details of an insurance contract.


Law established by legislation. In the UK it is law that is passed by Parliament.

Sum Insured

The amount for which the property is insured and the maximum amount the insurers will pay in the event of a valid claim.

Coffee Shop Insurance 3 lady with coffee machines perfect cappacino

Working in Café

Lady with Coffee Machines

Perfect Cappacino