Act of God
Additional Premium
Association of British
Insurers (ABI)
Average
Claims Procedure
Certificate of Insurance
Compulsory Excess
Cover
Direct Debits
Discounts
Endorsements
Excess
Financial
Services Authority
Insurance Ombudsman
Insurance Premium Tax (IPT)
Insured
Insurers
Material Facts
Policy
Premium
Proposer
Proposal Form
Return Premium
Voluntary Excess
Act of God
An accident or event which happens independently of human intervention and
due to natural causes such as storm earthquake etc which no human foresight
can provide against. Suggesting that an event was an "act of God" may be a
defence in English law against a claim for liability since it may be held
that it could not have been foreseen or safeguarded against.
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Additional Premium
An additional premium may be incurred for changes to an insurance policy.
(For example, you may wish to add an item to your home insurance, or a
driver to your motor policy. Back to top
Association of British
Insurers (ABI)
The
Association of British Insurers was formed in 1985 and is the principal
trade body representing insurers carrying on business in the UK. Its aim is
to protect and promote the interests of members in respect of all classes of
insurance business and in their related activities. It provides guidelines
for the conduct of insurers through its Codes of Practice.
Visit the ABI website here.Back to top
Average
Average
applies where there has been under-insurance and a claim payment is scaled
down in proportion to the degree that a sum insured bears to the total value
at risk:
Eg. Claims
payable = Actual loss x Sum insured
Total value of property
insured
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Claims Procedure
The procedure to go through when making a claim.
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A
document issued by insurers as evidence that an insurance contract exists.
Certificates must be issued by law in relation to motor and employer’s
liability insurance.
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Compulsory Excess
This is a mandatory amount deducted from any claim settlement and
represents your contribution to the claim cost. If you have an excess of £50
and your claim is for £300, then you will only receive £250 from your
Insurer.
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Cover
The protection offered by your insurance policy. Examples on a home
insurance policy would be Standard or Accidental Damage cover.
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Direct Debits
Payments made using a Direct Debit system where regular payments are
automatically taken from your bank account.
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Discounts
A discount is a reduction from the base rate due to a reduction in a
risk factor. An example of this would be a security discount if you had a
recognised alarm system.
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Endorsements
Any time you change your policy after first taking it out, the document
you receive from your insurer showing the mid-term changes is called an
endorsement.
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Excess
This is an amount deducted from any claim settlement and represents your
contribution to the claim cost. If you have an excess of £50 and your claim
is for £300, then you will only receive £250 from your Insurer. An excess
may be voluntary or compulsory, and may apply only for certain types of
claims.
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Financial Services Authority
(FSA)
In 2004, the Financial Services Authority took
on regulation of general insurance business in accordance with a Government
announcement. For more information regarding the work of the FSA,
please visit their
website. Back to top
Insurance Ombudsman
This is the ombudsman for the insurance industry and to whom all
complaints should be addressed if no satisfaction has been obtained from
your Insurer.
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Insurance Premium Tax (IPT)
This is a tax which is payable on insurance policies taken out or renewed
since 1/10/94. The current rate of IPT is 6%. Most premiums include IPT
within the quotes but watch out for the term “plus IPT”. Also note that
travel policies have a rate of IPT of 20%. Also, IPT cannot be reclaimed
from the Inland Revenue in the same way as VAT can.
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Insured
You become the Insured ( the person in whose name the policy is in) once
you have started the policy cover. Before the cover started you were the
Proposer.
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Insurers
Insurers are the companies who take the financial risk when you buy a policy
and have to “pay out” in the event of a valid claim; once they have received
your premiums. They are regulated by the Association of British Insurers and
the DTI (Department of Trade and Industry).
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Material Facts
A material fact is any piece of information that might influence a
reasonable underwriter in his or her assessment of the risk. Such facts may
not always result in negative treatment of your policy but failure to
disclose all information might void your policy. Material facts may include
things such as losses that you have had which you may not have been covered
for in the past or perhaps a member of your household who has a criminal
conviction for theft. If in doubt, declare it up front and the Insurer will
tell you where you stand.
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Policy
This the legally binding document which is the evidence of the cover. You
should be able to examine all the policy wordings. You should check your
policy carefully when you receive it and if any amendments are required you
must notify your insurer before it is too late. There is no point checking
the policy after you have had a loss only to find that there is a negative
part that you weren’t expecting.
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Premium
This is the amount that you will pay which goes to your insurer for the
cover purchased. There may be additional costs such as legal expenses or
specialist additional products.
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Proposer
The person taking out the insurance and completing the proposal form. A
policy is a legal contract between the Proposer and the Insurer. You are a
Proposer before the policy starts. Once it starts you become the Insured.
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Proposal Form
The proposal form is the basis of the contract. It is probably the most
important aspect of the cover process. This form may be in written hard copy
form or may be taken from the entered details on the system. As insurance is
an intangible product whose price is based on the information provided by
you then any errors or non-disclosure of material facts can result in the
policy being voided. Check with your insurance company if you have any
difficulties or need advice. Also, if you know of something, which the
Insurer ought to know, but the proposal form doesn’t ask that question, do
not think that you do not have to tell them. You have a legal duty to
disclose all facts.
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Return Premium
A refund of premium following cancellation of the policy or changes, which
reduce the risk.
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Voluntary Excess
This is a voluntary amount deducted from any claim settlement and
represents your contribution to the claim cost and is in addition to any
Compulsory Excess. If you have an excess of £50 and your claim is for £300,
then you will only receive £250 from your Insurer.
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