We’re committed to helping our customers understand insurance. Here’s a
list of common words and phrases you will come across in your policy and when making your
In the event of a claim, where under insurance is identified, an insurance company will look to reduce the amount paid, in proportion to the difference in value (see under insurance).
This will often be a period of time, following an insured loss, where you can no longer conduct business normally. Cover is available for the resulting loss of revenue, until such time as the business has fully recovered.
Certificate of Insurance
A certificate of insurance is a document issued by an insurance company/broker that is used to validate the existence of insurance coverage under specific policies.
A formal request to an insurance company asking for payment based on terms of an insurance policy.
Claims Made Basis
A policy issued on a ‘Claims Made’ basis meets claims that are made and reported during the policy period shown in the policy.
Claims Occurring Basis
A policy issued on a ‘Claims Occurring’ basis covers claims that occur during the policy period regardless of when the claim is made. Although you may have changed insurer they will still accept a claim even though the policy may no longer be in force.
Condition Precedent to Liability
This is potentially more serious than a policy condition because an insurance company stipulates that it will only have a liability to pay a claim if a policyholder complies with the specific policy condition.
This is when information about someone is held in confidence by another and is lost or stolen.
Duty of Care
A “duty of care” is the legal obligation to safeguard others from harm while they are in your care, using your services or on your property. A local council owes a duty of care to any third parties in their care, such as a member of the public on a park or driving on the roads.
Employers Liability Insurance
This covers employers for the costs of compensation claims resulting from their legal liability to employees for injury, illness or disease sustained at work. With some exceptions this is a legal requirement within Great Britain.
A document that amends, alters or changes the cover provided by the standard policy wording or the details contained in the policy schedule.
The amount you must bear yourself, before the insurers pay your claim.
Within a policy this is the provision which excludes an insurer’s liability in certain circumstances or for particular types of loss.
Where a policy is specifically extended to provide wider cover than the standard policy wording.
Fair Presentation of Risk
A fair presentation of your risk must be made to insurers. It must disclose, in a manner that is reasonably clear and accessible, every material circumstance which is known or ought to be known by those responsible for arranging insurance, following a reasonable search. This is required by an insurer to help them understand the risks they are taking on. Normally a Broker would work with their clients to deliver this information to the insurance company.
An insurer makes a payment to replace what is lost or damaged, putting you back to where you were, financially, prior to the loss occurring.
Insurance Act 2015
This is an Act of Parliament (within the UK) which has made significant reforms to insurance law and replaces legislation which dated back to the early 1900’s. The Act introduced new obligations, which are coupled with strict remedies for insurers.
An insurance intermediary who advises their clients and arranges their insurances. A full-time specialist with expert skills in insurance business.
The process when a policy is terminated after the policyholder fails to pay for renewal within the correct time-frame. Or the process when the insured decides to change insurers, causing the previous policy to end (become lapsed).
Process of being legally responsible for something.
Long Term Agreement
By signing a Long Term Agreement (LTA), a local council agrees to renew its policy for a 3 year period with the insurer offering the undertaking, in exchange for a premium discount. The insurer usually agrees to maintain their rate of premium during that period too, so long as there is no adverse claims experience.
An insurance specialist appointed by an insurer to review the circumstances of a claim made by a policyholder and advise the insurer what amount should be paid under the terms of the policy.
Failure to act reasonably in any given situation where any rational person would succeed.
Period of Insurance
The period in which the policy is valid. Typically policies are issued for a period of 12 months.
A contract agreed between the insurer and insured, which identifies all claims which the insurer is legally required to pay.
This is the amount of money that you must pay for an insurance policy.
This covers you in the event of products (including food and drink) which you have supplied causing damage to third party property or injury to third parties.
Professional Indemnity Insurance
A policy which protects a professional person against legal liability for third parties for injury, damage and loss due to the person’s own (or of the person’s employees) professional negligence.
An insurer may choose to reduce a claim payment in proportion to the premium paid, if, for example, they felt the presentation of the risk was not fair or correct, and whilst they would still have accepted the risk, would have charged an additional or increased premium.
A form filled out by a responsible person who is applying for insurance on behalf of themselves or their employers. The purpose is for the insurer to receive a fair presentation of the risk by way of the answers provided, in order that they may provide the appropriate policy, apply terms and calculate premiums as necessary.
Public Liability insurance covers you against any accidental injury or damage caused to third parties or third party property.
The policyholder is (under duty of care) lawfully required to act reasonably, responsibly and not to expose their insurers to unnecessary risks and hence claims. This is a general condition in all contracts of insurance.
The process where the period of insurance is coming to an end, and an invitation is issued to renew or continue the policy for a further period.
A retroactive date is generally the date from which you have held uninterrupted insurance cover. It is typically applied to professional indemnity and directors & officers insurance policies and its purpose is to exclude claims arising from any work undertaken prior to the date shown.
The process of identifying, evaluating and measuring all potential risks which may be found within a particular situation.
The process of identifying, measuring and mitigating risks (including financial) that threaten control over assets or earnings of an organisation.
Whilst these may vary from one insurance policy to another, generally these are the exclusions applied in all insurance policies and describe in what circumstances a claim may not be paid.
This is when an insurance company has made a claim settlement but feel that the cause of the claim was the fault of someone else and in these circumstances they may then seek to recover all or some of what they have paid.
If you insure an asset for less than its full replacement value any claim you make will be reduced in direct proportion. In simple terms if you insure an asset for £100,000 and its full replacement value is £200,000 you are 50% under-insured, so any claim you make will be reduced by 50%.
A person employed by an insurer who is responsible to assess a risk on the basis of the information provided and calculate the premium required.
This is usually a professional assessment of an asset’s worth, for example, a building or an item of regalia.
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BHIB Councils Insurance is
a trading name of
Limited. Registered office is AGM House,
3 Barton Close, Grove Park, Enderby, Leicester, LE19 1SJ. BHIB Limited is registered in England and
Wales number: 829660 Authorised and regulated by the Financial Conduct Authority. We are covered by
Financial Ombudsman Service. You can find out more at www.financial-ombudsman.org.uk
BHIB Limited also provide risk management services and guidance which is not regulated by the Financial Conduct
Authority. Any protection provided by the Financial Ombudsman Service or the Financial Services Compensation Scheme does
not apply to this specific business activity and we will inform you of this before undertaking the business activity