Below is a summary of common insurance terms. These are provide as a guideline only and clients are advised to get proper advice if unsure on anything.

A

Abandonment:  The giving up of damaged property - by an insured to the insurer - when total loss is claimed.
Ab initio:  Latin for 'from the beginning' or 'from the onset.'
Acceptance: An absolute and unqualified agreement to or approval of the terms of an offer resulting in the conclusion of  a contract.
Accident:  An unforeseen and unintended event or occurrence or an intended event which brings about unforeseen consequences.
Accident year:  Either the calendar- or accounting year in which a loss occurs.
Accommodation business:  Normally unacceptable business taken by an insurer as a goodwill gesture, in the hope that further business will materialise.
Act of God: An event that is the result of natural forces and which arises without human intervention.
Adjustable policy: A policy where the exact extent of the value at risk cannot be known in advance (e.g. goods in transit insurance). A provisional premium is charged and adjusted at the end of each period of insurance.  
Assessor:  See LOSS ADJUSTER
Adjustment premium: An additional (or return) premium that is payable in relation to a 'deposit premium', depending on the performance of the (insurance or reinsurance) contract.
Agent:  Someone who acts on behalf of another person (the principal), usually for reward.
All risks:  A domestic / property insurance type of cover that covers any accidental loss or damage not excluded from the policy.
Appreciation: An increase in value of the property insured. 
Arbitration: An alternate means of settling disputes (often where the issue concerns the amount of a claim, and not liability) without going to court. A qualified person/s - whose appointment has been agreed upon by the parties - will hear the case and furnish them a decision.
Asset:  Property - even an incorporeal right - with commercial value.
Assurance: A term interchangeable with insurance, which is often used within Life and Marine business.
Assured: Another name for an insured, typically within a life - insured contract.
Attachment date: Another term for inception date, being the date on which an insurance or reinsurance contract comes into force.
Average:  If the sum insured 1) under general insurance is 2) expressed to be “subject to average”, and 3) that insured sum is less than the actual value of the subject matter of the insurance, then 4) any claim that is agreed under the policy will be reduced proportionally to such "under insurance".
Avoidance of a contract ab initio : The cancellation of an contract from its inception. Typically, retrospective in nature, and due to a misrepresentation (disclosure or non-disclosure) of material facts. The result is that the party relying on the cancellation cannot be held to the agreement, subject to return of any benefit it might have enjoyed in terms of the agreement.
 

B

 
Balance-of-third-party: The term used in South Africa for the form of motor insurance which covers the insured's liability' for: i) injury to passengers not covered in terms of the Road Accident Act 1996; and ii) damage to the property of third parties (caused by the vehicle).
Betterment:  The value of the improvement in an insured property when it has been repaired or rebuilt following loss or damage.
Beyond economic repair: Where the cost of repairing the insured property, eg a car, exceeds the market value of that property. In such circumstances the insurer will pay the insured the market value of the insured property at the date of loss, subject to the terms of the policy (assuming the insurer is not under any obligation to provide a replacement).
Blanket policy:   A policy covering several items under one sum insured.
Broker: A professional, independent agent or intermediary - representing its client - that acts as a buyer of insurance (having been mandated by a client to obtain coverage that suits them best). It is an agent of the policyholder, mandated to negotiate terms and conditions culminating in indemnity provided by an insurer.
Brokerage: a) The commission or fee paid to the broker by the insurer for placing business with them. The commission that is payable to a broker for placing an insurance or reinsurance contract with an insurer or a reinsurer. A fee for service. Although brokerage is payable by the insured as part of the gross premium, the amount of brokerage is agreed with the insurer. The insured may request his broker to state the amount of his brokerage on a given placement. Similar considerations apply to reassureds under reinsurances. b) The term brokerage may also beused to refer to the business of a broker.
Buy back: In the context of general insurance this refers to the purchase of cover in respect of an otherwise excluded peril by means of payment of additional premium.
 

C

 
Cancellation clause: A clause in an insurance policy which permits an insurer and/or an insured to cancel the contract before it is due to expire / allows one party to cancel the contract (following due notice to the other).  The clause may provide for a return of premium in respect of the unused portion of the policy.
Carrier (of risk): An insurer, or reinsurer.
Casualty: Refers to a loss, particularly the loss of a ship (Marine).
Casualty book: A book which stands in the centre of the Lloyd's underwriting room and which records details of vessels which are or are likely to become total losses. (The entries are made by a Lloyd’s waiter using a quill pen.)
Catastrophe cover: A form of excess of loss reinsurance which protects the insurer against losses arising from major catastrophes.
Cede: To transfer a risk exposure under a reinsurance contract.
Claim: A demand made by the insured for payment after the occurrence of loss or damage covered by a policy. It term may refer to:  (a) a demand made by an insured on his insurer(s) for payment or contractual benefit under a policy; (b) a demand made by an insurer on its reinsurer(s) to be paid under a reinsurance  contract; or (c) a demand made by a third party on a insured to be compensated for some  injury, damage or loss for which the insured is blamed.  A claim is payable under an insurance or reinsurance contract if it was 1) caused by an insured peril and 2) it is not excluded under the terms of that contract.
Claimant: The person making a claim.
Claim-free group:  The term used in motor insurance to indicate into which of the rating groups a policyholder will fall according to his claims record.
Claims made policy: A policy which only pays claims that are notified to the insurer during a specified period.
Claims notification clause: A clause in an insurance or reinsurance contract which sets out the procedure that the insured or reassured must follow in order to make a claim under the contract. Such clauses frequently provide for prompt notification of claims and events which may gives to claims in the future.
Claims ratio:  See LOSS RATIO.
Co-insurance: The division of risk between two or more carriers, where each is liable to the insured for a proportion of the claim. This may refer to either of the following situations : (a) where two or more insurers underwrite the same risk with several liability such that each insurer is not bound to follow the decisions of any co-insurer unless it has agreed to do so, or (b) where the insured acts as its own insurer for a specified proportion of the sum insured.
Comprehensive policy:   A policy covering a wide variety of perils.
Consequential loss:   A loss arising (directly) from another loss. The term is used to describe the class of business also known as LOSS OF PROFITS or BUSINESS INTERRUPTION INSURANCE.
Contingency:  An unforeseen occurrence.
Contingency fund:  Monies put aside by a company in order to pay for unexpected losses.
Contra proferentum rule: Any ambiguity in contract wordings is construed against the drafter of those wordings.
Contract:   An agreement made by two (or more) parties with the intention of creating legal obligations between them.
Contract of Insurance:  An agreement between insurer and insured whereby, in return for payment of a premium, the insurer undertakes to indemnify the insured upon the happening of a specified event. An insurace policy.
Cover: The protection provided by insurance. Insurance or reinsurance as it applies to one or more specific risk exposures.
Cover note: A document (typically) issued by a broker - pending the issue of a formal policy - which confirms the arrangement of cover on behalf of a policyholder. Motor insurance cover notes are typically issued with a short duration.
 

D

 
Damage:  Loss of an asset (including a justified expectancy) or  incurring a liability.
Declaration Policy:  A policy requiring the insured to declare periodically the value of fluctuating items, such as stocks or goods-in-transit, to enable the insurer to adjust the premium accordingly. 
Declinature: The refusal of an insurer or reinsurer to offer terms of cover. See REPUDIATION. 
Deductible: An American term, referring to the amount that is deducted from some (or all) claims arising under an insurance or reinsurance contract. The practical effect is the same as an excess: the insured or reassured must bear a proportion of the relevant loss.
Delegated Authority:  The authority given to an agent of an insurer to act on its behalf in accepting risks within agreed guidelines. 
Deposit premium: A premium that is payable at the inception (start) of an insurance or reinsurance contract and in respect of which an adjustment premium (usually an additional premium) is due depending on the performance of the contract including, possibly, the amount of the business that is ceded thereunder.  An advance payment made by the insured before the actual premium has been decided. 
Depreciation: The extent to which (insured) property has diminished in value due to factors such as age, use or wear and tear. Such devaluation "loss" is not covered under a contract of indemnity. However an insurer may agree to provide cover on “a new for old” basis which replaces old items with new ones. 
Direct business:  Insurance placed with an insurer direct and not through an intermediary. 
Duty of disclosure: The duty on the parties to a contract of insurance to reveal all material facts to each other before it is concluded and prior to each renewal. 
 

E

 
Earned premium: That part of a premium relating to a completed or expired period of risk; the actual premium chargeable under an adjustable policy.The proportion of premium that relates to a used period of cover.  
Endorsement: Documentary evidence of some alteration to a policy of insurance, being a document attached to a slip, cover note or policy which evidences one or more changes in the terms of the insurance or reinsurance contract to which it refers. 
Escalator Clause: The clause in a policy which allows the sum insured on property to rise throughout the period of insurance in step with the assumed rate of inflation. 
Ex gratia payment: A payment made by underwriters “as a favour” or “out of kindness” without an admission of liability so as to maintain goodwill. A payment made to an insured where there is no liability under the policy. 
Exception: A peril specifically excluded from the insurance. 
Excess: That part of a loss for which the insured is liable. The amount (or proportion) of losses under an insurance contract that is the insured must bear. If the loss is less than the amount of the excess then the insured must meet the cost of it (unless there is other insurance in place to cover the excess). Excesses may either be compulsory or voluntary. An insured which accepts an increased excess (in the form of a voluntary excess) will receive a reduction in premium. . 
Excess of loss: A form of insurance where the reinsurer agrees to pay the balance of any losses exceeding a stated monetary amount. A type of reinsurance that covers specified losses incurred by the reassured in excess of a stated amount (the excess) up to a higher amount, for example £5 million excess of £1 million. An excess of loss reinsurance is a form of non-proportional reinsurance.
Exclusion: A term in an insurance or reinsurance contract that excludes the insurer or reinsurer from liability for specified types of loss. An exclusion may apply throughout a policy or it may be limited to specific sections of it. In certain circumstances an exclusion may be limited or removed altogether following the payment of an additional premium. 
Executor: The office / person appointed to wind-up an estate. Often named in the last will of a deceased.
Expense Loading: That part of the premium which meets the policyholder's share of the insurer's administrative costs 
 

F

 
F A I S Act : Financial Advisory and Intermediary Services Act . 
F S B:  Financial Services Board - find them here.
Fee for service: Where a broker is remunerated on the basis of a fee agreed with its client instead of brokerage. The benefit to the broker is that, subject to the terms of agreement, the fee will be payable whether or not cover is placed whereas brokerage is only payable in respect of the placement of cover. 
Fidelity insurance: A type of insurance which is designed to protect a firm from losses caused by the dishonest acts of its employees. 
First Amount Payable: The amount payable by an insured in the event of a claim  See EXCESS.
First Loss Policy: An insurance policy where the insurer pays all losses up to a given limit. 
Fleet Insurance: A motor policy covering a group of vehicles with the premiums calculated on an experience basis. 
 

G

 
General Insurance: Insurance which is not long-term business.
Good Faith: See UBERRIMAE FIDES.
Grace period: A short period during which cover under an annual policy may be extended beyond its expiry date to allow for the payment of a renewal premium. The privilege will be lost if the insured rejects the proposed renewal terms, by his actions or words. There are no grace periods in motor or marine insurance.
 

H

 
Hazard: Something that causes an exposure to injury, loss or damage. A physical or moral feature that affects the likelihood of a loss occurring, or has an influence on the size of the loss. 
Hazardous pursuits: Certain sports and activities are termed hazardous pursuits and are excluded from travel insurances (although it may be possible to have them included on payment of an additional premium). 
 

I

 
IBNR: Acronym for  "Incurred But Not Reported"  -  claims which have occurred but are not yet reported to the insurers. Many governments require insurers to establish reserves to cover such contingincies.
IISA:  Insurance Institute of South Africa - find them here.
Inception date: The date on which an insurance or reinsurance contract comes into force. Also referred to as EFFECTIVE DATE.
Incurred losses: The aggregate of the paid and outstanding claims of an insurer or reinsurer for a year of account or some other given period of time. These losses represent known losses to an insurer or reinsurer and, subject to issues of proof of liability and the determination of the final amount payable in the case of outstanding claims, are relatively certain. 
Indemnity:  The placing of the insured in the same financial position after a loss as he was in immediately prior to the occurrence.  An insured - who has suffered a loss - is restored (so far as possible) to the same financial position that he was in immediately prior to the loss, subject in the case of insurance to any contractual limitation as to the amount payable (the loss may be greater than the policy limit). Most contracts of insurance are contracts of indemnity. Life insurances and personal accident insurances are not contracts of indemnity as the payments due under those contracts for loss of life or bodily injury are not based on the principle of indemnity. 
Insurable interest:  An insured must have an insurable interest - a  recognised relationship - in the subject matter of the insurance, which is to say that he stands to benefit from its preservation and will suffer from its loss. In non-marine insurances, the insured must have insurable interest when the policy is taken out and also at the date of loss. 
Insurance:  Insurance (or sometimes assurance) is a device for indemnifying or guaranteeing against loss or harm arising in and from specific situtaions and / or contingincies such as fire, accident, death, disablement, or the like, in consideration of payment  (the insurance premium) proportionate to the risk involved.  It constitutes indemnification by a contract / policy in which one party agrees to indemnify and / or reimburse another for loss that occurs under the terms of the contract, for the amount for which the risks were insured. It embodies a risk transfer arrangement whereby the responsibility for meeting losses/liability passes from one party (the insured) to another (the insurer) on payment of a premium. 
Insurance contract: An insurance policy.
Insurance intermediary: A person through whom an insurance contract is effected. It normally refers to an insurance broker and / or an agent of an insurer such as a coverholder. 
Insurance policy: A document evidencing a contract of insurance. 
Insured: A person who benefits from a contract of insurance. Not neccessarily the policyholder!
Insured peril: A harmful event which is covered under a contract of insurance. 
 

J

 
Jurisdiction clause:  A clause in an insurance or reinsurance contract which states to which territory’s courts a contractual dispute can / shall be referred for resolution. 
 

K

 
Knock For Knock Agreement:  An agreement between insurers whereby - following a collision - each pays the cost of repairs to its own insured's vehicle (only), regardless of fault, provided that the vehicles involved are all insured for accidental damage. 
Key person insurance:  A policy that protects a firm from loss caused by the death or disability of a 'key person' within the company.