Glossary

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If you have any questions about these phrases or the wording of your policy contact us to speak to a specialist adviser.

Ab initio

This Latin term means 'from the beginning'. An insurance policy may be cancelled 'ab initio' if the insurer felt that there had been a non disclosure serious enough to not wish to proceed with the policy at all. Normally the insurer would refund the premium paid.

Accidental damage

Damage caused by accidental means as opposed to fire, theft or reckless conduct on your part. Accidental damage is usually subject to a policy excess for each claim.

Aggregate

'Aggregate' limit of indemnity is a term used to describe the type of indemnity limit provided by the professional indemnity policy. The total financial amount of cover provided is limited to the amount of claim or accumulated claims specified in the policy schedule, arising within the specified period of insurance.

If the aggregate limit of indemnity specified in the policy is £ 500,000, then that is the maximum amount the policy will pay during its term. Some policies will cover legal defence costs and expenses in addition to the aggregate limit of indemnity.

For example the client could have 2 claims, both for £250,000, but that would then mean the aggregate limit has been exhausted and therefore a 3rd claim for any amount would not be covered in that policy period.

Agreed value

The value of the insured items is agreed by you and the underwriters at the start of the period of insurance. This value then applies at the time of a claim.

All risks

All risks cover provides the broadest form of insurance cover. Such policies do not name the risks covered but list the exclusions and all unnamed risks are automatically covered.

Any one claim

The limit of indemnity is the maximum amount that can be paid for each and every claim made during the policy period.

If a policy has a limit of indemnity of £ 100,000, you could notify one claim of up to £ 100,000 or multiple claims of up to £ 100,000 during the policy period. In other words, the amount of claims the policy will cover during the policy period is unlimited.

Average

A clause in insurance policies whereby, in the event of under-insurance, the claim paid out by the insurer is restricted to the same proportion of the loss as the sum insured under the policy bears to the total value of the insured item.

If the building should be covered for £1,000,000 but is only insured for £500,000, then the amount payable will be reduced by 50% because the building is underinsured by 50%.

Buildings insurance

Buildings insurance covers the fabric of the actual building and the cost of damage to the structure of your property. This includes the roof, walls, ceilings, floors, doors and windows. Outdoor structures such as garages and fences are also included.

Business interruption

Covers lost income while a business is out of commission or you are unable to trade. And also includes the costs of repair necessary to get your business back up and running.

Certificate of insurance

This document is legal evidence of your insurance. This is an important document which you may need to produce in the event of a claim and will be provided to you by your insurer with your policy documentation.

Cherished car

A vehicle that is older than 20 years (25 years in the case of classic commercials) and to standard factory specification. A very limited selection of vehicles between 10 and 15 years old are also deemed to be 'cherished', but are subject to Towergate underwriting approval.

Cherished number plate

Registration numbers issued by DVLA in the UK, which may be rare or unusual, often spelling names or places. Some may be very valuable as they are able to be transferred from car to car, but in some instances following a total loss this may be disallowed.

Civil claim

Civil cases are generally brought by a private individual against another individual.

Civil liability

The legal responsibility for a payment to an aggrieved third party, due to the violation of a civil law, tort, or a breach of contract.

Claim

Any report of an incident in which the policy holder requests a payout or indemnity from the insurer under the conditions of the policy.

Claims made

The policy has to be in force when the claim is made, not when the incident occurred.

Claims occurring

The policy will respond to a claim only if the incident occurred during the policy period. Also referred to as 'loss occurring'.

Commercial insurance

Insurance for business firms, governmental units or non-profit organisations to protect against losses through unforeseen circumstances in return for the payment of a premium.

Consorcio

Applicable to Spanish property owners - the 'cover of extraordinary risks' (known as consorcio) insures you against some additional, extraordinary occurrences such as terrorism. Check with your adviser for the latest information.

Contents insurance

Covers the items in your home which are not fitted to the main structure of the building such as clothes, appliances, furniture, jewellery and other items of value. If you were to turn your house upside down, anything that fell out would be classed as 'contents'.

Costs in Addition

Legal costs to defend the insured are paid separately and in addition to the Limit of Indemnity chosen.

Costs Inclusive

Legal costs to defend the insured are included in the Limit of Indemnity chosen.

Cover note

A cover note is a temporary form of certificate, usually valid for 30 days only.

Criminal claim

Criminal cases are brought by the crown against an individual who has committed a crime.

Current market value

The current market value is the price which your property would sell for on the open market.

Employers liability

This cover protects employees from loss or injury while carrying out work for you. So if you have any full or part time staff, volunteers, interns, contracted or freelance workers, it’s your responsibility have the correct cover in place.

Endorsements

An endorsement refers to any variation or addition to the terms of your policy. You can refer to your policy statement for a list of any endorsements that apply in your case. Don't worry - there is nothing untoward about having endorsements on your statement - and you can always speak to a Towergate adviser for further clarification.

Escape of water

Escape of water refers to leakage from fixed water tanks, apparatus (e.g. washing machine) or pipes.

Excess

Generally a policy will have an excess applied to it. This indicates the initial amount of any claim that you will pay. For example, if the value of your claim is deemed to be £600 and your excess is £100 - you will pay the first £100 and the insurer will pay the difference, in this case £500.

Excesses can often be increased or decreased to affect the premium (the amount you pay for your insurance). Increasing your excess will often result in a lower premium as the insurance company decreases the potential payout in the event of a claim.

Fitness to practice

The skill, knowledge and character required to carry out your profession safely and effectively as determined by the regulator.

General conditions

Conditions which apply to all sections of the policy. These must be read in conjunction with other sections.

Inception of insurance

The day your insurance policy starts

Indemnity

Seeks to place the insured in the same financial position after an insured loss, as existed immediately before it.

Index linking

Index linking ensures that the sum you insure your building or property for is updated every year to reflect economic variations - giving you the reassurance of knowing your insurance value is going up in line with inflation, not down. This feature comes as standard on all our property insurance policies.

Insurance broker

A broker or intermediary who advises his/her clients and arranges their insurances. Although he/she acts as the agent of his/her client, he/she is normally remunerated by a commission (brokerage) from the insurer. An insurance broker is a full-time specialist with professional skills in handling insurance business.

Key person cover

Designed to help protect your business in the event of death or severe illness of one or more key employees. If your key employee dies or becomes seriously ill, the policy pays out a lump sum to make up for any loss in your revenue or profits, helping to keep your business on track.

Laid up cover

Cover for a vehicle that does not include road risks. Vehicles covered by this type of policy cannot be driven on the public highway or any other area to which the public have access. Often used for winter storage.

Legal costs

The legal or professional costs (including any disbursements such as Counsel’s or expert’s fees) reasonably charged to you by your representative.

Libel & Slander

Defamation of character. Libel is written, slander is spoken. Cover for libel & slander covers you should someone feel that you have written or said something about them that is inappropriate.

Limit of Indemnity

The Limit of Indemnity (LOI) is the maximum amount the insurer will pay for any one claim under a policy during the policy period (see aggregate limits or any one claim limits).

Limited mileage

The term given to a motor policy that restricts the maximum mileage you are allowed to cover, in return for a reduced premium. The Towergate cherished car policy allows for up to 7,500 miles in certain cases, or as little as 1500, according to individual requirements.

Material fact

A material fact is a piece of information that would directly influence an insurer in assessing and setting your premium - and must be disclosed. Failure to divulge any material fact could void your policy. If you're in any doubt as to whether something constitutes a material fact, talk to an adviser.

Medical indemnity

A specific area of insurance that relates primarily to malpractice in medical professions. It applies to accidents, mistakes and other incidents and, in cases where negligence is proven, compensation is paid to the claimant.

Medical malpractice

Medical malpractice is a legal cause of action that occurs when a medical or health care professional, through a negligent act or omission, deviates from standards in their profession, thereby causing injury to a patient. The negligence might arise from errors in diagnosis, treatment, aftercare or health management.

MID

The Motor Insurance Database is an independently operated database of all insured cars in the UK. It is accessible by the police, and insurers are required by law to supply certain data to the MID within a maximum of 14 days from inception of insurance cover.

Natural catastrophe system

Like the Spanish consorcio scheme, in France the Natural Catastrophe system (which is partly funded by taxes) provides a level of cover against natural occurrences that are otherwise not covered by insurance policies in France (e.g. avalanche, flood and earthquake).

New for old cover

This type of cover means you will receive a brand new 'like for like' replacement of your insured item in the event of a total loss claim.

No-claims bonus

A premium discount that rewards drivers for a number of years of claim-free driving. It is important to note it is a no-claim, not no blame bonus, meaning if your insurer pays out for a loss and the outlay is not recoverable, then the bonus will be lost. It is often possible to protect against this for a small additional premium. Towergate cherished car policies are not subject to a no-claims bonus.

Non standard

Refers to a risk that may be outside the insurer's usual limit of acceptance and often refers to a modification made to your insured items.

Non standard construction

Any property which includes an element of construction which causes the property to require specialist cover. Examples include; thatched roofs, steel framed houses, timber framed houses and flat roofed houses.

Occupier's liability

As occupier (irrespective of whether you own the property) you carry a duty of care to protect your safety and the safety of other occupants of the property. It is your responsibility to ensure that the premises are reasonably safe and free from danger.

Overseas use

Use of insured items outside of the UK and Northern Ireland.

Period of insurance

The period of time covered by the policy as shown in the policy schedule and any further period for which the insurer agrees to insure you.

Policy

Policy is the name sometimes given to your contract of insurance. It refers to the level of cover that you have agreed with your insurer, outlines the terms, and details any particular conditions that you need to be made aware of, or that you need to make your insurer aware of.

Premium

The insurance premium is the amount you pay for your insurance, normally on an annual basis (or by instalments).

Products liability

Covering you should any of your products cause harm to a member of the public.

Professional indemnity

Should the advice or guidance that you give to your clients be incorrect and leads to loss or injury to them.

Proposal form

The basis of the contract between you and insurer. An insurance contract is based on utmost good faith, which means you are duty bound to answer all questions correctly to the best of your knowledge. Failure to do so may void your cover.

Public liability

To cover you should you be sued by a member of the public if they are injured, or their belongings are damaged as a result of your negligence.

Rebuild value

Buildings insurance covers the cost of rebuilding your property as it stands - not in as-new condition or the value of the land on which it stands. This is a different valuation than the current market value of your home which is the price you would sell your property for. Outbuildings including sheds, garages, swimming pools, tennis courts, terraces and patios should be taken into consideration when deciding on the rebuild value of your property.

Renewal

The point at which you as a policyholder are invited to reinsure for a further year. Normally terms will be issued at least 6 weeks prior to your renewal date.

Retroactive date

Applies to any work you have undertaken before the start date of the current professional indemnity insurance policy. Its purpose is to make clear the starting point from which work undertaken is covered by the policy.

Risk

The possibility of a loss occurring to something of financial value, or injury to any person.

Run-off cover

In circumstances where a customer is no longer practicing and wishes to cancel their claims made policy, we can off run-off cover. This will provide cover for their previous work if an allegation arises once they have stopped working.

Salvage

Following the settlement that's paid out at the resolution of a claim, you will usually be allowed to retain the vehicle salvage at a nominal cost, subject to prevailing legislation regarding motor vehicle salvage. This is especially important where the vehicle is rare or of historical importance.

Settlement

The settlement is the payout you receive at the resolution of a claim, and in line with the stipulations of your policy. A settlement is affected by the excess you choose, and is dependent on you supplying your insurer with accurate and up-to-date information.

Statement of fact

List of answers provided by the client to the questions asked by us.

Structural survey

A thorough examination of the property usually carried out by a qualified surveyor, who will check that the interior and exterior match the minimum requirements for a lender to make a mortgage offer.

Subsidence

Subsidence refers to movements in the earth caused by geological or man-made factors. If your house is a subsidence risk it can make it harder to insure.

Total loss

The situation where the repair cost versus the item's value renders repairs uneconomic, thus 'writing off' the property as a total loss.

Underinsurance

When the cover you have purchased is not enough to meet your business requirements in the event of a claim. Insuring assets for incorrect values or setting cover limits too low is likely to result in underinsurance.

Underwriter

A person who accepts business on behalf of an insurer.

Underwriting

Underwriting is the process that insurers go through when assessing any new risk for insurance cover.

ULR

Stands for uninsured loss recovery. The process by which your uninsured losses in the event of a no-fault accident are recovered for you. For example, your excess is an uninsured loss and you would not wish to have to forfeit this if the accident was not your fault.

Utmost good faith

Both parties to the insurance contract have a duty to act honestly and not mislead or withhold critical information from one another. A breach of this duty by the proposer can entitle the insurer to repudiate liability and reject a claim.

Vacant possession

If your holiday property specifies vacant possession, it simply means that it will be unoccupied on, or before the sale completion date, ready for you to move in.

Warranty

A policy condition that must be complied with to the letter, for example, a garaging warranty, whereby the vehicle must be in a locked garage between the hours of 2200 and 0600 unless in the course of a journey. No cover would operate if this strict warranty was not complied with.