Jargon Buster

Not sure about any of the terms in your insurance? Track them down in Jargon Buster and let it all come crystal clear.

Additional Premium
Abandonment Of Events
Accidental Damage Cover
Adjuster
Advance Profits Insurance
Aggregate Limit Of Indemnity
All Risks
Average
Buildings Insurance
Business Interruption Insurance
Business Travel Insurance
Cancellation
Claims
Combined Liability Policy
Compulsory Insurance
Commercial Combined
Commercial Legal Expenses
Commercial Vehicle Insurance
Common Law
Community Company
Comprehensive
Computer Insurance
Concealment
Consequential Loss
Contents Insurance
Contingency Insurances
Contract Works/Contractors' All Risks Insurance (Annual Or Single Project)
Cover Note
Credit Insurance
Deductible
Deferred Premium
Dual Insurance
Duty To Minimise Loss
Employers Liability Insurance
Endorsement
Engineering Interruption
Excess
Excess Layer
Exclusion
Ex-Gratia Payment
Fidelity Insurance
Fire And Theft Cover
Fire Insurance Policy
First Loss Insurance
Fleet Insurance
Flood Insurance
Freight Liability
Goods In Transit Insurance
Glass Insurance
Gross Premium
Hazard
Health Insurance
Inception Date
Increase In Cost Of Working
Indemnity
Indemnity Period
Insurable Interest
Insurable Value
Insurance Broker/Intermediary
Financial Ombudsman Service
Insurance Premium Tax
Insured
Insurer
Knock For Knock
Lapse
Legal Expenses Insurance
Limit
Lloyd's (Of London)
Loss
Loss Adjuster
Material Damage Warranty
Material Fact
Money Insurance
Name
Negligence
Net Premiums
New For Old
Non-Disclosure
Package Policy
Peril
Period Of Risk
Permanent Health Insurance
Personal Accident And Sickness Insurance
Physical Security Warranty
Policy
Policy Holder
Premium
Products Liability Insurance
Professional Indemnity Insurance
Proposal Form
Quote
Reinstatement
Renewal
Risk
Risk Management
Schedule
Statement Of Fact
Statute Law
Subject To Survey
Subrogation
Sum Insured
Terrorism
Theft Insurance
Third Party
Third Party Liability
Third Party Motor Cover
Treatment Liability
Underlying Insurance
Underwriter
Utmost Good Faith
Warranty
Wear And Tear
Without Prejudice

Additional Premium
A further premium payable by the insured as a result of policy amendment, that may have increased the risk or changed the policy conditions or sum insured.

Abandonment Of Events
A contingency insurance protecting promoters of events (e.g. exhibitions, fetes) against financial loss following cancellation, abandonment, interruption, rescheduling, postponement through circumstances (fires, storms) beyond their control. Judicial intervention that causes abandonment is sometimes included in the cover. Non-appearance cover is also available.

Accidental Damage Cover
Cover under a household or a commercial policy that provides all the benefits of standard named peril policy plus accidental damage cover, e.g. spilling paint on a carpet or computer. Under a named peril policy a loss has to be matched to a named peril.

Adjuster
One who investigates and assesses claims on behalf of insurers (claims adjuster or loss adjuster).

Advance Profits Insurance
Business interruption insurance of the expected profits of a new enterprise or an extension to an existing business.

Aggregate Limit Of Indemnity
The maximum amount an insurer will pay under a policy in respect of all accumulated claims arising within a specified period of insurance.Alarm Warranty - Circumstances under which the alarm should be set (usually this is when the premises are unattended) and how it should be maintained. Failure to comply can lead to a claim not being covered.

All Risks
A term describing a property insurance covering any fortuitous loss or damage that is not specifically excluded. This contrasts with a policy covering physical loss or damage caused by a named peril, e.g. fire. The ‘all risks’ exclusions relate to inevitable forms of loss, such as depreciation and wear and tear, and other losses due to gradually operating causes. ‘All risks’ cover is available for personal possessions, cameras, jewellery, industrial equipment and goods in transit, and applies to Institute Cargo Clauses A. Under household and commercial policies on buildings and contents, and cover on motor vehicles, the term has given way to ‘accidental loss or damage’ as a means of going beyond named perils cover.

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.

Buildings Insurance
This covers your property against damage. This normally includes fire, flood and subsidence damage, temporary accommodation / housing, and the cost of replacing broken or lost keys. Outside buildings such as garages, greenhouses and sheds are often also covered. Fixed items such as baths, toilets, sinks, pipes and drains are also covered by the majority of policies. Some policies have options to include accidental damage cover, and to raise the excess (Initial amount you need to pay in the event of a claim) to reduce the policy cost.

Business Interruption Insurance
Covers loss of gross profit following reduced turnover resulting from, and occurring after, insured property damage. The gross profit indemnity enables the business to pay its standing charges, including payroll, and recover its net profit during the indemnity period, the period selected as being the time needed to restore normal trading levels. Specified working expenses are not at risk and are therefore deducted from turnover before arriving at the gross profit, the item to be insured. The policy also covers increased cost of working, e.g. renting alternative premises, subject to the cost not exceeding the amount of loss thereby avoided. Additional increased cost of working can be insured. The policy may extend to interruptions caused by damage at the premises to customers or suppliers, or resulting from loss of attractions, murder, suicide, food poisoning or infectious/contagious diseases.

Business Travel Insurance
This covers you against the loss or damage of business equipment such as laptops and product samples. This often also covers the costs of an emergency courier to deliver replacement items if needed (say, for an important meeting). Some policies also provide cover against the death or hospitalisation of an employee on a business trip, covering the costs for a colleague to take their place.

Cancellation
Termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the condition under which the policy may be cancelled by notice. The period of notice could be anything from 48 hours to 3 months. In most cases this will result in a return premium being paid by the insurer to the insured.

Claims
Injury or loss to the insured arising so as to cause liability to the insurer under a policy it has issued.

Combined Liability Policy
Policy combining two or more types of liability insurance in one document, e.g. public liability, products liability and employers’ liability.

Compulsory Insurance
The law requires certain risks to be insured. These include Private Motor, Third Party and Employers' Liability.

Commercial Combined
Covers accidental loss, destruction or damage to the property, except as excluded (e.g. faulty or defective design, inherent vice, latent defects, explosion of boilers, sonic bangs, collapse and others that may be applicable in real terms to certain categories of equipment). Many of the exclusions can be bought back. The property insured is industrial and commercial plant and equipment. Cover is often arranged on a first loss basis.

Commercial Legal Expenses
Provides businesses with legal advice and covers legal expenses to enforce or defend legal rights in a range of disputes. Cover is available under various sections: court attendance expenses; tax/VAT disputes; prosecution defence; data protection liability; contract disputes; personal injury or property claims; premises disputes; employment disputes and awards; licence disputes.

Commercial Vehicle Insurance
A general term referring to the insurance of goods-carrying vehicles, buses and coaches, agricultural and forestry vehicles, mobile plant and other special types.

Common Law
The common law consists of the ancient customs and usages of the land, which have been recognised by the courts and given the force of law. It is in itself a complex system of law, both civil and criminal, although it is greatly modified and extended by statute law and equity. It is unwritten, and has come down in the recorded judgements of judges who for hundreds of years have interpreted it.

Community Company
An insurance company whose head office is in a member State of the European Economic Community.

Comprehensive
A term describing a policy with a number of different types of cover in one document (e.g. a private car comprehensive policy has sections providing material damage cover, third party cover, personal accident cover, medical expenses, etc.).

Computer Insurance
Covers ‘all risks’, theft and breakdown included, on computer and ancillary equipment. Chips and standard software are included automatically. Other key features: ‘new for old’ settlements; cover in UK premises and in transit; negotiable excesses; loss of data; Data Protection Act liability; and consequential loss following an insured breakdown or loss. Liability insurance may be included. Exclusions are minimal but special precautions have to be taken when computer equipment is left in an unattended vehicle. Policies may apply to personal computers, laptops and main-frame systems.

Concealment
Deliberate suppression by a proposer for insurance of a material fact relating to the risk, usually making the contract null and void.

Consequential Loss
The term, unless defined in a contract, follows the rule for contractual damages and embraces losses flowing directly from the breach, e.g. late delivery that increases costs. Consequential losses are generally regarded as the more remote consequences that were not reasonably foreseeable by the parties. Contracts that define consequential are more likely to limit a person’s rights than a clause that simply excludes liability for consequential loss without definition. In insurance the term is used to refer to expenses such as the cost of temporary relocation, while fire damaged property is being repaired. The term ‘consequential loss insurance’ has been replaced by ‘business interruption insurance’. Consequential loss is not covered under material damage insurances.

Contents Insurance
This covers the contents of your home against damage or loss due to fire, lightning, flooding, theft or break-in. Accidental damage is sometimes included, although it is usually an optional extra. Contents Insurance is often sold together with Buildings Insurance, or as a single Home Insurance policy. Remember that if you have a home office, it is not covered by your standard buildings/contents insurance, and a special policy will need to be bought.

Contingency Insurances
A term describing those policies that do not fall naturally into one of the principal classes of insurance business. The term embraces insurances such as abandonment of events, pluvius insurance and others often of an unusual nature.

Contract Works/Contractors' All Risks Insurance (Annual Or Single Project)
Covers temporary and permanent works executed in the performance of contracts, and materials for incorporation therein, plus own and hired plant, and tools and equipment while on sites or in transit. Cover is arranged for house extensions through to multi-storey office blocks. Premiums are based on annual turnover with a maximum value of any one contract. Various extensions are available (e.g. continuing hire charges following plant damage). Key exclusions relate to existing structures and defective design. Cover may have to accord with standard term contracts (e.g. Joint Contract Tribunal).

Cover Note
A document issued to the insured confirming details of the insurance cover placed. Some cover notes are a legal requirement, e.g. motor.

Credit Insurance
This protects you against customers who fail to pay their invoices. Because the risk of bad debt can be high, you would probably find it hard to get cover for this unless your business has been successfully up and running for some time.

Deductible
The specified amount a loss must exceed before a claim is payable. Only the amount which is in excess of the deductible is recoverable.

Deferred Premium
The part of a premium which, following agreement with underwriters, is payable by installments, usually quarterly or half yearly.

Dual Insurance
Dual insurance occurs when, in the case of insurance against loss or damage, the same items are insured against a certain risk under more than one insurance policy. In the event of loss or damage the benefits paid by the insurer will be reduced by the amount of the dual insurance.

Duty To Minimise Loss
In the event of a claim you must do everything possible to restrict the damage as far as possible, and in particular to avoid any consequential damage.

Employers Liability Insurance
Insurance by employers in respect of their liability to employees for injury or disease arising out of and in the course of their employment. With some exemptions this insurance is compulsory in Great Britain, and can only be provided by an authorised insurer.

Endorsement
Documentary evidence of a change in the wording of or cover offered by an existing policy or qualification of wording if the policy is written on restricted terms. (See also Addendum).

Engineering Interruption
A business interruption insurance providing an indemnity at a fixed rate per day in respect of interruptions following breakdown or unforeseen damage to installed plant and machinery or failure of the power or water supply. There are time exesses/deductibles or franchises applied to the indemnity period to avoid small losses, particularly temporary losses of services.

Excess
The first portion of a loss or claim which is borne by the insured. An excess can be either voluntary to obtain premium benefit or imposed for underwriting reasons.

Excess Layer
A layer of insurance cover provided by an insurer that sits above the primary layer. The liability of the insurer providing the additional layer is only triggered when the existing primary layer (plus any other layers already in place) has been exhausted. The ‘layer’ insurer provides a band of cover, commonly in liability insurance, by setting an upper limit of liability.

Exclusion
A provision in a policy that excludes the insurer's liability in certain circumstances or for specified types of loss.

Ex-Gratia Payment
A payment made by an insurer to a policyholder where there is no legal liability so to pay.

Fidelity Insurance
This covers you for fraud or dishonesty by employees, it can be taken out for any amount of employees or the whole staff.

Fire And Theft Cover
Named peril ‘own damage’ cover added to a third party motor vehicle. The property damage cover is against damage caused by fire and theft risks only. The cover could stand alone if the vehicle is out of use.

Fire Insurance Policy
A material damage insurance that in its ‘standard’ form covers destruction or damage to the insured property by (1) fire (resulting from explosion or otherwise) not occasioned by or happening through (a) its own spontaneous fermentation or heating or its undergoing any process involving the application of heat, (b) earthquake, subterranean fire, riot, civil commotion etc.; (2) lightning; and (3) explosion, not occasioned by or happening through any of the perils specified in (1) above, (i) of boilers used for domestic purposes only, (ii) in a building not being part of any gas works, of gas used for domestic purposes or used for lighting or heating of the building.

First Loss Insurance
Insurance where the sum insured is accepted to be less than the value of the property but the insurer undertakes to pay claims up to the sum insured, without application of average.

Fleet Insurance
Policy on a number of vehicles operated by the same insured and rated on an experience basis, i.e. fleet rating. Usually five or more vehicles constitute a fleet. The fleet itself can comprise vehicles of different classes, e.g. private cars, goods-carrying vehicles, etc. Aircraft and ships can also be insured as fleets.

Flood Insurance
Insurance against damage caused by the escape of water from the normal confines of any natural or artificial water course (other than water tanks, apparatus or pipes) or lake, reservoir, canal or dam in addition to inundation from the sea. Losses are normally subject to a minimum excess of £250. The risk is normally insured as an additional peril together with storm damage.

Freight Liability
Products are aimed at transport contractors, road hauliers, freight forwarders, warehouse keepers, packers and consolidators. Cover is available to meet the firm’s chosen trading conditions and other legal liabilities.

Goods In Transit Insurance
Covers goods in transit by land (or by land and sea). Cover is either on (a) the goods protecting the owner’s interest; or (b) the liability when a road haulier carries customers’ goods. The goods owner insures ‘all risks’ cover up to an amount per specified vehicle or per consignment when using other transport modes. The haulier can insure on a specified vehicle basis or, on a declaration basis, by estimating annual haulage charges with a selected limit of indemnity. Cover, within the territorial limits, applies during loading, carriage, unloading or temporary garaging of vehicles or trailers. Insurance may include loss/damage to sheets, ropes, clearing up, repackaging and re-sorting following an accident.

Glass Insurance
Breakage of all types of glass (e.g. wired and embossed plate, figured glass, etc.). The insurers will make good or pay full replacement value, including shop fronts with lettering. Any breakage insurable under a fire policy or caused by explosion is excluded. Fixed glass in dwellings is insured under household comprehensive policies.

Gross Premium
A term normally applied to gross written premiums before deduction of brokerage and discounts.

Hazard
A physical or moral feature that introduces or increases the risk.

Health Insurance
This covers you for private treatment in the event of an illness or the need for an operation. Optional areas of cover include home nursing, some specialist consultations, and 'out-patient' treatment such as physiotherapy.

Inception Date
The date from which, under the terms of a policy, an insurer is deemed to be at risk.

Increase In Cost Of Working
Under a business interruption policy some cover is provided for additional expenditure incurred by the insured solely for the purpose of reducing the shortage in production following an insured event.

Indemnity
A principle whereby the insurer seeks to place the insured in the same position after a loss as he occupied immediately before the loss (as far as possible).

Indemnity Period
Under a business interruption insurance the period during which cover is proved for disruption to the business following the occurrence of an insured peril.

Insurable Interest
For a contract of insurance to be valid the policyholder must have an interest in the insured item that is recognised at law whereby he benefits from its safety, well being or freedom from liability and would be prejudiced by its damage or the existence of liability. This is called the insurable interest and must exist at the time the policy is taken out and at the time of the loss.

Insurable Value
The value of the insurable interest which the insured has in the insured occurrence or event. It is the amount to be paid out by the insurer (assuming full insurance) in the event of total loss or destruction of the item insured.

Insurance Broker/Intermediary
An insurance intermediary who advises his clients and arranges their insurances. Although he acts as the agent of his client, he 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. Since January 2005 intermediaries and brokers must be registered with,and regulated by the Financial Services Authority.

Financial Ombudsman Service
A bureau established by major insurance companies to oversee the interests of policyholders whose complaints remain unsolved through normal company channels of communication. The service is available to all those holding personal cover with the insurers who have joined the scheme. The decision of the Ombudsman is binding on the insurer, although the insured may appeal to the court if he so wishes.

Insurance Premium Tax
The Finance Act 1994 introduced this new tax on most general insurance risks located in the UK.

Insured
The person whose property is insured or in whose favour the policy is issued.

Insurer
An insurance company or Lloyd's underwriter who, in return for a consideration (a premium). agrees to make good in a manner laid down in the policy any loss or damage suffered by the person paying the premium as a result of some accident or occurrence.

Knock For Knock
A forbearance agreement between two insurance companies designed to avoid legal action. This arrangement applies to motor vehicle policies and under it each company agrees to pay up to the limits of their respective interests for the damage to the vehicle of their own insured without regard as to who was to blame for the accident. It is essential to talk to a specialist or advisor before taking out key person cover; as it requires a detailed knowledge and understanding of the business and employee roles.

Lapse
The non-renewal of a policy for any reason.

Legal Expenses Insurance
This helps cover the majority of your costs in the event of a legal dispute. This usually covers legal costs for employment tribunals, prosecutions under acts such as The Health and Safety at Work (etc) Act 1974, contract disputes, and costs caused by an in-depth Internal Revenue or Custom and Excise investigation. Some legal expenses policies also provide free legal advice, as well as cover for employee time lost during jury service or as a witness in a case.

Limit
The insurer's maximum liability under an insurance, which may be expressed 'per accident', 'per event', 'per occurrence', 'per annum', etc

Lloyd's (Of London)
A Society, incorporated under Act of Parliament of 1871 and known as the Corporation of Lloyd's, which provides the premises a wide variety of services, administrative staff and other facilities to enable the Lloyds market to carry on insurance business efficiently.

Loss
Another term for a claim.

Loss Adjuster
Independent qualified loss adjusters are used by Insurers for their experience and expertise necessary to carry out detailed and in some instances prolonged investigations of complex and large losses. Although the adjuster's fees are invariably paid by the insurers he is an impartial professional person and makes his judgement on the amount to be paid in settlement solely on the basis of established market practice. It is his task to negotiate a settlement which is within the terms of the policy and equitable to both insured and insurer. Should he himself not be an expert in a particular discipline which is necessary or desirable to pursue his negotiations, he will consult or employ such an expert.

Material Damage Warranty
A warranty in a business interruption insurance policy stipulating that for the interruption insurance to become effective there must be a policy in force in respect of the material damage and a claim paid or admitted thereunder for such damage caused by an insured peril.

Material Fact
Any fact which would influence the insurer in accepting or declining a risk or in fixing the premium or terms and conditions of the contract is material and must be disclosed by a proposer, or by the insurer to the insured.

Money Insurance
An insurer’s definition of money includes cash, bank notes, cheques, postal orders, postage stamps, national savings certificates and holidays with pay stamps, luncheon vouchers and VAT purchase invoices. Cover is ‘all risks’ subject to specific limits depending on the circumstances of the loss, e.g. from a locked safe or a directors home. Insurers normally cover personal assault and theft by employees, primarily a fidelity guarantee risk, is covered only if discovered within 14 days.

Name
Another term for an underwriting member of Lloyd's.

Negligence
Perhaps the most common formof tort. In Blyth v Birmingham Waterworks Co. (1856) it was defined as 'the omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do'. Gives rise to civil liability.

Net Premiums
Term variously used to mean gross premiums net of reinsurance premiums payable, or commission, brokerage, taxes, or any combination of these.

New For Old
Where insurers agree to pay the cost of property lost or destroyed without deduction for depreciation.

Non-Disclosure
The failure by the insured or his broker to disclose a material fact or circumstance to the underwriter before acceptance of the risk.

Package Policy
Combines different insurances in one document for one insured. Example: Shopkeepers’ policy covers property, business interruption, money, liability covers, etc.

Peril
A contingency, of fortuitous happening, which may be covered or excluded by a policy of insurance.

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

Permanent Health Insurance
Term used to describe contracts of insurance providing continuing benefits in the event of prolonged illness of disability.

Personal Accident And Sickness Insurance
An accidents only policy pays lump sum benefits following permanent total or partial disablement, dismemberment or death caused by an accident and weekly benefits for temporary total disablement. The policy is renewable annually but similar cover is available under travel policies. Hazardous pursuits (e.g. mountaineering) are excluded but can usually be bought back. A weekly/monthly benefit can be added for total disablement through sickness – a personal accident and sickness policy.

Physical Security Warranty
As alarm warranty but relating to physical protections - (locks, grills, shutters etc.)

Policy
A document detailing the terms and conditions applicable to an insurance contract and constituting legal evidence of the agreement to insure. It is issued by an insurer or his representative for the first period of risk. On renewal a new policy may well not be issued although the same conditions would apply, and the current wording would be evidence by the renewal receipt.

Policy Holder
The person in whose name the policy is issued. ( See also insured and assured).

Premium
The consideration paid for a contract of insurance.

Products Liability Insurance
These policies cover the insured's legal liability for bodily injury to persons, or loss of or damage to property caused by defects in goods (including containers) sold, supplied, erected, installed, repaired, treated, manufactured, and/or tested by the insured.

Professional Indemnity Insurance
This policy protects a professional man against his legal liability towards third parties for injury, loss, or damage, arising from his own professional negligence or that of his employees.

Proposal Form
A form sent by an insurer to a person requiring insurance so as to obtain sufficient information to allow the insurer to decide whether or not to accept a risk and what conditions to apply if it is accepted.

Quote
A statement by an insurer of the premium he will require for a particular insurance.

Reinstatement
Making good. Where insured property is damaged, it is usual for settlement to be effected through the payment of a sum of money, but a policy may give either the insured or insurer the option to restore or rebuild instead.

Renewal
The process of continuing an insurance from one period of risk to a succeeding one.

Risk
The peril insured against or an individual exposure.

Risk Management
The identification, measurement and economic control of risks that threaten the assets and earnings of a business or other enterprise.

Schedule
The part of a policy containing information peculiar to that particular risk. The greater part of a policy is likely to be identical for all risks within a class of business covered by the same insurer.

Statement Of Fact
An alternative to a completed proposal form. A statement provided by the insurer clarifying the basis on which insurance is accepted and what conditions apply.

Statute Law
Presently the most important source of law is statute law, otherwise known as Acts of Parliament; which may create entirely new law, over-rule, modify, or extend existing principles of common law and equity, and repeal or modify existing Statute law.

Subject To Survey
Phrase used by an insurer to signify provisional acceptance of an insurance pending inspection by a surveyor whose report is necessary to determine the rate and conditions applicable.

Subrogation
The insurance company that makes the initial payments (e.g. in the case of Motor Liability insurance) has recourse to the person responsible for the loss, or to the policyholder if the loss was due to a tortuous act (such as gross negligence) or if the insurance cover does not suffice.

Sum Insured
The maximum amount payable in the event of a claim under contract of insurance.

Terrorism
Coverage is available for physical damage to fixed and mobile assets caused by terrorist acts, sabotage acts, malicious damage, strikes, riots and civil commotion, and Business Interruption following property damage to the insured asset by one of the above perils. Terrorism General Liability is also available and insures against liability for third party physical damage and bodily injury, as well as coverage for employers’ liability in the event of a terrorist act.

Theft Insurance
Indemnifies the insured against loss or damage occasioned by theft as defined in the policy. Commercial policies normally cover theft following ‘forcible and violent entry into or exit from the premises’. Theft, as defined in the Theft Act 1968, is normally considered too wide in scope. Wider cover is available under household policies.

Third Party
A person claiming against an insured. In insurance terminology the first party is the insurer and the second party is the insured.

Third Party Liability
Liability of the insured to persons who are not parties to the contract of insurance and are not employees of the insured.

Third Party Motor Cover
Covers liability for third party injury and property damage, including emergency treatment, and liability for accidents caused by passengers. The policy exceeds the level of cover required under Road Traffic Act compulsory requirements that require cover only in connection with vehicles used on a road or other public place. The normal third party policy is not so restricted.

Treatment Liability
Covers your legal responsibility for injury or damage caused by the products or treatments you provide. In the case of hairdressers this will include hair products, services and the assorted range of treatments you provide to your clients.

Underlying Insurance
The primary insurance as distinct from excess insurance.

Underwriter
A person who accepts business on behalf of an insurer. (See also Lloyd's underwriter).

Utmost Good Faith
Insurance contracts are contracts of utmost good faith (uberrima fides), which means that both parties to the contract have a duty to disclose, clearly and accurately, all material facts relating to the proposed insurance. Any breach of this duty by the proposer may entitle the insurer to repudiate liability.

Warranty
A very strict condition in a policy imposed by an insurer. A breach entitles the insurer to deny liability.

Wear And Tear
This is the amount deducted from claims payments to allow for any depreciation in the property insured which is caused by its usage.

Without Prejudice
1. Term used in discussion and correspondence. Where there is a dispute or negotiations for a settlement and terms are offered 'without prejudice' an offer so made or a letter so marked and subsequent correspondence cannot be admitted in evidence without the consent of both parties concerned.2. Term also used by an underwriter when paying a claim which he feels may not attach to the policy.This payment must not be treated as a precedent for future similar claims.