Like most other industries, Insurance has its own vocabulary and those in the know often use distinctive words to convey specific meanings.
Most business owners will need insurance to protect their business. As such, it’s likely that they will come into contact with insurance jargon at some point, which is where confusion often begins.
As a business owner, it’s a good idea to have a basic understanding of insurance terms that you may come across. The following are some basic insurance definitions that are handy to know.
Claim: A claim is the request that you make of your insurer in the event that you suffer a loss that is covered by your policy.
Compensation: Compensation is the benefit you receive from your insurer after a loss. This benefit can be in the form of money, services, a replacement item or repairs.
Cover: Cover is what is included in your insurance policy. Your cover will typically include the risks that you are insured against, the properties that are covered under the policy, the locations the policy covers, the people who are insured under the policy, and the limits of compensation.
Excess: Your insurance excess is the amount that you must pay before your insurance policy kicks in. It will be stated on your certificate of insurance. If you are not happy with this amount, you can discuss it with your insurance broker.
Insurance Broker: An insurance broker is an insurance expert who works for your business to determine the most appropriate insurance products to fulfil your requirements. Insurance Brokers know the market, and can not only obtain quotes, but also negotiate on your behalf and explain the fine print to you.
Liability: Liability is the term used to describe when a person or organisation is responsible for something, particularly in a legal sense.
Policy: Your insurance policy is a binding legal contract that documents your insurance cover. You should always ensure you know the details of your policy and make sure it covers the risks you want to cover.
Premium: The insurance premium is the amount of money you pay the insurer in return for your policy.
Policyholder: The policyholder (sometimes referred to as the insured) is a person, business or entity who has taken out the contract with the insurer.
Risk Management: The term risk management refers to the way that you prepare for and manage losses that your business may experience. It makes sense for businesses to limit the amount of risk they are exposed to, so they may change something in their behaviour or environment to reduce risk. Taking out an insurance policy is another form of risk management.
Underinsurance: Underinsurance is when the sum insured in your insurance policy doesn’t cover the actual value of the items you are insuring. This can leave business owners having to pay significant out of pocket expenses in the event of a claim.
The team at PSC Insurance Brokers are insurance experts with experience in insuring businesses across a range of industries. Get in touch with us for more information on how we can help with your business insurance.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.
