Home insurance jargon buster

There are increasing volumes of words and phrases creeping into all of our ever-diverse language which make little sense at face value.

One of the main culprits of this is the insurance industry, which is forever coming up with a range of new and improved ways of saying the same thing.

So with this in mind – and focusing on the Home Insurance market and finally dispensing with any lingering oxymorons – here’s our Plain English, jargon-busting guide to the ONLY terminology you’ll EVER need to be aware of when you apply your logical (and lateral) thinking to the subject of household insurance products.

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By Bobatoo
July 16, 2015


Association of British Insurers (ABI) – The ABI was formed in 1985 and is the UK insurance industry’s recognised trade body and boasts a membership of some 400 insurance providing companies.

Accidental Damage – This refers to any damage that befalls a building or its contents and is the colloquial term for damage which occurs to either the external or internal structure of the property as well as the possessions of the homeowner found under their roof. So for example, someone put a foot through a wall the policyholder would have to instigate a buildings insurance claim, while alternatively a contents insurance claim would be put in if paint was accidently spilled on a carpet.

Accidental Damage Cover/Protection – This is the type of cover a home insurance policyholder might automatically make a beeline for, however a significant number of standard buildings and contents policies will encompass this under their general insurance umbrella. Therefore it’s imperative to read the small print and determine either way before you attempt to bolt this onto an existing policy.

Act of God – As dramatic as this vernacular sounds, it isn’t as biblical as you might first imagine. Although the sums of insurance money might be, in the event of claiming on a buildings policy in the immediate aftermath of a lightning, earthquake or tsunami unexpectedly hitting a policyholder’s property. Or unpreventable damage sustained if your home became embroiled in a war zone. Please note that Acts of God are NOT necessarily covered by ALL home insurance providers.

All Risks Cover – This phrase pertains to making a home insurance policy extendable to cover the insured party whilst they are out and about. Outside and aboutside of the property that is, when they’ll more than likely be wearing examples of jewellery or watches, as well as facilitating mobile gadgets, which are otherwise/normally itemised under the policyholder’s home contents policy. This extension can stretch to include what’s known as ‘specified personal possessions’ (items valued over £1,000) or ‘unspecified’ (which are capped at £3,000).

Amendment – As in real life, an amendment in home insurance parlance means a timely adaption or addition to an existing thing or situation. The thing or situation in this instance being a policy agreement. So for example should a new property extension or conversion require more cover, the insured party’s policy can be duly amended to take this extra-curricular revision into account.

Annual Premium – As the name implies, there’s no home insurance-speak red herrrings here; instead merely referring to the sum of money a policyholder will pay out for their home cover on a yearly term.


Buildings Cover – One of the most important aspects of any home/household insurance product is the ‘Buildings Cover’, which is effectively a policy which serves to protect the very skeleton of the policyholder’s property. Extending its reach to include the external structures, fixtures and fittings, the buildings cover quite literally (or rather, physically) comprises of your dwelling’s roof, walls, floors, ceilings, doors, windows and every other fitted feature. From bedroom and bathroom suites to fitted kittens and built-in wardrobes. What’s more, familiar outdoor structures might also be taken into a typical buildings cover insurance policy, such as greenhouses, garages, sheds and gazebos.

Broker – Ostensibly an insurance expert who acts independently, either as an individual or in the guise of an insurance product-providing company in its own right. A large percentage of insurance companies – with the historic Lloyd’s of London being perhaps the most well-known – promote and sell their policy services via a broker or third party brokerage firm. Brokers by definition tend to have access to a cross-section of insurers in all fields and can seek out a competitive quote on behalf of their clients as a result of being able to aggregate so many.


Cancellation – The mutually acceptable termination of an existing home insurance policy prior to the conclusion of its term/previously agreed lifecycle, between both intrinsic parties involved; namely the insurance provider and the policyholder. This option doesn’t come cheap however and will habitually mean footing a cancellation fee and/or a percentage of the remaining/outstanding annual premium, courtesy of a continuation of payments until the end of the next full repayment month.

Certificate of Insurance (also referred to as ‘Insurance Documents’) – A hard copy proof of insurance which testifies as physical evidence to support the purchasing of a home insurance product either online or over the phone. Once the application process has been completed and the legally-binding agreement between the policyholder and insurance provider has been drawn up and ratified, the documentation will be sent out in the post, as tradition has always dictated. Having said that increasing numbers of companies are now looking at generating electronic certificates in the future in a bid to minimise carbon footprints.

Claim – Should an unforeseen event occur during the term of your home insurance policy running which results in losses or damage of some description (and as per cited in a policyholder’s agreement), then a claim is subsequently filed by the insured party to instigate some form of recompense or monetary settlement figure. A claim can also be made against a policyholder by a third party, such as a member of the public if for any reason they fall victim to an injury and/or damage to their property/possessions as a result. Say for instance if their vehicle was damaged by falling masonry dislodged from the policyholder’s property by what was later deemed as an Act of God; and therefore complying with home insurance protocol.

Compliance – Like when in Hollywood sci-fi blockbusters the baddies will always say that “You have no choice other than to comply with me”. Well yeah, ‘Compliance’ in home insurance terminology is absolutely NOTHING like that. Not as intimidatingly so, anyway. Obviously compliance is compliance and someone/body has to comply with the rules laid down by others; in this instance it’s home insurance –providing firms who must by law comply with the Financial Services Authority at all times, and strictly adhere to its rules and regs. However these are in place to protect the interests (financial and consumer) of the policyholder. Which of course is a good thing.

Compulsory Excess – This is the fiscal amount which the policyholder agrees to pay up-front in the event of registering a future claim against the home insurance plan they signed up to. Although this is more normally subtracted from any settlement figure once a claim has been successfully processed by the insurance provider rather than exchanged from the outset.

Contents (also known as ‘Home Contents’) – This describes the very possessions and personal belongings that the policyholder has in their home/property at the time that the home content insurance package is underwritten and agreed to in principle. Pretty much everything falls into the contents category, excluding anything which is pinned down. As a general rule of thumb the contents insurance policy provider will often explain what items this specifically safeguards by telling the insured party to imagine being able to turn their property upside down and shaking it vigorously. Anything that remain secured to the structure of the property is classed as ‘Buildings Insurance’ fodder, while everything that drops off is conversely referred to as examples of ‘Contents Insurance’. So think gadgets, clothing, antiques, furniture, kitchen equipment, bikes, sports gear, etc.

Combined Cover – This simply equates to the popular pairing of ‘Buildings Insurance’ and ‘Home Contents’ insurance within the same, one-stop household insurance policy. It tends to bring down the overall premium price by fusing the two together. Plus it’s easier to have all the household insurance documentation in one place too.


Depreciation (Otherwise known as ‘Wear and Tear’) – Unless you tick the ‘new for old’ box on your home contents insurance policy application form, then your possessions will be subject to depreciation over a period of time. Which means should they be lost, damaged or stolen during the term of the policyholder’s insurance cover, then they’ll only be recompensed by way of current market values indicative of said item. Essentially the insurance provider will allow for any notable wear and tear which most items are exposed to during a passage of time and the amount determined will be duly deducted from any pay-out.

Due Diligence – A traditional insurance phrase which has been passed down over the years which has the exact same connotations as it always did. That is the demonstrating of reasonable care of your property at all times so as not to place them at risk of being damaged, mislaid or stolen. Failure to show due diligence could result in a future claim made against your home contents insurance policy being rendered null and void. This situation could potential arise from, hypothetically-speaking, leaving an item of jewellery next to an open window which is deemed to be reachable from a street, as a point in question.

Duty of Disclosure – This refers to keeping your home insurance provider in the picture and fully updated as to any changes in the policyholder’s set of circumstances at the juncture their current policy started. Conveying and submitting accurate and honest information from the outset is pivotal to maintaining a good working relationship with an insurer, which extends to notifying them immediately of any revisions during the lifecycle of said policy which might otherwise contravene or affect the policy in any way, shape or form. The best illustration of this is if and when the insured party changes address.


Emergency Home Assistance – This is the term which describes the policy feature which is activated in the event of an unpredicted domestic crisis arising, usually involving heating or plumbing systems in the main. This additional cover plan compensates for any inconvenience or upheaval resultant from sudden and/or catastrophic failure of in-built utility devices and systems found in most domestic and non-domestic properties.

Excess – As we’ve already established this is the amount of money the home insurance policyholder pays towards the cost of any claim they might make. However with regards to this particular insurance model, this is historically sub-divided further, with the advent of ‘Accidental Damage Excess, Escape of water Excess’ and ‘Subsidence Excess’ to name just a handful of alternative featurettes of excess packages in direct relation to the homes market.

Exclusions – Always set in stone in the policy documentation small print, home insurance exclusions effectively refer directly to any element which ISN’T duly mentioned/therefore included in the gist of the actual agreement terms and conditions of contract. In the home insurance arena this would be more likely to be rulings about ‘properties which are left vacant for over 30 days consecutively not being insured during this period’ amongst other aspects which require the policyholder to be aware of from day one. This one headline exclusion alone is of paramount importance as in the eventuality of a fire or burglary laying waste to the building the insured party would NOT be able to claim if it had been left unoccupied for the stated period.


Financial Ombudsman Service (FOS) – A completely independent organisation and service-provider which oversees and settle unresolved disputes between the businesses which effectively proffer financial services , including in this case, the home (and every other branch of) insurance industry.

Financial Conduct Authority (FCA) – The UK’s foremost financial watchdog and regulatory body of which insurance providers are answerable to in the event of any outstanding issues between policyholders and insurance providers.

FLEA Cover – As far removed from protecting your pet fleas as is possible to be, FLEA cover is ALL about the rudimentary home insurance cover which is widely available for specifically unoccupied properties; which comprise of Fire, Lighting, Explosion and Earthquake cover (and from where the FLEA acronym originates), of course.

Force Majeure – Despite sounding like an Indie-Dance band, ‘Force Majeure’ is the phrase used to describe an extraordinary or wholly unpredictable scenario which as a consequence leaves a trail of damage and destruction in its seemingly improbable wake; and for which no one party is culpable in the eyes of the home insurance industry/law. We are naturally talking about naturally disasters for the most part, for instance the effects of earthquake and tsunamis, as well as more man-made ravages such as riots and war. Closely related to Acts of God in home insurance terms.


Garden Cover – Traditional and more orthodox outdoor structures separate to a household insurance policyholder’s main residing property may well be earmarked under standard building and home contents cover, yet when they’re not dedicated ‘Garden Cover’ is an absolute must option if you own a garden shed, garage, outhouse, greenhouse or gazebo to ensure comprehensive and far-reaching protection for the individual structure and its often valuable contents. Expensive tools and bikes are increasingly kept in these sort of extended domestic environs these days.


Home Security – This refers expressly to the gamut of tried and tested methods of securing the home insurance policyholder’s property at all times, but more pertinently when the house is temporarily unoccupied due to work/holidays/etc. Burglar alarm systems, window and door locks, external lighting and CCTV and Neighbourhood Watch schemes all play a vital support role in ensuring that the policyholder’s insured bricks and mortar is safe and secure at any one time. The greater the levels and deployment of home security the lower the home insurance premiums tend to be, as the insurance provider sees this as presenting a decreased risk.

Household Insurance – This is the general and all-encompassing phraseology used to describe both ‘Buildings Insurance’ and ‘Home Contents Insurance’ packages of varying degrees, more so when they’re lumped together as the one jointly insurable entity.


Indemnity – This is in effect another word for ‘compensation’, as its active role is to restore the policyholder’s financial status to their pre-claimed standing, should any loss or damage to their property/possession be recorded and successfully contested with their insurer.

Indemnity Cover – This refers explicitly to the like-for-like replacement of damaged goods as part and parcel of certain home insurance plans. As a means of better understanding, if for example a TV which was 5-years old was subject to accidental or malicious damage, any payments would be derived from the value of the television at the time of the recorded/claimed incident.

Insurance Premium Tax (IPT) – Pre-factored into typical home insurance quotes/subsequent premiums, IPT is the standard 5% rate Government tax which is levied on all insurance products.

Insured – The individual(s) specifically covered by a particular, targeted insurance policy.


Joint Proposal – Referring to the home insurance policy instance whereby two adults reside at the same address, and when both names are evident on the policy documentation.

Joint Proposer – If a would-be policyholder is arranging a home insurance package with a partner (or another party they stipulate as sharing their property with), then they are both classed as joint proposers as the likelihood is that possessions belonging to more than the one person will be present and will need accounting for in terms of insurance.


Liability (also referred to as ‘Public Liability) – In insurance practice this unequivocally means that the policyholder bears a legal responsibility to a third party should they inadvertently cause a loss, damaged their property or they’ve suffered injury as a result of your negligence.

Loss Adjustor – The individual charged with keenly scrutinising the legitimacy of claims filed against a home insurance provider, and the first port of call before any claims are financially satisfied.

Loss Assessor – Prior to a home insurance policy being offered to an individual a risk assessment is carried out by a loss assessor to ascertain if said risks are acceptable in the eyes of the insurer on whose behalf they independently act. It’s also part of their remit to calculate the premium to be set, derived from said level of risk implied.


No Claims Bonus (NCB)/ No Claims Discount (NCD) – As is par for the course with most insurance products, home insurance policyholders who don’t claim on their plans for extended periods will often be rewarded for this by way of receiving an NCB the next time they renew their policy. The longer the period of non-claiming, the greater the level of monetary discount as time goes on.

New for Old Cover – For home insurance policyholder who subscribe to this optional extra in most cases, they are entitled to a brand new replacement of said item listed as damaged or stolen as part of a claim submittance, irrespective of age and condition. Although some exclusions may be stipulated in regards to this which will be confirmed in the accompanying small print.


Optional Extras – These are essentially extensions of existing home insurance cover or separate standalone features which can be bolted on at various junctures. ‘Home Emergency Protection’ and ‘Family Legal Protection’ being two such examples.

Over Insurance – This is the term applied to occurrences of policyholders buying more insurance than they tend to require and usually present when the insured have to rebuild a house in the aftermath of it being destroyed for various claim-compliant reasons. If the property was mistakenly valued in terms of its current market price rather than the full cost of a ground-up rebuild then there’s going to be a shortfall of potentially tens of thousands of pounds. Similarly, some policyholders tend to go overboard on home contents cover too, so it’s always advisable to address each room individually and tot up the value of all your contents, then get insurance to match that value.


Period of Cover – In a nutshell this is the longevity of the insured individual’s home insurance policy term. As per most insurance products, with home insurance the policyholder habitually pays for 12 months cover unless otherwise stated.

Personal Possessions – Known colloquially as personal effects or belongings, these are the items either worn or carried about the person of a policyholder, such as clothing, handbags, mobile phones and other portable tablets, wallets/purses and jewellery.

Policy – This is the written agreement forged between the two key parties in any insurance policy, namely the home insurance provider and the potential policyholder. This legally-binding contract will comprise of all the core elements and aspects of any home insurance package which has been ratified and thus actioned by both parties.

Policyholder – The individual(s) whose name appears on the home insurance policy documentation, either in the capacity of policyholder, the proposer or the insured.

Price Comparison Website – Alternatively known as an aggregator, these virtually-occuring insurance systems routinely capture and highlight a compendium of up-to-the-minute premium quotes sourced from a myriad of independent home insurance policy providers; which in turn allows the observer/user to compare the very latest prices at a glance and afford them the relative luxury of picking and choosing which insurance product best suits their needs.

Premium – This is the sum of money a policyholder pays for their home insurance policy, either annually (in the one lump sum at the start of the agreed term) or monthly. The newly insured party will find that there’s often a useful sized discount if they’re in a financial position which allows them to pay for the policy up-front.

Proposer – The insured party (i.e, you) isn’t known as this until such time as you have an appropriate home insurance cover plan arranged on your behalf/you pay for it/it commences (after all of which you then henceforth known as the policyholder). However up until this point you are officially referred to (in insurance industry parlance) as the proposer.


Quote – Forget about Shakespeare and Wordsworth for a minute, as this relates purely to the obtaining of home insurance policy premium prices from your would-be insurance provider. Or as the case more often is, a selection of relevant quotes from competitors. Not to put too finer point on it, a quote is the amount of money that an insurer intends to charge a would-be policyholder with direct regards to the stated passage of time based on the information you have supplied. Which is then computed along with various other risk variables and calculations based on a series of assumptions.


Ratings Factor (alternatively known as ‘Risk Factor’) – Nothing to do with Simon Cowell or TV audiences, ‘Ratings Factor’ in this livery are risk barometers derived from a sliding rule range of variable which insurance underwriters deploy so as to work out the price you/the future home insurance policyholder pays. Age, gender, geographic location, claims history, property types and a raft of other related data will be garnered as well so as to formulate the odds of you making a claim. The higher the risk-determined ratings factor, the higher the premium unfortunately.

Rebuilding Costs – Remembering that the current market value of your property ISN’T the figure on which your buildings insurance policy is based – rather the cost of rebuilding your home from scratch – and you won’t go far wrong in finding a suitable sum insured re: rebuilding costs. Getting an independent surveyor in to help you arrive at that sum is always strongly advised.

Renewal Date – To avoid any confusion, the renewal date in this instance is the exact calendar date when your existing home insurance policy agreement expires. Therefore this is the date by which a policyholder will have had to renewed their policy by so as to remain covered in the eyes of an insurance provider. And therefore be entitled to claim, if needs be. That is, unless your present insurer automatically renews on your behalf, as is often the case with today with many other personal insurance products for ease and convenience.

Risk – Assessing the perceived risk of a property being viewed as the bricks and mortar basis for a potential insurance policy is compulsory procedure for all UK home insurance providers. And risk in this term means the likelihood that a claim might be made on the would-be policyholder’s home. If the surveyor/insurer thinks it is risky business per se, then it will be classed as a higher risk; which will be reflected in the price of the premium quoted. Conversely, the less likely, the more competitive the price. Risk itself is assessed by scrutinising the exacting details submitted by the proposer in their completed home insurance policy application documentation.


Schedule – This is specifically the bespoke home insurance plan documentation which relates to information including; the sum insured, the period of insurance cover, premium details and any discount data amongst other criteria accounted for within.

Settlement – Not of the monolithic civilisation type, more to do with the amount you/the policyholder are paid-out in the event of a claim made on your home insurance policy being successful; and thus entitling you to a financial settlement to recompense for your losses; less any excesses of course.

Single Article Limit (SAL) – Essentially the maximum fiscal sum a single item/possession/belonging to the policyholder can be insured for in your property within the pre-agreed parameters of the home insurance provider’s standard policy. Valuables can still be insured individually with additional insurance if required, while limits can regularly vary from insurer to insurer.

Statement of Fact (SOF) – A modern interpretation of the more orthodox paper proposal form which has come into wider circulation of late with some home insurance providers here in the UK. The predominant different between the traditional iteration and the SOF being that with the latter there’s no longer a requirement to sign and return the document, although it is the consideration of the contract with your Insurer in the same way a proposal is. Hence why it’s a policyholder’s prerogative (and in their best interests) to check it and ensure that all details within are correct, and contact the insurer immediately should any amendments need to be actioned.

Subsidence Excess – An extra insurance supplement some homeowners are urged to pay when rubber stamping their home insurance policies if their insured property has the potential to be compromised at some point in the foreseeable future by a problem which affects the structural soundness of some homes. Subsidence typically happens when the land a property is built on gives way under the weight of the building. Whether this subsidence is very slight or very major, the property would probably require underpinning for it to remain structurally safe. Due to the risk posed by the presence of subsidence, some home insurers may refuse to afford coverage to an affected home, in which case specialist insurance would be suggested.

Sum Insured – Ostensibly the monetary figure for which the home insurance policyholder is covered under either the buildings, contents, or all risks section of your documentation.


Third Party – Excluding the policyholder and the home insurance provider, the third party is effectively a person involved in a claim process.


Underwriter – Being the individual who ultimately decides whether or not to accept a risk (and therein insure the proposer), as well as being the person tasked with calculating the premium.


Valuables – Historically describing any items, including Jewellery, pictures and works of arts, curios and antiques which were deemed to be of high value, yet in today’s currency equally likely to be state of the art gadgetry.

Voluntary Excess – As per all insurance, the greater the amount you are prepared to pay for a voluntary excess in the event of a claim pays dividends toward annual premiums, chiefly reducing them as the perceived risks are offset against each other from the outset. Generally speaking, the higher the voluntary excess that a home insurance policyholder is prepared to pay up front if/when a claim is lodged, then the lower their premium will be. That said policyholders should be mindful enough so as not to choose a level higher than they are able to pay should they have to during their policy term.