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Glossary of Terms
Acceptance - absolute and unqualified agreement to the terms of an offer, so creating a contract.
Agent - a person who acts on behalf of another and in the case of insurance is the intermediary between the proposer and the insurer.
Average -this is a policy provision which reduces a claim payment where under-insurance is discovered.
Broker - professional full-time independent intermediary.
Claim - demand made by the insured for payment after the occurrence of loss or damage.
Claim form - form supplied by the insurer to enable an insured to lodge a claim.
Contribution - principle whereby two or more insurers covering the same risk contribute proportionately to any losses.
Cover note - temporary evidence of the granting of insurance.
Exceptions - losses specifically excluded from the cover.
Excess - the part of a loss for which the insured is responsible.
General conditions - these are the conditions that apply to the whole policy and each section will also have its own specific conditions peculiar to that class of business.
Indemnity - placing of the insured in the same financial position after a loss that he was immediately before the loss.
Insurable interest - principle which requires a person taking out insurance to have a legally recognized relationship to the subject matter of the insurance.
Insured - person or organization purchasing or taking out insurance
Insurer - company transacting insurance business
Intermediary - person who arranges insurance on behalf of another.
Lapse - cancellation of an insurance policy by the non-payment of the renewal premium or by the insurer's decision not to invite renewal.
Policy - written evidence of the terms of an insurance contract.
Policy schedule - list of exclusive details of the insured and the subject matter on each insurance policy.
Premium - money paid by the insured to the insurer for cover provided in the policy.
Proposal form - written application form supplied by the insurer for completion by the proposer relating to a particular risk.
Proximate cause - direct cause of a loss uninterrupted by any other event.
Renewal - process of continuing insurance for a further period after the current period of cover has ended.
Renewal notice - notice issued by the insurer to remind a policyholder that his/her contract will shortly expire.
Risk - situation which cannot be controlled or exactly foreseen and the subject matter of an insurance contract.
Salvage - whatever is recovered of an insured item on which a claim has been paid.
Subrogation - right of one party to stand in the place of another and take up their legal rights against a third party.
Third party - person who is not party to the contract.
Under-insurance - insurance for a sum insured less than the value at risk.
Underwriter - person who makes decisions on whether or not to accept insurance business.
Underwriting - process of accessing a proposal to decide on its acceptability and terms to apply.
Utmost good faith - duty imposed on both parties to an insurance contract to disclose all material facts.