In insurance terminology, an accident is an event which is not deliberately caused, and which is not inevitable. Similarly, insurance policies do not compensate for obsolescence or wear and tear because their occurrence is inevitable in the normal course of things.


If the sum insured is less than the value of the subject matter of the insurance, then any claim that is agreed under the policy will be reduced proportionately to reflect the under insurance.


An individual or firm that acts as agent for an individual, body or firm in arranging insurance cover and in presenting claims under such cover.

Certificate of Insurance

A document that is issued to a policy holder which evidences the existence of insurance cover and details the terms of such cover.

Cover Note

A document issued to an insured pending the issuance of a policy which confirms the arrangement of cover for the named insured. Motor insurance cover notes that are issued are usually of short duration.


The amount or proportion of some or all losses arising under an insurance contract that the insured must bear.


Something that causes an exposure to injury, loss or damage.


The principle according to which a person who has suffered a loss is restored to the same financial position that they were in immediately prior to the loss, subject (in the case of insurance) to any contractual limitation as to the amount payable (the loss may be greater than the policy limit).


A contract whereby an insurer promises to pay the insured a sum of money or some other benefit upon the happening of one or more uncertain events in exchange for the payment of a premium.


A person who is insured under a contract of insurance.


A provider of insurance.


This term generally refers to some injury, harm, damage or financial detriment that a person sustains/suffers. Losses may be insured or uninsured.

Minimum Premium

The minimum amount that is payable to an insurer as a premium in respect of an insurance cover.

Moral Hazard

Those personal characteristics of a prospective insured or its employees or associates that may increase the probability or size of an insurance loss.


A harmful event which may be covered under a contract of insurance.


The amount charged by an insurer as the price of granting insurance cover.


This term may variously refer to:-

  1. The possibility of some event occurring which causes injury or loss
  2. The subject-matter of an insurance contract
  3. An insured peril.

Under Insurance

Where the sum insured does not represent the true value of the property insured. See average for an explanation on the consequences of under insurance.

Wear and Tear

The amount deducted from a claims payment in recognition of the depreciation of the property insured through usage of it over time. Where cover is provided on a 'new for old basis' i.e. where the insurer agrees to replace an old item with a similar new one, no such deduction is made.