Bringing insurance policies back to basics – Glossary


Policy Schedule

A document which contains some of the information pertinent to an insurance contract, often including but not limited to: the active sections of cover; excesses; endorsements; cover limits; and exclusions. It will often be specific to each company and contain details relevant only to that company.

Proposal Form

A declaration of the business’s risk and statements about its activities, turnover, claims and a host of other important considerations that underwriters use to determine a business’s insurable terms. Proposal forms must be signed by a representative of the insured business.

Statement of Fact

Information given to a business which is standardised and provides a material overview of the business. It is used by insurers to provide quotations and forms the basis of the insurance schedule and terms. This is often used in place of proposal forms for ease and speed.


Adjuster (Loss Adjuster)

A person appointed by/for the insurers to investigate and assess the validity and value of a claim.


A person who can help to set up insurance contracts between the insured and the insurer. They can often provide advice and leverage competitive terms by searching and negotiating with insurers and underwriting specialists. Many often have additional practical functions such as financing premiums, claims specialists, risk management, etc.

Loss Assessor

A claims specialist who acts on behalf of the insured to negotiate claims, usually at a cost.


A person employed to understand, rate, and underwrite insurance policies on behalf of an insurance company.

Third Party

A business or person who is claiming against the insured party/or their insurer.


EB – Employee Benefits

A specific department within insurance broking dealing with policies such as private medical insurance and key person.

FCA – Financial Conduct Authority

The regulatory body of the insurance broking industry.

GWP – Gross Written Premium

Total written premium by an insurer or a broker within a given period.

LCR – Low Claims Rebate

An agreement between insurers and insured which rebates commission in the event of low or no claims within the policy period.

LTA – Long-Term Agreement

A policy which lasts longer than a standard 12-month period.

MGA – Managing General Agent

An intermediary who underwrites business utilising insurance capacity of insurers separate from their own business.

MID – Motor Insurance Database

A database constructed to track which vehicles are insured, by whom, and when.

NDA – Non-Disclosure Agreement

An agreement between two parties to not divulge information to any further person or business.

RFQ – Request for Quote

Action taken by a broker to formally request insurance terms from an insurer.

RFP – Request for proposal

Initial discussions between two parties to begin working together, usually prior to quotation.

TOBA – Terms of Business Agreement

A general agreement between two parties for the basis on which they co-operate and do business together.

ULR – Uninsured Loss Recovery

An event (process or policy) by which uninsured losses caused by a third party are recovered and paid back to the customer or first party.

UW – Underwriter

A person working on behalf of insurers to underwrite policies terms and premiums.

The Contract Terminology

Aggregate Limit

A single sum limit which is the total limit payable within an entire policy period regardless of the number of claim events or occurrences.

Any One Claim

In contrast to the above, each and every valid claim can benefit from the limit defined under the section of the policy regardless of the number of events resulting in a claim.


Often used interchangeably with Insurance, but implying an event which has certainty (frequently used for life insurance policies).

Average (Rule of Average)

A clause which correspondingly reduces the settlement value paid for a claim proportionally to the amount for which property is under-insured compared with its total value.

Removal of Average

The clause above is removed from the policy in favour of a pay out based purely on the value of the loss incurred up to the insured limit.

Consequential Loss

A loss which occurs after an insured event consequent to the initial loss, for example loss of profits or revenues after a fire damages production machinery.


Value threshold for which a loss must exceed before becoming payable, the value above the deductible threshold is recoverable via the insurance policy.


A conditional agreement within a policy wording and/or policy schedule which extends or restricts the cover. Endorsements might require a business to become compliant with to satisfy the insurers, for example having tested and working fire alarms.


The amount payable towards a claim by the insured. This is reduced from the final settlement value and can often be changed by brokers in order to modify the premium offered by insurers.



Sections of the policy which exclude and restrict elements of cover, which could include certain perils, risk items, property, and a potential host of specific scenarios.

Gross Profit (Insurance)

Not to be confused with accounting gross profit. In insurance, the gross profit figure will include all fixed costs that would continue to be incurred after a loss – an example of this would be wage roll – and foregoing any uninsured working expenses (any cost which would cease through inability to trade).  The gross profit sum insured must also reflect any trends that are anticipated during the whole of the indemnity period.


The term to describe putting an insured business/person back to the same position which they enjoyed prior to a loss occurring.

Indemnity Period

The maximum period which insurance cover will be provided for an interruption to usual trading capacity where a loss has been suffered for an insured event.


Insurable Interest

The requirement for the insured to have a valid and lawful interest in the insured subject matter. Insurable interest must exist when the insurance is purchased and when a loss occurs for a claim to be valid.


The cessation of an old insurance contract by non-renewal.


The maximum liability an insurer will pay against a specific element of the policy, which can vary by section, occurrence, event, or policy.

Lloyd’s (Lloyds of London / London Market)

An underwriting hub in the heart of London which caters to a huge variety of underwriters and insurance personnel catering to an extensive range of insurance policies and programmes.

Material Fact

Information which can impact an underwriter’s (or insurer’s) decision to accept a risk, and on what basis and premium they might insure such a risk. Material facts need to be disclosed to insurers and by insurers. These include (but are not limited to), financial information on directors, HSE breaches, criminal convictions, previous claims, and a host of other facts about directors or their business.


A frequently discussed tort within insurance. In Blyth v Birmingham Waterworks Co. (1856), negligence is considered to be ‘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’.

New for old

Insurers replace lost, stolen, or destroyed property as new, without any deduction for depreciation over time.


Not making an insurer or underwriter aware of a material fact which could impact the basis of the insurance terms offered, or at what cost they can be offered for.


The fortuitous instance for a claimable event under which a policy could cover a loss such as fire, theft, or flood.


Insurers provide a settlement figure which can be paid to the insured based upon damage to their property to return them to the same position as prior to the claim. The policy could also give the insurer or insured the opportunity to rebuild or restore the property instead of a settlement figure.


Reclamation of the value of insured item once a claim has been paid. Insurers will often look to recuperate losses by sale of damaged items, sometimes salvage can be offered back to the insured.


Something which the insured is duty bound to do in order to comply with the terms of insurance. Examples might be: to conduct a health and safety audit; send ERN numbers: or have a survey completed on their premises.


A surveyor will attend the site of a business to conduct an assessment on its merits, its risk management, to ensure the business complies with the insurance terms and conditions, and that the material facts provided by the insured are correct and true. Surveys can sometimes mean the insured has to improve their risk management or change its practices. Often, they give the insured and the insurer comfort that they have a mutual agreeable and accurate contract.

Sum insured

The limit of value payable in the event of a claim under a specific section of the insurance.


A strict condition usually found in the policy schedule which requires adherence by the insured to ensure cover remains in force. Failure to comply with a warranty gives the insurer scope to lawfully decline paying or defending claims.