While definitions can vary slightly from policy to policy, here are definitions of terms as they are commonly understood.
All Risks Cover
If an insurer agrees to pay a claim and the policyholder disagrees with the amount to be paid, it may be referred to an arbitrator who is jointly appointed. This condition generally will not apply to Public and products liability, Professional indemnity, Employers liability or Legal expenses. (Alternatively, cases may be referred to the Financial Ombudsman Service.)
Buildings belonging to the insured business, which can include outbuildings, extensions, security cameras and lights, yards and paved areas, and more.
A business insurance broker works for their client (e.g., you), helping the buyer find the right insurance for their needs at the best price. Brokers take your details and survey a selection of the market for their client to obtain quotes. Brokers can also advise a client and answer questions.
Both the insured and the insurer have certain rights to cancel an insurance policy. Insured businesses that cancel a policy may have to pay a cancellation fee, especially if the cancellation notice is given after the 14-day cooling off period.
A policyholder might need to pay a cancellation fee to cancel a business insurance policy. This is more likely if the cancellation fee occurs after the 14-day cooling off period has ended.
A "certain risk" policy only covers losses resulting from the perils named specifically in the policy documents, e.g., fire, flood or theft. In contrast, a policy can be written to cover "all risks".
Certificate of Insurance (COI)
A certificate of insurance (COI) is a document proving the existence of a valid insurance policy and lists the policy's type of cover and effective dates. A COI is supplied by a broker or insurance company.
All computer and ancillary electrical office equipment like printers, phones and fax machines belonging to the insured business.
The equipment, machinery and other contents owned by the insured business, such as furniture, records and documents, patterns and moulds, personal effects belonging to employees, visitors and directors, etc.
A claim is when a policyholder asks their insurance company to pay for a loss that is covered by the insurance policy.
Professional indemnity insurance is typically sold on a "claims-made" basis, which means a policy will only cover the insured for claims made while the insurance policy is active, not for claim made afterwards.
All insurance policies state the rules a policyholder must follow in order to make a successful claim. Failing to comply with these conditions means the insurer can refuse to pay the claim. For example, claims procedure conditions typically include, but are not limited to:
- Taking practical steps to prevent further loss or damage, recover property lost and otherwise minimise a claim happening
- Providing a full written account of any injury, loss or damage
- Not accepting, negotiating, paying, settling, admitting or repudiating any claim without the insurer's written consent
- Allowing access to premises or possession of property insured
Employers' liability insurance protects against claims of employee illness or injury due to work; it's required by law in most cases when hiring an employee.
The excess is the first amount of a claim or claims for which the policyholder is responsible.
Financial Ombudsman Service (FOS)
The Financial Ombudsman Service (FOS) settles complaints between consumers and businesses that provide financial services. In cases where the insurer and policyholder disagree with the amount to be paid, cases may be referred to the FOS. This condition generally will not apply to Public and products liability, Professional indemnity, Employers liability or Legal expenses.
Hazardous stock such as cigarettes, tobacco, wines, spirits, precious metals and stones, nonferrous metals and portable hand tools might not be covered under contents without paying an additional premium.
Limit of Insurance
A limit of insurance is the maximum amount an insurance company will pay out for claims during the period of insurance. Policies may be written with a limit per occurrence (that is, per disaster or accident), and/or with a limit in aggregate per policy year (that is, a maximum pay out in the period of insurance across all claims).
Period of Insurance
The period of of insurance is the time from the start date to the expiry date shown in the schedule of an insurance policy.
A policyholders must comply with certain conditions to have the full protection of the policy. There usually conditions for the policy as a whole, as well as additional conditions under each section of cover. If the conditions are not complied with, the insurer may, for instance:
- 1) cancel the policy
- 2) declare the policy void (as if it never existed)
- 3) change the terms of the policy
- 4) refuse to deal with all or part of any claim or reduce the amount of any claim payments
Policy exclusions refer to certain hazards, perils, circumstances, or property that are NOT covered by the policy. For example, claims due to coronavirus may be excluded from some policies.
The policy wording is a document that spells out the terms and conditions and definitions of coverage of an insurance policy. In essence the policy wording is meant to help policyholders understand how a policy works—what they are covered for, what's not covered, any conditions that must be followed and more.
Premises are defined by the property address shown in the schedule,which are occupied by the policyholder for business purposes.
When a policyholder cancels an insurance policy, they may get a refund if the policy was paid for upfront. When the amount of this refund is calculated on a "pro-rata" basis,
Professional indemnity insurance protects against claims that professional advice or service given to a client was negligent, and resulted in a financial loss to the client.
Public liability covers claims that an accidental injury or property damage suffered by a third party was caused by a business's negligence.
A retroactive date on a public liability insurance policy is the date from which the insured has held uninterrupted professional indemnity insurance cover, even if part of the time the cover was through a different insurer.
Run-off insurance protects a professional who is paid for their advice or service against new professional indemnity claims that are made after their professional indemnity insurance expires or has been cancelled (e.g., due to retirement or changing careers).
Stock such as goods for sale or raw materials (e.g., steak in a restaurant) typically are covered separately as an add-on to contents insurance, with the premium for this cover dependent upon the value of the stock. Be aware there may be additional constraints regarding stock stored in a freezer, to protect against freezer failure.
A business who rents their premises and makes permanent alterations or additions to the building, including interior decorations, can cover these improvements against damage from events like fire and flood.
The underwriter is the company ultimately at the other end of an insurance policy. You may buy via a broker or through a reseller, but it's the underwriter that decides whether to accept an insurance application, the premium and the terms and conditions of the insurance policy. And it's the underwriter that is financially responsibility for paying a valid claim.