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Be Wiser Business Insurance - Glossary of Key Terms

The list below is a collection of key terms and commonly used insurance jargon. If you have any insurance queries then this is a good place to start. If you cannot find what you are looking for you can also visit our FAQ page.

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50/50 Claim:
This is a situation where both parties involved are partially at fault and eventually both insurance companies will contribute towards the cost of the overall claim.

ABI:
The Association of British Insurers is a market association which has members consisting of insurance providers and brokers that operate in the UK The ABI’s role is to promote the interest of its members using market statistics, issues codes of practice and raises awareness.

Accelerated No Claims Bonus:
Offered by some insurers, it is a quicker way to get a no claims bonus. It allows customers to have a shorter insurance period (such as 9 months) and when it has ended and no claims have been made, the policyholder can enjoy a full one years no claims discount.

Accidental Damage
This refers to damages to an individual, business or premises that were caused by acts of negligence or acts of God. This includes breakages, spillages and perils such as fires, floods and adverse weather. This is usually sold as an optional add on to existing policies.

Aggregators:
Be Wiser Business Insurance is an aggregator meaning that it works with a number of insurance companies, compares the different prices and policies and introduces the customer to the most suitable product for them.

Aggregate Limits:
This is the maximum that an insurer can pay out to a customer during a specific policy period. For instance, if the insurance limit for a policy is £10 million for the year, they cannot pay out more than this, regardless of the number of claims.

Any Driver Policy:
Ideal for businesses sharing cars, vans and bikes (such as couriers), you can arrange to make the policy ‘any driver’ so different employees can share the driving on any vehicle. This allows for flexibility between shifts and can boost productivity.

Broker:
Be Wiser Business Insurance is a broker that acts as an introducer or comparison service between the insurance provider and the customer. By acting as a middleman, we are able to give customers a variety of options and find the best policy and pricing for them.

Buildings Insurance
Buildings insurance involves covering the physical fixtures of your business premises such as offices, warehouses and factories. In the event of a fire, flood or vandalism, you can have the physical infrastructure of your building repaired so that you can continue trading as usual.

Business Interruption
This allows a company to recover a loss of income as a result of their business being brought to a standstill. There are several circumstances that will cause a business to come to a halt including a robbery, severe weather conditions, broken machinery and a lawsuit. Rather than lose business and revenue, firms are able to receive compensation to achieve a normal financial position. See business interruption for more information.

Business Use Car Insurance:
This refers to car insurance which is used purely for business purposes such as making deliveries, carrying passengers and going to business-related meetings.

Casualty Insurance:
This covers any injuries, losses or damages to individuals or property as a result of your actions. This will pay for any medical bills, repairs to a property and compensation to a damaged third party.

Claim:
This is where you apply for compensation under the terms of your insurance policy. If your business or staff have suffered damages or losses, your insurer can reimburse any costs once you have made an official claim.

Commercial Business:
This is an insurance policy taken out by a profit-seeking firm to protect their financial interests. Commercial business can cover a trade, business or profession.

Commercial Combined:
This involves a number of different commercial insurances put together as one single packaged policy.

Compulsory Excess:
This is an amount that is set by your insurer at the beginning of the insurance period and you are forced to pay this amount when wish to make a claim.

Contents Insurance:
You can cover any stock, machinery, equipment and personal belongings in your organisation. If these contents are damaged, you can claim to have them repaired or replaced.

Cover:
The extent of protection available under the insurance policy you have purchased. There are various levels of cover depending on the nature of your business and you can choose to add or remove different levels and amounts of cover at any point.

Comprehensive Cover:
When purchasing vehicle insurance for your business, comprehensive cover is the highest level of cover you can purchase. This includes cover for third parties, fire, flood, theft and also any damage to you own vehicles and drivers.

Cooling off Period:
Once a customer has purchased their insurance policy and received their documents, they will receive a cooling period of 14 days where they can decide to cancel the policy and receive a full refund, minus the administration fees.

Cover Notes:
This is a temporary certificate that is valid for around 30 days and can be used to show that your business or vehicles are insured until the policy sets in.

Cyber Liability:
This is cover for a business that is compromised and suffers losses due to a technical, computer or network breach of data. This can involve a cyber hack, loss of sensitive online data and ransom costs. See cyber liability insurance.

Directs and Officers Liability:
If a director or officer of the organisation is accused of wrongdoing, this policy can offer protection against any potential claims and legal action.

Driving Other Cars:
If you have purchased vehicle insurance, you may be permitted to drive other vehicles and instantly receive third party only cover. This rule only applies in the United Kingdom and for those over 25. You must check your policy to see if you are eligible for this.

Duty of Disclosure:
All the parties involved in an insurance policy such as the proposer, insurance broker and provider are required to disclose all relevant material and honest information regarding their business and dealings to make the policy applicable.

Employers Liability:
This is a compulsory form of insurance for business owners to protect their employees against any injuries or damages that are contracted through their work activity. Employers have a responsibility to pay any claims to their staff including sick pay, medical bills, loss of income and compensation. Daily fines can be administrated to those companies without a formal policy or documentation in place. You are not required to cover your own family members or yourself as a freelancer. See employer's liability insurance.

Excess:
This is a contribution you are required to pay only if you make a claim on your business insurance policy. Your excess is broken down into a compulsory excess which is determined by the insurer and then a voluntary excess which you can choose how much to pay. The more voluntary excess you pay, the cheaper your overall policy will be, but the more you will pay when you need to make a claim.

Excess Protection Insurance:
This is an additional low-cost policy that ‘protects your excess.’ So if you end up making a claim and paying your excess, the amount can be reimbursed.

Fault Claim:
This is where a claim has been made and the policyholder is to blame for any accidents or losses and therefore they cannot recover their costs from anyone else. For example, if you spill hot coffee on your machinery, this was your fault and so you cannot claim for it. Similarly, if you left the premise windows open overnight and your place was robbed, this would put you at fault and no one else.

FCA:
Our practices are regulated and governed by the Financial Conduct Authority (FCA). They provide financial services with the aim of protecting and enhancing confidence in the UK Financial system. It is there to ensure the market puts customers' interests at the forefront of their activities and to encourage ethical behaviour at the highest levels of financial service.

Fleet:
This refers to more than 5 vehicles being insured under the same policy. Companies are able to insure fleets of vehicles and save money by purchasing their cover in bulk and also reduce their administration costs. It is popular for company cars, couriers, long-haul drivers and taxi companies.

Foreign Cover:
If your business activity extends beyond the UK, you can apply for foreign cover to carry out your work in Europe and other parts of the world. This can be relevant for transporting goods and offering services overseas.

FOS:
The Financial Ombudsman Service is a body that allows customers to make complaints against financial institutions. This is the next step if the company has not resolved the issue directly with the dissatisfied customer.

Group Rating:
If you are using cars, bikes and vans for business purposes, every make and model of vehicle will have a group rating from 1 to 50 based on the factors such as engine size, safety, security and cost of repairs. The ratings are determined by the Association of British Insurers and start with 1 being the least risky and 50 being the riskiest.

Hazards:
This refers to the acts that increase the chance of a loss or damage occurring. This includes leaving car doors or buildings unlocked overnight or not having any fire safety equipment.

Hire and Reward:
This is insurance specifically for businesses that transport goods or passengers in exchange for money. Ideal for taxis and couriers, if there is a road accident that causes damage to a passenger or the goods you are carrying, you are liable for any injuries and costs involved.

Immobiliser:
This is an electronic security device fitted to a vehicle that immobilises it by preventing the engine from running unless the correct key or activation device is present. An immobiliser is a security feature that many insurance companies will reward with a lower premium because it reduces the risk of the vehicle being stolen.

Indemnity:
Following an accident or loss, the indemnity is the legal principle that restores the policyholder to their original work status. For example, if your office has experienced a fire and has made a claim to repair the premises and equipment, the indemnity refers to putting you back to the state you were before the accident occurred.

Intermediary:
Be Wiser acts as an intermediary between customers and insurers. As an authorised broker, we aim to match the customer with the best cover and premiums for their business by comparing the policies from different insurance companies. We can also give advice about insurance risks and policies.

Insurance Premium:
This is the cost of your insurance that will entitle you to any legitimate claims in your policy. Premiums can be paid by the customer on a monthly or annual basis.

Introductory No Claims Discount/Bonus:
Some insurers will be able to offer you an introductory no claims discount on a new policy provided that you have driven claim-free on your previous policies. This can give you a discount of up to 65%, depending on the terms and the insurer.

IPT (Insurance Premium Tax):
The Insurance Premium Tax is an indirect tax in the UK levied on insurance premiums. The rate increased to 10% in October 2016.

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Key Man:
If there is a senior person in your organisation who is vital to the company’s success or image, you can purchase insurance in case they die or leave the business. You will cover any loss of earnings and the costs involved to replace them.

Legal Costs Cover:
If you are involved in a claim which was not your fault, you can use your cover to claim for any legal costs including solicitor fees, lawyer fees and time in court.

Legal Expenses Insurance:
If your organisation is involved in a law suit or legal battle with another party, you can claim towards any solicitor, legal, court fees and time off work to fight the claim.

Liability:
This is the ‘responsibility’ for causing an accident, loss or damage to another individual, company, vehicle of property. When carrying out your business, you have a duty of care to protect those around you and causing any harmful damage will make you liable.

Material Facts:
The facts that are considered to be important by the insurance company when determining whether or not to accept a risk, and at what premium and with what terms.

Medical Expenses:
Following a motor accident or in the workplace, the medical expenses can be paid to the injured victim to compensate for any medical bills incurred.

Medical Expenses:
Following a motor accident or in the workplace, the medical expenses can be paid to the injured victim to compensate for any medical bills incurred.

MGA:
An MGA – Managing General Agent - is an insurance intermediary appointed and authorised by an insurer (underwriter) to accept and administer insurance on their behalf.

Modifications:
For any business vehicles you use such as bikes, vans and heavy good vehicles, the modifications are any additional changes you make to the vehicle such as CCTV cameras, branding, engine tuning or trailers. Unless the modifications help with securing the vehicle, they will genuinely increase of the cost of your premium because they make the vehicle more expensive to repair.

Named Driver:
Anyone, other than the policyholder, who is named on the certificate of insurance as being allowed to drive the vehicle under the policy of insurance.

Non-Fault Claim:
An accident or loss where the policyholder is not considered to be the blame and therefore the policyholder and their insurance company can recover costs from somebody else who was liable. For example, a supplier providing faulty materials or defective products.

No Claims Bonus/Discount:
If you have your insurance for several years without making a claim, you are considered a lower risk by insurers and can receive a no claims discount. This saving increases year-upon-year and can reduce your premium by as much as 85%.

No Claims Discount Protection:
If you have avoided making a claim for 4 or 5 years or more, you risk losing your discount if you have to make a claim. However, by applying for protection, you are able to keep your no claims discount intact if you need to make a claim.

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Period of insurance:
The duration of your insurance policy and the effective dates are known as the ‘period of insurance.’ This is typically renewed on a yearly basis but insurance can also be taken out for a number of days or weeks depending on the requirements.

Peril:
This is an event that leads to a loss or disaster for your business such as fire, floods, adverse weather conditions, earthquakes, war and terrorism. This is also known as ‘risks.’

Policyholder:
This is the name of the person or company who set up and owns the insurance policy.

Policy Booklet:
This document is the full wording of the insurance policy and will be granted to the policyholder upon agreeing their cover. It includes general information, conditions, exceptions and advice on how to claim and how to complain. It must be read in conjunction with a policy schedule, usually issued in conjunction with the policy booklet, that indicates by reference to the policy booklet which specific sections apply.

Policy Schedule:
This is a unique document given to the policyholder that summarises all the level of cover provided by the insurance policy. Normally the schedule will contain sections relating to the policyholder's personal details, company details and vehicle details. The schedule is not a stand-alone policy document and should always be read in conjunction with the policy booklet in order to fully understand all conditions and exclusions.

Products Liability:
Any products or goods that you manufacture can run the risk of being faulty and defective. If this causes harm to a customer or is not what they purchased, they can request a refund or pursue legal action. This cover will allow you to claim for any financial losses from dissatisfied customers. See products liability insurance.

Professional Indemnity: For those giving professional advice such as consultants, financial advisors and medical practitioners, you can face legal action if your client suffers physical damage or financial loss due to your advice. Professional indemnity insurance will protect you from any claims and legal action provided that you were practicing in the best interests of the customer and not acting negligently.

Proposer:
This is the person or company that is applying for the insurance policy.

Proximate Cause:
When insurance companies are investigating a claim, they look for the proximate cause to see why the accident or loss has occurred. Insurers will need to check that the claim fits within the guidelines of the cover issued.

Public Liability:
This is a type of cover that protects your business activity from claims that have caused damage to other members of the public and public property. Although not compulsory, it is recommended to those organisations or workers that come into regular contact with the public. In the event that a passer-by, trespasser or object is damaged due to your work, this will protect you if you are held liable and forced to pay damages. Read about public liability insurance.

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Renewal:
When a business insurance policy is up (usually after one year), a new policy can be renewed between the customer and the insurer. There are typically great discounts available upon renewal as insurers can use more accurate information based on the previous year and also offer benefits such as no claims bonuses.

Risk:
This is the potential of a loss or accident occurring. Understanding the risks of making a claim are key from the insurer’s point of view and will determine the pricing of your policy.

Statement of Facts:
When insurance is bought over the telephone, a statement of facts covers all the information given by the purchaser at the proposal stage that subsequently forms the basis of the insurance contract. This is a way to increase transparency and acts as a record of their communication.

Terms of Business Agreements:
A document that puts into writing the relationship between the insurance company and the intermediary or the intermediary and the policyholder. This will include all the key terms and features of the policy and also things such as cancellation and complaints procedures.

Third Party Only (TPO):
This is the most basic level of vehicle insurance and is a legal requirement to drive on UK roads. It provides cover to any third parties involved in an accident with your vehicle e.g one of your company vans hits another vehicle, pedestrian or piece of public property. This does not cover any damage to your driver or own vehicle.

Third Party, Fire & Theft (TPFT):
In addition to receiving cover for third parties, this cover will also allow to claim your drivers and vehicles to claim for any losses or damages caused by fire and theft.

Transit Insurance:
If your business involves carrying and transporting goods, freight and cargo, this will cover the items whilst they are ‘in transit.’ You have a responsibility to protect the goods you are carrying but if they are damaged, loss or stolen during transportation, your insurance will help you pay for any losses, repairs and replacements for the customer.

Treating Customers Fairly:
This is an important ethical principle introduced by the Financial Conduct Authority which puts your customer at the centre of everything you do and make sure that you provide a transparent service. TCF is enforced to protect consumers from unfair practices and increase confidence in the financial services industry.

Underwriting:
This is the stage during the application process where the insurer considers the risks involved and makes their decision on whether the customer should be insured and under what terms. The people who do this are known as ‘underwriters’ and they will responsible for selecting the amount of cover and paying out in the event of a claim being made.

Utmost Good Faith:
This is the goodwill that a policyholder will disclose all relevant information when applying for their insurance and the cover they are asking for reflects the true nature of the risk they represent. It is then the obligation of the insurance provider to uphold this information and cover the risks accordingly.

Voided Cover:
If you are trying to claim for something, your cover can become void or inactive so it is not permitted in your policy. This can be due to the policyholder failing to disclosure material facts or key information about the company’s products, revenue or people. Had the insurance company known about this, they would have charged you a higher premium or decided not to cover you for it. It can also be considered fraud if you are trying to claim for things that are outside of your cover.

Voluntary Excess:
This refers to the amount policyholders wish to pay towards making their first insurance claim. The voluntary amount is set at the beginning of the insurance period and by agreeing to pay a higher amount, you are accepting more responsibility if you need to make a claim.

Write Off (Total Loss):
In the event of serious damage to a vehicle or premises, the insurance company will make a decision as to whether it is more economical to repair the damage or consider it a ‘write off.’ This means that it is a deemed a total loss and not worth repairing and instead better to purchase a new vehicle or premises.

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