Knowver Insurance Glossary

26 Jul

Written By Luke Allen

Accidental Damage: Unexpected damage caused accidentally or by mistake, not on purpose, and not because of wear and tear.
Example: While carrying tools through a customer’s house, you accidentally knock over a vase and it smashes. That’s accidental damage.
Additional Premium: Extra premium you pay on top of your usual insurance premium, usually because something has changed.
Example: You move your business to a new area that has a higher crime rate. That’s more risk to your insurer, so they charge you an additional premium to keep cover going.
Aggregate: The total amount your insurance will pay out over the whole policy period (in most cases, this is 12 months). Once that limit is reached, you can’t make any more claims.
Example: Your policy has a £1,000,000 aggregate limit. If you make four claims in a year adding up to £1,000,000, you won’t be able to make any more claims until the policy renews.
All Risks: A type of cover that protects against any loss or damage, unless it’s specifically excluded.
Example: If your laptop is insured under an “All Risks” policy, it’s usually covered whether it’s stolen, dropped, or damaged, unless the policy says it isn’t.
Average/Average Clause: If you don’t insure something for its full value, your insurer might reduce any claim by applying what’s called an average clause. If you’re only insured for half of what something’s worth, you might only get half back if you claim.
Example: You insure your shop’s contents for £10,000, but they’re actually worth £20,000. If there’s a fire or a flood, and £5,000 worth of stock is destroyed, the insure might only pay £2,500, because you were only 50% insured.

Bodily Injury: Harm or injury to a person caused by an accident or incident.
Example: A customer slips on your wet shop floor and breaks their wrist.
Broker: A person or company that helps you find the right insurance by comparing different options. They’re similar to a mortgage advisor, but for insurance. They don’t provide the cover themselves, but they work for you to find what’s right for you.
Buildings Insurance: Buildings insurance covers the structure of your business premises, like the walls, roof, floors and permanent fixtures against damage.
Example: A fire breaks out in a flat that you rent out, damaging the kitchen, living room, and part of the roof. Buildings insurance pays to repair the structure and makes the flat safe to live in again.
Business Interruption: Cover that helps replace lost income if you can’t trade because something has stopped your business from running.
Example: A flood damages your restaurant’s kitchen and you have to close for two months. Business interruption cover helps cover your lost takings during that time.

Certificate of Insurance: A document that proves you have insurance in place. If you’re a tradesperson, for example a builder, you might be asked to show this as evidence that you have Public Liability insurance cover in place before starting a job on a building site.
Claims Made: A ‘claims made’ policy is a type of policy that only covers events whilst the policy is still active, even if the event happened earlier. You still need to have the policy in place when a claim is made, not just when the incident happened.
Example: You gave incorrect advice to a customer in 2019, but the customer makes a claim against you in 2025. You’d only be covered if you still had the same ‘claims made’ policy in 2025.
Commercial Combined Insurance: A policy that combines multiple types of insurance cover into one policy for a business.
Example: A shop might have one Commercial Combined policy that covers their buildings, stock, and their liability to members of the public and employees, as opposed to multiple different policies.
Condition(s): Rules and requirements set out in the policy that you must follow. If you don’t, your insurance might not pay out.
Example: An electrician’s policy conditions say that all tools must be locked away overnight. If the tools are left in an open van and they’re stolen, the insurer might not pay to replace them, because the electrician breached the condition.
Contents Insurance: Cover for the items inside your business premises, like tools, stock, computers and furniture.
Example: A hairdresser or barber might cover hairdryers, chairs, and stock under their Contents policy.

Declaration: The information that you as the policyholder provide to the insurer to help them assess the risk and set the premium. This can include turnover, number of employees, and what your business does. It’s important to provide accurate information - if you don’t, the insurer could refuse your claim later on.
Declared Value: The amount that you tell your insurer what you want to insure is worth, so they know how much to cover.
Example: An accountant tells their insurer that their computer equipment is worth £3,000 - that’s the declared value.
Deductible: See ‘Excess’. The term ‘Deductible’ is more commonly used in the US, but it is still in occasional use in the UK.
Depreciation: The reduction in value of an item over time, usually due to age or wear and tear. Things lose value they older they get, and insurers take this into account when working out how much to pay out for a claim.
Example: A van stolen after 5 years might not be replaced at its original £20,000 value - the insurer might only pay £11,000 due to depreciation.
Directors’ and Officers’ (D&O) Insurance: D&O insurance protects company directors and senior management if they are personally sued for something they did in their role.
Example: A director is sued by an investor over a business decision that caused them to lose money. D&O insurance helps with legal costs and compensation.

Employers’ Liability Insurance: A type of insurance that covers you if an employee is injured or sick because of their work. Employers’ Liability cover is a legal requirement for most UK businesses that have employees.
Example: A shop assistant slips on a wet floor in your shop and injures their leg. Employers’ Liability insurance would cover the claim.
Endorsement: This is a change or addition to your insurance policy - it might add something extra, or change the terms of your cover slightly.
Example: You buy a second company van, and tell your insurer. They add an endorsement to your Motor policy, so both vehicles are now covered.
Excess: The fixed amount that you, the policyholder, pays towards any claim.
Example: If your policy has a £250 excess, and you make a claim for £1,000, the insurer pays £750 and you pay £250.
Exclusion: Insurance doesn’t pay out for everything - the exclusions are what’s not covered.
Example: A contents insurance policy might exclude damage caused by wear and tear, or rodents like rats.
Extension: An optional extra that adds extra protection for specific things beyond the basic cover provided by your insurance policy.
Example: A roofer’s Public Liability policy might have extensions in place for working at height or using heat tools, like blowtorches.

Financial Conduct Authority (FCA): The FCA is the UK’s financial regulator. It makes sure that insurers, brokers, and all other financial firms treat customers fairly and follow the law.
Financial Ombudsman Service (FOS): If you have a complaint about your insurance, and you can’t come to a resolution with your provider, you can escalate your complaint to the FOS. It is a free, independent service that helps settle disputes, impartially and fairly.
Fleet Insurance: Fleet insurance covers several business vehicles under one policy, instead of insuring each vehicle separately. It’s usually cheaper and easier to manage.

General Condition(s): See ‘Condition(s)’.
Goods in Transit (GiT) insurance: This covers your business items (e.g tools, stock or materials) while you’re transporting them yourself. If they’re accidentally damaged or lost during the journey, this insurance can help cover the cost to repair or replace them. This doesn’t usually cover loss or damage caused by third party couriers like DPD, Royal Mail or FedEx.
Example: You run a catering business and your van takes a sharp corner, causing several trays of prepared food to tip over and get ruined. Goods in transit insurance could help cover the cost of the spoiled stock.
Gross Profit: Your income from sales minus the cost of making or delivering your product or service. This doesn’t include overheads like rent, utilities, or paying staff wages.
Example: You sell handmade souvenirs for £10 each. It costs you £3 to make one. Your gross profit is £7 per candle.

Hazardous Goods insurance: Extra cover for businesses that handle, store, or transport dangerous or flammable materials.
Example: If your business removes asbestos from an old building, hazardous goods insurance can protect you if there’s an accident or contamination during the work.
Hired in Plant: Insurance that covers equipment or machinery your business rents from another company, protecting you if it’s lost, damaged, or stolen while in your care.
Example: If you hire a digger for a construction job and it gets damaged on site, hired in plant insurance helps cover the repair costs.

Inception date: The date your insurance policy starts.
Increased Cost of Working: Extra expenses you have to pay to keep your business running after a disruption, and which your insurance might cover under a business interruption policy.
Example: If a flood shuts your premises and you rent a temporary space to carry on trading, the cost of that rental could be classed as an increased cost of working.
Index Linking: A way of automatically increasing your insured amounts to keep up with inflation, usually used for buildings or contents.
Example: If you insure your office building for £200,000, index linking might raise that sum slightly each year to reflect rising construction and material costs, so you’re not left underinsured.
Insured: The person or business that’s covered by the policy.
Insurer: The company providing your cover and paying out claims.

Jurisdiction: States which country’s legal system will handle any disputes about the policy (for the policies we talk about on Knowver, this will be the UK).

Key Cover (Theft of Keys, Loss of Keys): Insurance that covers the cost of replacing lost or stolen keys, locks, and potentially locksmith services.

Legal Expenses Insurance: Covers the cost of certain legal disputes, like employment tribunals, contract disputes, or tax investigations. Legal Expenses insurance may also include a telephone number that you can call for legal advice. This is typically an optional add-on.
Example: If a former employee takes you to a tribunal, legal expenses insurance can cover the cost of hiring a solicitor.
Limit of Indemnity: The maximum amount the insurer will pay for a claim for a particular cover.
Example: If your Public Liability insurance has a £2,000,000 limit of indemnity, that’s the most the insurer will pay for a single Public Liability claim.
Loss Adjuster: A professional sent by the insurer to assess large or complex claims and check the damage or loss.
Example: If your warehouse is badly damaged by a fire, a loss adjuster will visit to confirm the details and help settle the claim.
Loss Assessor: A professional hired by you (the policyholder) to handle your claim and negotiate with the insurer.
Example: If you suffer a big fire and want expert help dealing with the insurer, a loss assessor can manage the process for you.
Loss of Licence Insurance: Covers your business if you lose a licence you need to trade. This is often used by pubs, bars, or restaurants.
Example: If a pub loses its alcohol licence due to circumstances beyond its control, this insurance can cover lost income.
Loss of Rent Insurance: Covers rental income you lose if your property is damaged and tenants can’t occupy it.
Example: If you own a shop unit and a flood means the tenant can’t trade, your policy may cover the lost rent.

Machinery Breakdown: Covers the cost of repair or replacement if key machinery suddenly breaks down, outside of normal wear and tear.
Example: If the fridge in your restaurant suddenly fails and your stock spoils, machinery breakdown cover can help pay for repairs and losses.
Market Value: The price something would reasonably sell for on the open market, considering its age and condition.
Example: If your delivery van is written off, market value is what a similar van would sell for second-hand, not the price of a new one.
Material Damage: Physical damage to your business property, like buildings, contents, or stock.
Example: If a fire damages your office furniture and equipment, that’s material damage, usually covered under a property insurance policy.
Material Fact: Any important piece of information that could affect an insurer’s decision to provide cover or set your premium.
Example: If your shop had a recent burglary, you must tell the insurer. Not mentioning it could affect your cover.
Maximum Indemnity Period: The longest time your business interruption insurance will pay for lost income after a disruption.
Example: If your shop burns down and your maximum indemnity period is 12 months, your policy will only cover lost income for up to a year.

Named Peril(s): An insurance policy that only covers specific risks that are named in the policy, like fire, flood, or theft.
Example: If your warehouse policy lists fire and theft as named perils, storm damage wouldn’t be covered because it’s not named.
Negligence: Failure to take reasonable care, leading to someone else’s loss, damage, or injury.
Example: If a customer trips over loose wires in your shop because you didn’t secure them, that’s negligence. Public Liability insurance could cover the claim.
Non-Disclosure: Not telling your insurer something important (a material fact) that could affect your cover.
Example: If you don’t mention that your shop had a recent flood when taking out insurance, that’s non‑disclosure and could void your policy.
Non-Standard Construction: A building that isn’t built from standard materials like brick walls and tile/slate roofs.
Example: If your business operates from a timber‑framed cabin, or the house you rent out and want to insure has a thatched roof, it’s non‑standard construction and may need specialist insurance.
No-Claims Discount (NCD): A reduction in premium offered if you don’t make any claims during a policy period.
Example: If your van has had no claims for 3 years, your insurer may apply a no‑claims discount to your renewal premium.

Occupational Disease: An illness caused by the type of work someone does, or the conditions they work in.
Example: A carpenter develops long-term breathing problems from inhaling sawdust. If their employer has Employers’ Liability insurance, it could help cover compensation.
Occurrence: An event that causes a loss or damage and can lead to a claim.
Example: A customer slips in your pub on a wet floor. That slip is the occurrence that triggers a claim under your Public Liability insurance.
Own Plant: Machinery or equipment your business owns and uses for work, often in construction or trades. This can be insured for theft or damage.
Example: Your mini digger is damaged during a job. Own Plant insurance could pay for repairs or replacement.

Package Policy: A single insurance policy that bundles different types of cover together for convenience.
Example: A shop owner buys a package policy that includes Public Liability, Employers’ Liability, and Contents insurance in one plan.
Partial Loss: When damage doesn’t completely destroy the insured item, so the insurer only pays to repair or restore it, not replace it fully.
Example: A small fire damages one room of your café. The building isn’t a total loss (see ‘Total Loss’), the repairs would be a partial loss.
Period of Insurance: The exact start and end dates that your insurance policy is active and will pay claims for.
Peril(s): The specific risk or event your insurance protects against.
Example: Fire, theft, and flood are all perils listed in a typical property insurance policy.
Personal Accident Insurance: Insurance that pays out if you or an employee is seriously injured or dies because of an accident, whether at work or elsewhere.
Example: A self-employed electrician breaks their leg and can’t work. Personal Accident cover can provide a weekly payment while they recover.
Personal Effects: Items you personally carry with you, which some business policies cover if they’re lost or stolen.
Example: Your bag with your phone and laptop is stolen during a work trip. Your policy may cover these personal effects.
Policy Schedule: A key document that sets out your cover details, such as the insured business, sums insured, and any special conditions.
Policyholder: The person or business that owns the insurance policy and has the legal rights under it.
Premium: The amount you pay an insurer for your policy, usually monthly or yearly.
Principal: The company or individual hiring you to do work who could also be included under your liability insurance.
Example: The council hires your building firm. If your work causes damage, the principal (the council) might also be protected under your policy.
Pro-Rata Cancellation: When a policy is cancelled part-way through its term and the insurer refunds you for the unused period, minus any admin fees.
Products Liability Insurance: Covers your business if something you make or sell causes injury or damage to others.
Example: A café sells homemade chutney, and a batch gives customers food poisoning. Products Liability insurance could cover medical claims and legal costs.
Professional Indemnity Insurance: Covers your business against claims for mistakes, bad advice, or professional negligence.
Example: A marketing consultant gives incorrect advice that leads to a client losing money. Professional Indemnity insurance can cover legal costs and compensation.
Public Liability Insurance: Covers your business if a member of the public is injured or their property is damaged because of your work.
Example: A customer trips over a cable in your salon. Public Liability insurance could pay compensation and legal costs.

Quantum: The amount of money involved in a claim or legal case.
Example: A customer sues your pub after slipping. Liability is clear, but the quantum (the compensation amount) still needs to be agreed.
Quote: The price an insurer offers for a policy based on the information you provide. You could choose to accept or reject this.
Example: You request a Public Liability insurance quote, and the insurer offers cover for £120 a year.

Rebuild Cost: The amount it would cost to completely rebuild your property if it was destroyed, including materials and labour, but not the land value.
Example: The house that you rent out has a market value of £200,000, but the rebuild cost is £265,000. Insurers use the rebuild cost to set your sum insured.
Reinstatement: Insurance that pays to repair, replace, or rebuild property to the condition it was in before the damage happened.
Example: A burst pipe damages your office ceiling. Your property insurance will pay for the reinstatement of the ceiling to its original state.
Renewal: When your current insurance policy ends and you either continue it for another period or switch to a new one.
Repudiation: When an insurer refuses to pay a claim, usually because the loss isn’t covered or policy conditions weren’t met.
Example: You make a claim for stolen tools, but you’d left the van unlocked. The insurer issues a repudiation because of the breach of policy terms.

Short-Period Insurance: Cover that lasts less than a standard 12-month policy, often used for temporary projects or events.
Statutory Liability: Cover for legal defence costs if your business accidentally breaks certain laws or regulations.
Example: A hair salon breaches waste disposal rules. Statutory liability insurance helps cover legal fees.
Stock Insurance: Covers the goods your business sells or uses, whether stored at your premises or in transit.
Example: A burst pipe ruins your clothing stock in your shop. Stock insurance pays to replace it.
Sub-Limit: A smaller limit within your policy for certain items or events, even if your main sum insured is higher.
Example: Your contents policy covers £30,000, but has a sub-limit of £5,000 for laptops.
Subrogation: The legal right of an insurer to recover money from the party responsible for a loss after they’ve paid your claim.
Example: Your workshop is damaged by a neighbour’s fire. Your insurer pays you, then subrogates to claim from the neighbour’s insurer.
Sum Insured: The maximum amount an insurer will pay for a particular type of loss, set by your policy.
Example: Your office contents policy has a sum insured of £30,000. That’s the most the insurer will pay.

Luke Allen

Knowver Insurance Glossary

contact@knowver.co.uk