Accidental damage - This form of insurance cover is for an unintentional one-off incident that causes damage to your property or its contents. For example, accidentally spilling red wine over your new white carpet. It doesn’t cover general wear and tear, or damage that occurs over a long time.

Benefit/Settlement - This is what you receive from your insurer when your claim is agreed and processed. You may have the damage to your property repaired, or the insurer may give you the money. It’s often called a settlement or payout.

​Claim - The request you make for compensation from your insurer if you suffer a loss that is covered by your insurance policy.

Compensation - What you receive for a loss or as a result of a loss. It could be in the form of money, services, a replacement item or repairs. To receive compensation from your insurer for your loss, the assessor must decide it is a valid claim that falls under your policy.

​Coverage - What’s included in your insurance policy such as the belongings, the locations covered, the people insured, and the limits of compensation.

Certificate of Insurance - A formal document providing evidence that an insurance policy has been issued by an insurer containing the details of the type of insurance cover, its value, any exclusion or excess limits, the premium and the period of the insurance cover (how long it is in force).

Cash settlement - The amount an insurer may offer you to settle and close your claim instead of repairing or rebuilding your insured asset.

​Duty of disclosure - When you apply for an insurance policy, or renew or extend your existing policy, you have to tell the insurer everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you. You don’t need to disclose something you don’t know, that reduces the insurer’s risk, that is common knowledge, that the insurer knows or ought to know, or something that’s not relevant or the insurer has told you that you don’t need to disclose.

Excess/Deductible - the amount of any loss or damage that you must pay before your insurance policy starts to kick in. In effect, you are accepting a small part of the financial risk yourself. Your excess is stated on your certificate of insurance.

​Financial loss - This refers to the damage or destruction of an asset that has a financial value. It could also refer to the type of insurance that covers liability claims from a loss that is solely financial - that is, it does not cause injury or property damage. For example, professional liability insurance.

Indemnity - under an insurance policy this is the security or coverage that is provided to you to protect against loss, damage or injury. Legal indemnity means someone promises they won’t sue you if a certain event happens, or they promise to protect you by paying your damages if an event occurs.

Loss - You can make a claim only if you have incurred a loss that meets the terms and conditions of your policy. This means looking at the impact on your assets, for example when your property is lost or damaged.

​Liability - When a person or organisation is responsible for something, especially in law, that’s liability. Liability insurance can cover you for legal costs and compensation costs that you might have to pay if you are proved to be the cause of harm to another person or business.

Non-disclosure - This means that a person has not told their insurer all of the information that should have been given, if the person had complied with their duty of disclosure when they applied for an insurance policy. This may result in your insurer not being obliged to pay all or a portion of a claim being entitled to avoid your policy so that it was never effective in the first place. With insurance, honesty is the best policy.

​New for old - In an insurance policy that refers to older items being replaced with new items, without any discount for the depreciation in value of the old items.

​Occurrence - An occurrence is something that happens that results in a loss. It might be an accident, a burglary, a natural disaster or a recurring event that results in liability.

​Over insurance - This is when you insure something for an amount of money that is more than its fair or reasonable value.

​Payout - Sometimes the insurance company will give you money as part or full settlement for your insurance claim. Also see benefit and settlement.

​Policy - This is the binding legal contract that documents your insurance cover.

​Premium - This is the amount of money you pay to your insurance company for your insurance policy, in return for the insurance company’s promise to cover you if something that is covered by your policy, goes wrong.

​Product Disclosure Statement (PDS) - Insurance companies must give you this by law. It describes the terms and conditions of your policy. It’s important to take the time to read and understand it together with the policy schedule, to make sure it covers the risks you want to cover.

Proposal - The application form that you complete when you want to take out an insurance policy. This is an offer by you to enter into an insurance contract, and it might be accepted, varied or declined by the insurance company.

​Public liability insurance - This covers a person’s liability to another person or organisation for causing injury or property damage.

Policyholder/The Insured - The person who has entered into a contract with an insurer and holds an insurance policy.

​Qualifying event- This is something that happens which is covered by your insurance policy.

Renewal- When you agree to continue your existing insurance policy for a further period.

Replacement cost - The cost to replace damaged, stolen or lost property by buying new items.

Risk management - The way that you manage losses you might experience. Sometimes you might change something in your behaviour or environment to reduce risk, for example installing a burglar alarm. Other times you will transfer the risk by taking out an insurance policy.

Sum insured - The maximum amount that your insurer will pay for a claim in a particular policy.

Underinsurance - When you don’t have enough sum insured in your policy to cover the value of the items you are insuring.