There’s nothing worse than sitting down to read important documents only to find you’re attacked by jargon in every sentence. Insurance policies are no different. – packed full of terminology that really could mean anything!?
Well, Aspray are here to help.
Our glossary contains some of the frequently used terms that you may come across within your property’s insurance policy.
Sometimes damage can leave your property unliveable. On these occasions you may need to move out for a period of time whilst your property is reinstated, leaving you in need of alternative accommodation.
In most cases, the cover for alternative accommodation is only for the family usually residing in the property and may not include pets, guests, food, or additional travel costs. Something to be mindful of if you ever find yourself in this position.
Your policy will have a general conditions section within the policy wording which are applicable to the whole policy. These identify the requirements of the policyholder.
Although there are conditions likely to be found in most policies there will also be some that are specific to your policy.
Consequential loss is a loss that flows from the original loss or damage and is usually not covered as part of a building policy.
Let us give you an example! If you have tickets to a concert but are unable to attend due to a fire at your property, this would be considered a consequential loss. In this instance, the cost of the tickets would not be covered by the insurance policy.
The definitions section of your policy sets out exactly what your insurer means by the words used in their policies.
The excess is the portion of the claim that you agree to pay when you take out your insurance policy. There may be different excess amounts depending on the type of damage incurred. Individual amounts will be stated within your policy wording.
Your policy will likely have two forms of exclusions: general exclusions and specific exclusions. These are things that your insurance policy will not cover.
General exclusions apply to the whole policy and will likely have their own section within your policy wording. However, each peril will also have their own individual exclusions.
Your insurer may appoint a loss adjuster to act on their behalf. The adjuster will assess the damage to your property and validate your claim. If your claim is valid, they will agree a settlement value.
Loss assessors manage the claim on behalf of you, the policyholder. They must be regulated by the Financial Conduct Authority (FCA) and will handle all forms of communication with the insurer, or their loss adjuster, agree your settlement and, in some instances, complete the reinstatement works.
Aspray offer a full loss assessing and reinstatement service for policyholders and you can find out more about our services here.
A peril is the cause of the damage to your property. Each peril will have different conditions within your policy wording.
The perils you will come across within a building’s insurance policy are:
- escape of water
- malicious damage
- subsidence, Heave & Landslip
- accidental damage to underground services
- accidental damage.
Your policy will indicate the maximum level of payout your insurer will make for damages incurred to your property. Different perils may have different policy limits and these can be found within your policy wording.
A premium is the cost you pay for your policy. This can be paid in increments or as a one-off payment. The level of premium is determined through a variety of factors, such as rebuild value, location, local crime statistics and potential flood risk, to name but a few.
Pro Rata Condition of Average and Underinsurance
If your property is deemed underinsured, your insurer may apply the pro rata condition of average to your claim settlement.
Let’s imagine the rebuild value of your property is £200,000 but your policy only covers a rebuild of £100,000, meaning you are 50% underinsured.
Unfortunately, a leak in your home has caused £10,000 worth of damage. Because you are underinsured, your insurer can apply the pro rata condition of average and reduce their payout by the percentage of underinsurance, in this case 50%. Therefore, they will only pay £5,000 towards the cost of reinstatement, less your excess, leaving you to foot the rest of the bill.
Find out more here.
Not to be confused with market value, the rebuild value of your property is the cost that would be incurred to rebuild your premises from the ground up if it was damaged beyond repair. This value includes the cost of both materials and labour, and should also consider plumbing, electrics, and the removal of the old property,
Without prior knowledge of material and labour costs, gaining an accurate rebuild value can be an impossible task, especially considering economic factors, such as rising costs, also affect the figure. A chartered surveyor will be able to provide an accurate valuation and you can find one in your area here.
If the damage to your property is not covered by your insurance policy, for example, if it is caused by poor maintenance, your claim will be rejected by your insurer. In the insurance world, this is known as a repudiated claim.
Schedule/Scope of Works
This is a detailed breakdown of the damage to your property and the actions needed to complete the reinstatement works.
Sometimes the damage to your property is caused by a third party. Should the third party be found liable, once your claim is settled, your insurer may take up their legal right to recover these costs.
Trace and Access
Discovering a leak in your property is a nightmare. It’s even worse if you can’t find where the leak is coming from.
If your policy cover includes trace and access then your insurer will cover the cost of any damage that occurs whilst locating the source of the leak.
Simplify your insurance claim with Aspray