Encyclopedia / Jargon

Betterment

If a company replaces property on a new for old basis, this is a form of betterment, in other words the insured is in a better position after a claim than before it. True indemnity would require a deduction to be made for betterment.

Caveat Emptor

Let the buyer beware.

Condition of Insurance

Something which goes to the root of the contract, if broken, the contract can be repudiated.

Contribution

When several insurers cover a risk & all make contributions to the cost of claim.

Cover Note

Temporary form of cover until contract terms have been agreed.

Disclosure

It is the duty of the insured to disclose any material facts to the insurance broker.

Indemnity

Exact financial compensation sufficient to place the insured in the same financial position after a loss as he enjoyed before it occurred.

Insurable Interest

In order to insure something, you must have a particular interest in the subject matter.

Insurance Contract

A contract is a legally binding agreement enforceable at law made between two parties whereby one party pays the premium and the other undertakes to pay a sum of money following the occurrence of a specified risk.

Material Facts

Anything that would influence a prudent underwriter in fixing a premium or deciding whether to write the risk.

Non-Disclosure

Where an insured does not disclose a material fact.

Policy

The policy is not the contract, the contract is the invisible agreement entered into by the parties and the policy is merely the evidence of the contract.

Subrogation

The insured is entitled to indemnity but nothing more than that.

Utmost Good Faith

Special insurance term that the insurer believes that the insured has disclosed everything so that they enter into a fair deal. (the insured knows everything about himself & the insurer nothing)

Warranty in Insurance

An important term in insurance, if broken allows the insurers to repudiate the contract.