Glossary

Latin for "from the beginning".
A sudden unforeseen and unintended event.
An unpreventable event caused by the forces of nature.
The total amount of money an Insurer will pay under a policy for claims arising within a specific period of time, despite the number of claims. Usually relates to liability insurance.
The value of an insured item, agreed between an Insured and the Insurer at the beginning of a period of cover, which does not change throughout the period of cover.
A policy which covers an Insured against all risks of loss or damage which are not otherwise excluded under the policy.
The amount of premium which must be paid annually to keep a policy fully in force.
A request or proposal for insurance submitted by or on behalf of a person seeking cover.
A clause in an insurance contract which restricts the amount of a claim paid out by an insurer where the sum insured at the time of a loss is less than the insurable value of the insured item (i.e. is underinsured). The value of the claim will be reduced in proportion to the amount the item is underinsured, in order to reflect the underinsurance.
An intermediary appointed by a person seeking insurance to advise them on insurance matters and to arrange insurance cover for them.
A commission that a broker receives from the Insurer for placing business with that Insurer. A broker will usually deduct their brokerage from the premium paid to them by an Insured when submitting payment to the Insurer.
Commercial insurance that protects the owner of a business from revenue losses suffered during the period a business must stay closed while the premises are being restored because of physical damage from a covered peril.
Termination of an existing policy before it is due to expire.
An organisation set up by the government to lead recovery work in Canterbury following the devastating earthquakes of 2010 and 2011. For further information see http://cera.govt.nz/.
Notification to an insurance company that payment or some benefit is required because a loss which is covered by the policy has occurred.
A person who makes a claim.
A form a claimant must complete and provide to the Insurer so that it can assess and settle the claim. These can be obtained from the Insurer.
A clause in an insurance contract setting out the procedure an Insured must follow in order to make a claim, often requiring the Insured to give the Insurer early notification.
A fee paid to an agent or broker by an Insurer, usually as a percentage of the premium (see definition of Brokerage).
A policy which covers most risks relating to an insured item, with certain named exclusions. Often used in motor vehicle and liability insurance.
The scope of protection provided by an insurance policy.
See definition of Excess.
A scheme providing a free, independent service for Insured's with complaints about services provided by participating Insurers'.
Duty on an Insured to disclose material facts to an Insurer (see definition of Non-disclosure).
A New Zealand Government agency established to provide cover in the event of earthquakes to residential property owners. For further information see http://www.eqc.govt.nz/.
A compulsory government tax charged against all residential fire policyholders in return for limited natural disaster cover from the EQC.
A goodwill payment made by an Insurer where it has no liability to make such payment under the contract.
The portion of an insurance claim which the Insured is responsible for paying. It is usually the first part of the loss claimed, up to a value determined by the insurance policy.
A term in an insurance contract which excludes the Insurer from liability in certain circumstances or for specific losses.
The date that cover under an insurance contract comes to an end.
See definition of Negligence.
A code of practice that all Insurance Council members must comply with. The code sets service standards for insurance companies, describes the responsibilities Insureds and Insurers have to each other and encourages professionalism in the insurance industry.
Another fee which brokers receive directly from their client, either instead of or on top of the brokerage received from an Insurer.
A compulsory government tax charged against all residential fire policyholders in order to fund the New Zealand Fire Service.
damage to an insured item which is gradual in nature, not sudden.
An exposure that creates or increases the probability of loss or damage.
The date a contract of insurance comes into force and an Insurer goes on risk (i.e. the effective date).
The current value of an item, taking into account its age and condition at the time of loss or damage.
A period under an insurance contract in which cover is provided for disruption to the business.
A policy which in monetary terms restores the Insured to the same financial position they were in immediately prior to the loss or damage, in so far as is possible.
A formal contract between the Insured and Insurer agreeing to the level of cover which is to be provided and the terms and conditions of that cover. It is generally made up of 3 separate documents – the Policy Wording, the Policy Schedule/Notice and the Proposal, Application or Declaration.
A person who is insured under a contract of insurance.
A provider of insurance.
An arrangement between most motor vehicle Insurers whereby each Insurer pays its own repair costs for damage to the vehicle of its own customer, regardless of fault.
A policy terminated because of non-payment of premiums, or that has expired at the end of the period of cover without renewal.
Insurance which provides protection for the Insured from damage arising out of the Insured's negligence to a third party's property.
A liability incurred, or injury, harm, damage or financial detriment suffered by a claimant.
A person who acts on behalf of an Insurer, or Insured, to investigate the circumstances of a loss and determine the extent of an Insurer's liability.
The fair price for which something can be sold in its current condition (see definition of Indemnity value).
A fact that would influence the judgement of a prudent underwriter in accepting or rejecting a proposal for insurance, and on what terms.
A statement made by the Insured which is substantially incorrect and would have influenced the judgment of a prudent Insurer in assessing the risk or setting the premium.
A failure to exercise reasonable and prudent care so as not to cause damage or loss to any other person's property.
A discount or reduction in insurance premium allowed if no claims are made by an Insured in one or more consecutive proceeding years.
A failure by an Insured to disclose a fact which is material to the acceptance of a contract of insurance by an Insurer.
A possible loss occurrence which may be covered or excluded under an insurance contract (i.e. fire, collision, bodily injury or loss of profits).
A document issued to an Insured from an Insurer setting out the terms and conditions of the insurance contract.
See definition of Insured.
The maximum amount payable under a policy of insurance.
A prescribed amount paid by the Insured as consideration for cover provided by the Insurer.
See definition of Replacement Policy.
Insurance brought by Insurers in order to mitigate risk. A reinsurer agrees to pay specific losses incurred by an Insurer in return for a part of the premium paid to the Insurer.
An underwriter of reinsurance.
A process where the Insured and Insurer agree to continue insurance from one risk period to another.
A policy which covers the cost of repairing or replacing the insured property.
A hazard, exposure or chance of loss.
Damaged property that an Insurer takes over in order to recover all or part of its loss incurred after paying a claim in respect of that property.
A notice which must be recorded on a certificate of title for land (pursuant to section 74 of the Building Act 2004) specifying that a building consent has been granted for building on that land and that the land is subject to specific natural hazards.
The right of an Insurer to take over the legal rights of the Insured person in order to recover payment from a third party that is partially or wholly responsible for a loss which an Insured has made a claim for.
A specified limitation in an insurance contract for a particular loss to a specific insured item, despite the overall policy having a higher limit.
The maximum amount covered under a contract of insurance.
Insurance to cover temporary accommodation if a home becomes uninhabitable.
Any person other than the Insured who has suffered or caused an injury or loss (the Insured and the Insurer are the first and second parties to the insurance contract).
Insurance which protects a Third Party against third party claims arising from their negligence.
A loss where the cost of repair exceeds the market value of the insured item or where it is uneconomical to repair the item. The Insurer will generally pay the Insured the replacement or indemnity value of the damaged item limited to the total sum insured under the contract.
A situation where the sum insured is less than the true market value of the item insured.
The process an Insurer goes through in evaluating, accepting or rejecting insurance risk.
A person responsible for underwriting an insurance contract. It is also a reference to the insurance company assuming the risk.
A legal principle that requires both an Insurer and Insured to act in good faith towards each other (Latin – Uberrimae Fidei).
An undertaking from the Insured that certain statements are true or that certain conditions shall be fulfilled. A breach of warranty may invalidate the insurance contract.
An amount deducted from a claim for damage to an insured item because of depreciation in the items value due to usage.

General Disclaimer: This glossary does not purport to be a comprehensive guide or to provide specific advice. No person should act in reliance on this glossary without first obtaining appropriate professional advice. Reasonable efforts have been made to ensure that the information provided in this glossary is accurate. Nevertheless, the Insurance Council does not warrant the accuracy, adequacy or completeness of any information provided in this glossary.

General Disclaimer: This glossary does not purport to be a comprehensive guide or to provide specific advice. No person should act in reliance on this glossary without first obtaining appropriate professional advice. Reasonable efforts have been made to ensure that the information provided in this glossary is accurate. Nevertheless, the Insurance Council does not warrant the accuracy, adequacy or completeness of any information provided in this glossary.