Insurance Fact File > Insurance Jargon Buster

Say ‘insurance’ and most people will instantly glaze over. And there’s a strong evolutionary reason for this. We have so long associated insurance with jargon and unfamiliar terminology that we simply expect insurance to be incomprehensible. But things don’t have to be this way. Here’s a quick jargon buster for you to get your head round what you’re being sold, next time you’re looking at an insurance policy …

Accidental Damage

Contents insurance was created first and foremost to make good catastrophic loss to your things. Through a fire, flood or burglary for instance. Accidental damage on the other hand refers to those breakages that can occur along the way – coffee-sodden laptop, cracked phone screens and red wine spills on the carpet to name a few.

With most contents policies, you will need to add accidental damage on as an extra. And the choice is a personal one. Do you want cover for the absolute worst-case scenario (like a burglary where you lose all your things) or do you want quick replacement cash for things you may break across the year?

Claim

There’s nothing complex about the idea of claims in themselves – if something bad happens, then you qualify for a payout from your insurer, according to the terms of your policy. Where things get complex is applying theory to practice – something that’s made more difficult by the number of exclusions that standard polices come with (more on that below).

Cover Level

Deductible

The insurance deductible is the amount of money you pay before your insurance kicks in – so called because this is what gets deducted from your payout. Say you have a £200 deductible; if an item is damaged, you will pay the first £200 of repairs yourself and your insurance provider will cover the rest.

Excess

An excess is the same as a deductible – it’s the portion of an insurance claim that you have to pay out of your own money. A standard excess is something you have to pay on every claim you make. Additionally, you may have a voluntary excess – this is where you agree to a higher excess in exchange for a lower premium. This way, you pay less across the year – but more if you need to claim.

Exclusions

This is a situation that your insurance doesn’t cover. Exclusions can be the bane of policyholders but they’re actually a good thing – by making your policy more affordable. Think about it: insurers can provide basic health cover for your travels for a few pounds. But, if they had to cover the potential costs of injuries from unregulated bungee-jumping, then their medical bill would probably be a damn sight higher. And this money would have to come from somewhere, namely by charging customers more for their policies.

Inclusions

Good news! These are the cases where you are covered. These tend to represent the most basic situation – like protecting your things while they’re inside your house. Other situations – like taking electronics into town or on your holidays – are typically excluded from basic policies. But it’s commonplace and easy to get them included in exchange for paying a bit extra.

Out-Of-Home Cover

Many standard home and contents policies only cover your belongings if they are lost or damaged in your home – such as in a flood or a burglary. Adding out-of-home cover to your policy gives you that added peace of mind of knowing your things are safe when you’re on the move with them – for instance, if you’re taking your laptop down to the coffee shop with you.

Premium

Put simply, the insurance premium refers to the amount of money that the insurance provider is going to charge you for using their services.

Single Item Limit

If you have an engagement ring, or a valuable worth more than the single article limit, you need to tell your insurer about it (and you’ll probably pay a bit extra to get it covered).

  • Tell your insurer what high-value items you have
  • Provide proof of purchase (and value) if they ask you
  • Check that they are correctly listed on your policy document

Walk-In Theft

A great many burglaries don’t look like burglaries – there are no stripey-jumper-wearing, crowbar-wielding miscreants hotfooting it down to the nearest car-boot sale, and no forced entry. However, many insurers – especially for student insurance – will only pay out on a theft claim if you can prove forced entry. So it pays to check for a walk-in-theft exclusion!

Stay tuned for updates to our Insurance Jargon Buster!