Insurance is basically the contributions of the many paying for the losses of the few. However, over the years Insurance has become a complex business with lots of "jargon". The following explains some of the more commonly used jargon, but in language that we hope you will be able to understand.
This is the maximum amount that the Insurance Company will pay in the event of a total loss. You should check your sum insured at least once each year, to ensure that it continues to be accurate. See under-insurance, below for further information.
Putting someone who has suffered a loss into exactly the same position that they were in prior to the loss happening. For example if you lose a camera that is three years old, and your insurance company replaces it with exactly the same model of camera in the same condition and age, or they make a payment representing the market value of the camera, then you will have been indemnified. However, due to competition between insurance companies over the years it is possible to insure on a new for old basis. This means that in the above example the insurance company would pay for a new camera with the same specification, or as close to the same specification as the one that was lost.
Utmost Good Faith
Insurance is a contract between the person insured (you) and the Insurance Company. The Insurance Company assesses the risk, and calculates the premium based on information that you provide. In many cases the information that you provide will be known only to you, and because of this, the Insurance Company relies on you providing complete, correct and accurate information. If you are in any doubt as to the information that you should provide please ask us or your Insurance Broker.
When insuring your business, house, or any other item, it is essential that the property is insured for its "full value". Assessing the full value depends on the type of item being insured. For example if you own your house, the sum insured should represent the cost of completely rebuilding your home in exactly the same way that it is now. If the sum insured does not represent the full value, then the Insurance Company will not receive the full premium for the risk that they are running. They will therefore make a reduced payment in proportion to the level of under-insurance in the unfortunate event of a claim happening.
Deductible or Excess
This is a small contribution that the Insurance Company will ask you to make towards a claim. It is included within your insurance contract to encourage everyone to take as much care as possible to prevent a claim from happening. Unfortunately there are people who sometimes take less care than they perhaps should because they know that insurance will pay for any loss or damage. The deductible or excess ensures that our customers have an interest in ensuring that claims do not happen, or if a claim does happen, the loss or damage is kept to a minimum.