Here are some insurance terms you should know about and what they mean.
Short term insurance terms:
Excess – The excess on your policy the basically first payment due on the repairs of your vehicle. It is your responsibility to pay the excess. Usually you would pay the excess to the repairer that fixes your vehicle when it has been in an accident. When shopping for insurance a lot of insurers will raise your excess with out telling you although they need to tell you by law. Some insurers have a fixed excess while other charge a percentage of the claim. Some insurers have an excess waiver. This is where you would pay a little more monthly and not have to pay an excess at claim stage.
Claim – Basically a claim is just that. When you have had an accident or your goods have been stolen you would submit a claim to the insurer for the damages or replacement of your goods. So basically when you claim you are asking the insurer to fix or replace your damaged or stolen goods.
Car Hire – Car hire is when your insurer lets you hire replacement car while your own vehicle is being repaired or replaced. It can sometimes take over a month for your vehicle to be repaired and most times insurers have a waiting period on stolen vehicle. This waiting period is to allow the police time to find your vehicle. Very often car hire costs you more on your monthly premium, so if you do have an extra car or if you can make a plan to get around should you ever be involved in an accident or your car being stolen, then you should take car hire off your policy cause it could save you some money.
Peril – Peril is a term used by insurance companies to describe an uncontrollable action which could cause damage to your goods. Eg. A car accident is a peril, or a hail storm. Where as an earth quake would be referred to as an act of God. Which also is often not covered by insurance companies because the loss for them in such an instance would be too large.
Home contents or householders insurance – This is basically an insurance policy that covers the goods within your home. This type of policy would only cover the contents of your home or anything that is inside your home at the time of the loss. Anything that is not inside the home at the time of the loss will not be covered. Eg. If you have a laptop computer and you leave it in your car and it is stolen out of your car it will not be covered under your home contents policy unless it is specified on the policy. Specifying specific things on your policy does end up costing more though so be careful of what you specify.
House or Home insurance – The difference between home contents insurance and house insurance is House insurance will only cover you for your house. The actual building or things attached to it like the roof and geyser or the walls. Home contents insurance only covers the contents of your home. So for example, your house gets broken into and the criminal breaks a wall down to get in. the wall will be covered under your house insurance and whatever he steals will be covered under home contents insurance.
Portable possessions cover – insurers normally have another policy attached to your home content or vehicle insurance called portable possessions cover. This basically covers items that you would take out of your car or home regularly. Like sporting goods or cell phones and things to that affect. Like with home contents insurance you can specify things or you can take out general cover for a general amount.
Personal Liability cover – some insurers cover you for personal liability cover. This is normally a sub policy attached to home contents cover. This policy basically covers you for perils which you can be held liable for. Such as if a roof tile come unlogged and lands on someone head, or if your dog bites somebody.
Policy – A policy is the agreement with the insurance company. It is the product that you purchase. The insurer will state in the policy what they will cover and what they will not cover you for. These are normally all explained in the policy documents.
Policy Documents – Policy documents are the legal documents or the contract between you and your insurer. They explain what you will be covered for and for what perils you will be covered.
Premium – A premium is a monthly fee that the insurer will charge you for, for the insurance cover they give you.
Riot Cover – Riot cover is another sub policy attached to either home contents or vehicle cover. It basically covers your belongings against damage caused by riots or war.
These are some of the most common terms used in the insurance industry. There are however many more terms out there. Should you hear of any other terms and would like an explanation on them please post it in the forum and we’ll get to it soonest.