Insurance Terms
Insurance is based on disclosure. The information you provide at the time of insuring your asset plays a major part in the claims process. Below are a few key terms that will make insurance easier to understand.
Policy
Your policy is a contract between you and your insurance company which sets out the conditions and details of your insurance cover. A policy schedule sets out the personal details of your insurance.
Premium
A premium is the amount you pay to have your property or personal effects insured. Depending on the type of cover you have, your premium can also include Earthquake Commission and Fire Service levies. When you pay your premium, you accept the policy offered by the insurance company.
Excess
This is the amount of a claim that you have to pay yourself. The type and amount of excess changes, depending on the item insured and disclosures made when you took the policy out.
No Claim Discount
This is a discount you may be entitled to on your renewal premium if you don’t make a claim under your insurance policy for one or more consecutive years.
Sum insured
Under a sum insured policy, we agree on cover up to a certain dollar amount. With this type of policy it’s important to update your sum insured regularly, otherwise the amount of cover you have may not be sufficient to totally replace your valuables.
Actual replacement
This is an alternative to a sum insured policy and will pay out on the actual cost of replacement.
Indemnity value
This is an item’s current value allowing for its age and condition immediately before the loss or damage happened.
Reasonable care
As part of an insurance contract, you have an obligation to protect and look after your property. The general rule for reasonable care is simple common sense - would you act in the same way if you weren’t insured?
For more information on the terms listed above, call your broker.