A sudden, unplanned and unforeseen mishap or untoward event, not under the control of the insured, resulting in injury or damage. Personal accident cover may encompass injury caused by an accident or accidental injury.
If there is no definition in the policy, the term will have its normal everyday meaning. Accidental Damage usually means unintended and unexpected damage caused by sudden (and external) means. Insurers will usually exclude specific causes from cover, such as electrical and mechanical faults or use contrary to the manufacturer’s instructions, and ‘action of insects, moths, vermin and the like’.
A further premium payable by the insured as a result of a policy Endorsement (or Mid Term Adjustment) that may have increased the risk or amended the policy conditions or Sum Insured.
A term describing wider cover than is normally given under a property insurance policy. It covers any loss or damage unless the cause is specifically excluded. Typically, all risks cover will be used to protect items that are taken out of an insured building but would otherwise only be covered whilst ‘on the premises’. An example would be PA equipment that is used in a number of venues. The ‘all risks’ exclusions will include standard exclusions plus others, for example limiting cover to the British Isles.
If the policy is subject to an Average clause, which is usually the case, and the Sum Insured is less than the total value of the property insured at the time of loss, the claim will be reduced in the same proportion. For example, if a church is insured for £400,000 when its true insurable value is £800,000 and the church is seriously damaged by fire at a cost of £200,000, insurers will apply the average condition and only pay £100,000 on the claim. This is intended to combat under-insurance.
Commonly, church property is subject to a special condition of average, as values of church buildings often fluctuate or are difficult to assess. Typically this means that if the sum insured is 75% or more than the value at the time of loss, the Average clause is not applied.
An improvement made to the standard of insured property when it is repaired or replaced following a claim. Insurers may expect the insured to pay something towards the claim in these circumstances. An example of this may be replacing a lost or damaged laptop computer with a higher specification than the one that was lost or damaged.
A general insurance clause permitting the insurer to terminate insurance cover during the policy term. The clause sets out the notice procedure the insurer must follow, and the basis for refunding the unexpired premium. Some policies also give the insured the right of cancellation.
A condition setting out what the insured has to do in the event of a claim. It sets out when a claim should be reported, the evidence required and the assistance that the insurer may expect. In the case of liability claims it also makes it clear that no admission of liability should be made to a third party.
Conditions Precedent in a policy come in two main types:
The first is a condition precedent to the validity of the policy or commencement of the risk, such as the payment of premium. A condition precedent of this sort must be met. If it is not, the policy will not be in force.
Secondly, a condition precedent to the insurer’s liability for a particular claim. These are more common and often relate to the claims process or the insured’s conduct, such as the giving of notice of a claim.
Failing to comply with this form of condition precedent means the insurer is not liable for the particular loss in question but the insurance policy remains valid and the insurer’s liability for future claims is preserved. In this way, insurers use conditions precedent to control the way in which a claim is dealt with.
Employers’ liability insurance
Is a compulsory insurance that covers the insured’s legal liability for bodily injury or disease to employees if caused during the period of insurance. The policy also covers the insured’s own costs and pays for solicitors’ representation at inquests and courts of summary jurisdiction. Note that the term ‘employee’ may or may not include volunteers and so the definition in the policy should be checked carefully before proceeding with cover.
Employers’ liability insurance certificate
Insurers must issue a certificate of insurance to employers who take out or renew policies. Employers must display a copy of this certificate where employees have reasonable access to it. If they do not, they can be fined.
Since 1 October 2008, employers have been allowed to satisfy this requirement by displaying the certificate electronically. If an employer chooses this method, they must ensure that the employees know how and where to find the certificate and have reasonable access to it.
It is strongly recommended to keep copies of Employers’ liability certificates for a period of at least 40 years as some illnesses or conditions caused as a result of bodily injury sustained during employment such as asbestosis may take many years before being identified. It is the employers’ responsibility to prove who the insurers were at the time that the bodily injury was caused and if they are unable to do so then they will have to deal with any claim and pay any compensation awarded themselves.
A written change to the standard insurance policy which becomes part of the insured’s policy. See also Mid-Term Adjustment.
A claims payment made by the insurer (‘as of favour’) even though there is no legal obligation to pay. Such payments are made to preserve goodwill, often where the right to refuse payment is founded on a technicality.
An amount deducted from each and every claim paid out under the policy. Different excesses may apply to each section of a policy. Claims for amounts equal to or less than the excess will not be paid. Higher value claims will be reduced by the amount of the excess.
Forcible and violent entry
Insurers sometimes restrict theft cover to loss arising from forcible and violent entry or followed by forcible and violent exit. The words eliminate shoplifting or entry via an open or unlocked door. The word ‘violence’ is used in its ordinary sense, meaning that an entry or exit, where force might have been minimal, should be accompanied by an act characterised as violent.
In most Church Policies, certain hazardous sports and activities are excluded from personal accident section as they are high-risk pursuits not undertaken by all policyholders. The ‘pursuits’ typically include aviation (other than as a passenger on normal flights), hunting and polo, football, motorcycling, mountaineering involving the use of ropes, winter sports and others.
The date when cover under a policy starts.
A method whereby sums insured are increased (usually annually) by a factor derived from an index of prices. Building sums insured are linked to a rebuilding cost index and contents cover increases annually in line with an index reflecting replacement costs.IndemnityThe term Indemnity refers to the principle by which the insured is put in the same financial position after a loss as they were immediately before it.
Indemnity Period / Maximum Indemnity Period
A Section often found within Church Policies is a Business Interruption Section. Here there will be an Indemnity Period or Maximum Indemnity Period. This is the period beginning when damage or loss occurs and ending not later than the end of the period stated in the policy as the Maximum Indemnity Period (for example, 24 months). The stated period reflects the time needed to restore the business to its pre-loss trading level and is specified by the insured.
A principle of insurance whereby a policy is not valid unless the insured person themselves stands to suffer a financial loss if the insured event occurs or benefit from the non-occurrence of the event, i.e. the property being preserved or no liability being created. Generally, an insurable interest must exist when the policy is taken out and at the time of loss
Liability attaching to a party because of the breach of a legal duty or law. Employers’ liability, public liability insurances, etc., insure the legal liability of the insured and not the injury, damage or loss suffered by the third party. If there is no legal liability there will be no payment to an injured claimant. The allegation of liability is sufficient to give the insured access to the insurer’s help by way of defence costs and claims handling.
Insurance against the legal obligation to pay compensation and costs to third parties and employees for loss, injury or damage caused by the insured. Liability may arise, for example, through negligence, strict liability, breach of statutory duty or breach of contract. Liability policies include employers’ liability, public liability, products liability, professional indemnity and cover for directors’ and officers’.
Independent expert engaged by insurers to investigate claims and assess the true extent and value of any loss.
A fact that would influence the judgment of an underwriter in deciding whether to accept a risk for insurance and on what terms. The proposer has a duty to disclose all material facts at the inception, at renewal and in respect of mid-term alterations where there has been a change in risk.
An adjustment to existing insurance arrangements, other than at the renewal date. An adjustment may be needed for example to change, add or remove property to be insured, change the Sum Insured or because of a change in the nature of the risks insured since last renewal. A mid-term adjustment may give rise to a change in premium such that a refund or Additional Premium is required. See also Endorsement.
New For Old
Cover for property where an item lost or destroyed is replaced with a brand new one, with no deduction for wear and tear. Insurers will commonly pay the lower of New for Old value or Sum Insured. This type of cover is alternatively called Replacement as New.
No claim discount (NCD)
A reduction in renewal premium to reflect a claim free record under a policy.
The cost of rebuilding premises following their destruction by an insurable cause. The amount should take into account professional fees (architects and surveyors fees) and the cost of demolition and debris removal as well as any VAT that may apply and this will be the relevant figure for the Sum Insured under a buildings policy or buildings section of a policy.
Replacement as New
See New for Old above.
The part of an insurance policy that sets out the detail that is specific to the individual insurance contract. The information includes: name and address of insured, policy inception date, the period of insurance and the premium.
The right of the insurer who has granted an Indemnity to take over any recovery rights the insured may have against third parties liable for the same loss. A subrogation condition in the policy enables the insurer to take action in the insured's name before paying the claim.
The amount for which property is insured, and the maximum amount that the insurance company will pay for any claim.
An individual employed by an insurer who will assess the premium to charge and terms to apply for an insurance risk.
A condition that must be complied with literally. A failure to do so prevents the insured from recovering under his policy, although the loss may not have been affected by the warranty. Insurance warranties may consist of undertakings that certain things shall or have been done (for example, that the burglar alarm is set whenever the premises are left unoccupied), or things that shall not be done (which may for example if done increase the risk factors), or a declaration whereby the insured confirms or denies a certain state of affairs (for example, confirmations given in a proposal form).
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