Glossary & Insurance Definitions

Please note these definitions are for guidance only. For full definitions please refer to your policy document when received.

Ab Initio
This Latin term means "from the beginning". An insurance policy may be cancelled 'ab initio' if the insurer felt that there had been a non disclosure serious enough to not wish to proceed with the policy at all. Normally the insurer would refund the premium paid.

Act of God
An accident or event which happens independently of human intervention, usually due to natural causes such as storm or earthquake, which no human foresight can provide against. Suggesting that an event was an "act of God" may be a defence in English law against a claim for liability since it may be held that it could not have been foreseen or safeguarded against. One of the reasons why it can be inadvisable to drive your vehicle in adverse or dangerous weather condtions.

If you are found to be under-insured, the insurer's liability will be limited to that proportion where the amount of cover is compared to the value at risk. This ratio is then applied to your loss. In simple terms, if you have bought only half the cover you should have, your insurers will only pay you half your assessed loss.

Bona Fide Sub Contractor
The term is used to describe sub contractors who operate using their own tools and carry their own insurance and are paid by means on invoice. For a definition of the difference between Bona Fide Sub Contractors and Labour Only Sub Contractors please visit our definition of sub contractors

Business Interruption
This insurance covers a business in the event of the loss rendering the business inoperable or hindered by an event such as a fire or a breakdown of machinery. The policy will define the gross profit and uninsured working expenses within the policy wording, which will be subject to increased costs of working and savings.

Business Use 
This is use by the policyholder for their own business to travel to more than one place of work and between places of work. 

An insured party who has undergone a loss, which they believe to entitle them for compensation under the terms of their insurance policy.

Comprehensive Cover
This includes the cover described points 1 and 2 above, as well as loss of or damage to your vehicle caused by accidental or malicious damage and generally includes some personal accident benefit in respect of personal injury to you or your death (please refer to your policy terms when received). Theft cover for the contents of your car is provided by most insurers but only to a specified amount and subject to policy terms. Details will be shown with your quotation. All insurers provide audio equipment cover. Details of the amount of cover will be provided with your quotation.

Consequential Loss
A financial loss occurring as the result of some other loss. Also known as an indirect loss.

Any contract or agreement for the performance of work in connection with the business or trade of the insured party.

Contractors All Risks Insurance (CAR)
A policy which covers contract works, such as new buildings in the course of construction, usually on an 'All Risks' basis. Sometimes referred to as 'Contract Works Insurance'. In addition cover can be included for tools, plant owned by the policy holder or plant hired in. This type of insurance is especially useful for builders and similar tradesmen and is often purchased along with public liability insurance but can be bought as a seperate policy.

Contractual Liability
Contractual liability is defined as liability that does not arise by way of negligence, but by assumption under contract or agreement.

The specified amount a loss must exceed before a claim is payable. Only the amount which is in excess of the deductible is recoverable.

Duty of Disclosure
The duty of any person applying for an insurance policy to tell the insurer all relevant information affecting the risk, such as prior claims history.

Employers Liability Insurance
Compulsory insurance for all employers. Employers liability insurance is required in case any employees pursue their employer for compensation in the event that they suffer injury or disease in the course of their employment. 

SIS can offer liability insurance cover, even if you have a criminal conviction to your name.  Click for a liability insurance quote.

This is the first part of each and every claim that you (not your insurer) must pay. The amount will differ from insurer and the type of insurance. For example an excess under a public liability insurance policy could range from £100 to £500 for some trades. For van insurance this amount is recoverable if you are involved in a non fault accident.

There are two types of excess: 

  • A compulsory excess - This is an excess that has been applied as a requirement by your insurer and will vary according to your personal circumstances and the terms of cover provided. A compulsory excess can, for example, be required if you drive a particular car, if you have protected no-claims discount or you have inexperienced drivers on your policy. There is also a compulsory excess for fire, theft or windscreen claims.
  • A voluntary excess - This will apply where you agree with your insurer to pay a greater part of each claim than the compulsory excess.

First Loss
Insurance where the sum insured is accepted to be less than the value of the property but the insurer undertakes to pay claims up to the sum insured, without application of average.

Foreign Use 
All policies offered through us provide the minimum cover you require to drive in any of the EU countries. 

To extend this to include your normal policy cover then you need to have a Green Card. Some insurers provide this free of charge. Please see our quotation reply for further details. 

Gross Profit
Defined within an insurance policy. In simple terms: sales, less purchases, adjusted for opening and closing stock.

The principle under which a claimant is restored (so far as possible) to the same financial position that they were in immediately prior to the insured loss. As account is taken for age, wear, tear, and depreciation, this differs from “New for Old”.

Insurable Interest
A person has an insurable interest in "something" when loss of or damage to that "something" would cause the person/business to suffer a financial loss or other kind of loss. 

Labour Only Sub Contractors
A sub contractor who is self employed for tax reasons but works a set pattern for one or more main contractors and is paid by the hour, day, week or month. See our definition of sub contractors.

Latent Disease
An illness which lies dormant for some years before manifesting itself.

Legal Protection cover
This is an additional policy that will safeguard you against the effects of uninsured losses as a result of an accident. Uninsured losses are things such as loss of earnings, personal injury, loss or damage to personal property and excesses under a comprehensive policy. The policy also includes free car hire, replacement car facility, credit repair and vehicle recovery.

Material Fact
Information that would affect an insurance company's willingness to accept a policy, or the premium it would charge, such as previous driving convictions. Failing to disclose a material fact could invalidate a policy.

Minimum & Deposit Premium
The premium payable at the start of the policy will be the minimum the insurer will collect and no refunds are permitted for reductions in cover or cancellation. Additional premiums may still be charged.

Non disclosure
When a policyholder does not disclose a material fact.

A contingency, of fortuitous happening, which may be covered or excluded by a policy of insurance.

Professional Indemnity Insurance
This type of cover protects a business's interests against claims for error, omissions, professional neglect for both the principles and their employees.

To return the insured to the pre-loss situation.

The practice whereby one insurer transfers part or all of the risk it has accepted to another insurer (the reinsurer).

Social, Domestic and Pleasure use (SD&P)
Excluding commuting - Social domestic and pleasure purposes only.

Including commuting - This includes commuting to and from one place of work. 

Sub Contractor
For a full definition and explanation of the term "Sub Contractor" in relation to liability insurance, please click here.

The right of an Insurer who has indemnified a policyholder to take over any legal rights the policyholder may have had in respect of that particular claim.

Sum Insured
The maximum amount that an insurer will pay under a contract of insurance. Under insurance can lead to 

Third Party Only cover
This is the most basic insurance and covers your liability for death or bodily injury to a third party (including other occupants of your vehicle) and your liability for damage to third party property. 

Third Party Fire and Theft cover 
This covers third party risks as described in point number 1 above plus the risk of fire and theft in connection with your vehicle in accordance with relevant policy terms.

Some insurers will provide cover for the contents of the car and details will be provided when we provide your quote. Audio equipment cover is provided with a number of insurers and again, details will be provided with your quotation. 

Under Insurance
If you fail to provide the insurance company with the correct value of the items you are insuring you are under insured. The insurer's will then apply the average clause to your claim

Utmost Good Faith
Insurance contracts are contracts of utmost good faith (uberrima fides), which means that both parties to the contract have a duty to disclose, clearly and accurately, all material facts relating to the proposed insurance. Any breach of this duty by the proposer may entitle the insurer to repudiate liability.