Jargon buster: Do you speak insurance?

Like most industries, insurance has a language all of its own and it’s not uncommon for people to be unclear what certain terms in their insurance papers mean, which can be a problem. But fear not! At EBM RentCover we are committed to guiding clients through the maze of insurance jargon.

Here’s a list of 50 terms you might see related to landlord insurance and just what they mean.

1. Accidental damage – an unintentional one-off incident that causes damage to your property or its contents.
2. Actual total loss – where the property insured is completely destroyed or so badly damaged that it is beyond economic repair.
3. Arbitration – a system of deciding legal disputes between an insured and an insurer by use of a private tribunal outside of the court system.
4. Assessor (or loss adjuster) – a representative of the insurer who determines the extent of the insurer’s liability for loss when a claim is submitted. They help approve the claim by checking the details to see if it’s valid and whether it meets the terms and conditions of the policy.
5. Benefit – what you receive from your insurer when your claim is agreed and processed (e.g. funds to repair damaged property). This is also often called a settlement or payout.
6. Building insurance – offers protection for the outer-structure of your building (e.g. the framework of a house) from damage. This includes cover for fixtures and fittings – like kitchens and bathrooms – however, check your PDS for a better idea of what is and is not covered under your particular building insurance.
7. Building sum insured – this is the amount that your property is insured for. It is the amount of money it would cost to rebuild your property if it suffered a total loss (e.g. it was completely destroyed or badly damaged in a fire), however it does not include the value of the land. It is the maximum amount an insurer will pay out in the event of a claim. 
8. Catastrophe – a sudden violent and widespread disaster that impacts on many organisations and/or results in substantial loss (e.g. a bushfire, flood or storm).
9. Claim – the request you make for compensation from your insurer if you suffer a loss or damage that is covered by your insurance policy.
10. Consequential loss – a loss of property may also result in a ‘loss of profits’ and/or additional expenses. This is a loss which is a consequence of the property loss (e.g. you may miss out on rental income because your tenants are unable to live in the property while it is being repaired following damage from a natural disaster – this is a consequential loss). \
11. Contents insurance – cover for the contents you own within the property. This typically covers all non-fixed items (e.g. sofa and dining room table) and not fixed items (e.g. kitchen unit). However, some conditions apply (e.g. carpet is often covered under contents insurance and it is a fixed item). You should read your PDS to find out more.
12. Contents sum insured – what it would cost you to replace all of the contents of your property. The sum insured is the maximum amount that your insurer will pay for a claim in a particular policy.
13. Cooling-off period – a period (min. 14 days) during which you may cancel your policy if you change your mind and receive a full refund of the premium unless a claim has been made.
14. Coverage – encompasses what is covered (e.g. your property), who is covered (e.g. the policyholder), the features (e.g. loss of rent and tenant damage) and the amounts the policyholder can recoup if things go wrong. 
15. Certificate of Insurance – a formal document proving that an insurance policy has been issued by an insurer. It includes the details of the type of insurance cover, its value, excess limits, the premium and the period of the insurance cover (how long it is in force).
16. Cash settlement – the amount an insurer may offer to pay you and close your claim instead of repairing or rebuilding your insured asset.
17. Depreciation – is the loss in value that your property and most of its contents loses over time due to factors such as age and wear and tear.
18. Duty of disclosure – as the policyholder, when you apply for an insurance policy or renew or extend an existing policy, you have a duty to tell the insurer everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you. This is called your duty of disclosure. 
19. Defined events (or insured events) – occurrences that cause loss and damage which are listed in your policy. 
20. Embargo – a restriction applied by an insurer on accepting new policies in certain areas or under some circumstances. An embargo means you can’t take out or purchase insurance when an event is already occurring or is known to be extremely likely to occur (e.g. during a natural disaster such as a bushfire or cyclone).
21. Endorsement – a specific change on your policy. 
22. Excess (or deductible) – the dollar amount of any loss or damage that you must contribute towards each claim.
23. Exclusions – the things your insurance provider won’t pay for (they’re ‘excluded’ from your policy).   
24. Exposure – the amount of loss you might experience. A policy usually put limits on different types of exposure.
25. Indirect loss – a loss or damage that happens as a result of other loss or damage.
26. Inspection – a regular and official visit to a property to check everything is being maintained, and to troubleshoot any potential issues (many landlord insurance policies require regular inspections as part of the terms and conditions of cover).  
27. Liability – where a person or organisation is responsible for something, especially in law (e.g. if you own a rental property and someone gets hurt in or around it, or their property gets damaged in or around it, you could be liable to pay them compensation and any resulting legal fees if you are found to have been negligent). 
28. Limit – your claim limit is the maximum amount that your insurer will pay out for a particular loss. 
29. Loss – this is a financial loss to the policyholder. As a landlord, it could be from damage to the property or rent default, and it is something that you can claim for under your policy. 
30. Malicious damage – damage that has been caused by ‘malicious intent’ (carried out with vindictiveness or spite).
31. Mitigation – what you might be able to do to prevent the loss from happening or getting worse.   
32. Non-insurance – not having insurance to cover your exposure to a risk.
33. Negligent (or negligence) – when you don’t use reasonable care in a situation where you have an obligation to do so. 
34. Non-disclosure – this is when you have not told your insurer something important that may have changed its mind about accepting your cover. If you do not disclose all relevant info, it may result in a claim not being paid (or not being paid at the full amount).
35. Occurrence – something that happens that results in a loss (e.g. an accident, a burglary, a natural disaster or a recurring event that results in liability).
36. Over-insurance – where you insure something for an amount of money that is more than its worth or reasonable value.
37. Peril – something or a situation that might cause harm or loss such as a cyclone or fire (the cause of a loss).
38. Policy – the binding legal contract between you and your insurer. It highlights your insurance cover.
39. Premium – the amount of money you pay to your insurance company for your insurance policy, in return for the insurance company’s promise to cover you if something that is covered by your policy, goes wrong.
40. Product Disclosure Statement (PDS) – a document which explains exactly what is and is not covered under your policy. This allows you to make an informed decision about the cover you are purchasing and should be read alongside the policy wording.
41. Policyholder (or the insured) – a person or entity who has entered into a contract with an insurer and holds an insurance policy.
42. Renewal – when you agree to continue your existing insurance policy for a further period.
43. Risk – the likelihood of something happening that might cause injury or financial loss.
44. Tenancy agreement – the written agreement made between a landlord and their tenant.
45. Third party – a person apart from those that are parties to a contract.
46. Under-insurance – when you don’t have enough sum insured in your policy to cover the value of the items you are insuring.
47. Uninhabitable – not fit for people to live in.
48. Unoccupied – the property is not being lived in.
49. Utmost Good Faith – all parties to an insurance contract are required to act towards each other at all times and in respect to all things with the utmost good faith (fairness, honesty, reasonableness, standards of decency, fair dealing).
50. Wear and tear – the general day-to-day and low-level damage caused by continuous use. This is not covered in landlord insurance policies.

At EBM RentCover we empower landlords and property professionals with the tools and knowledge needed to make informed decisions about landlord insurance.  

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.