Insurance Glossary
Every term you will meet on a policy schedule, explained in a sentence or two.
A
- Average clause
- If the sum insured is less than the true value, the insurer pays only that proportion of the loss. Underinsurance is penalised.
B
- Business interruption
- Cover for profit lost and fixed costs still payable while a business cannot trade after insured damage.
C
- Cashless claim
- A claim settled directly between the insurer and a network hospital, so you do not pay and reclaim.
- Co-pay
- A fixed percentage of every approved claim that you pay yourself, common on senior citizen health policies.
D
- Deductible
- The amount you bear on every claim before the insurer pays. A higher deductible lowers the premium.
E
- Endorsement
- A formal change to a policy after it is issued - adding a member, changing an address, correcting a detail.
- Exclusion
- Something the policy specifically does not cover. Exclusions decide more claims than the cover section does.
F
- Free cover limit
- The amount of group life cover an insurer will grant without medical tests.
G
- Grace period
- A short window after expiry in which a policy can still be renewed without losing continuity benefits.
I
- IDV
- Insured Declared Value - the current value of a vehicle and the maximum payable if it is stolen or written off.
N
- No claim bonus
- A discount or increase in sum insured earned for each claim-free year. Lost if a motor policy lapses beyond the grace period.
P
- Pre-existing disease
- A condition diagnosed or treated before the policy started. Cover applies after the stated waiting period, provided it was disclosed.
- Premium
- The amount you pay the insurer for cover, usually annually, plus GST.
R
- Room rent limit
- A cap on the daily hospital room charge. Exceeding it can proportionately reduce the whole claim, not just the room charge.
S
- Subrogation
- The insurer's right, after paying you, to recover the amount from whoever caused the loss.
- Sum insured
- The maximum amount an insurer will pay under a policy in a year. It is a limit, not a guaranteed payout.
- Super top-up
- A health policy that pays above a chosen threshold of total annual claims, a cheaper way to add high-level cover.
T
- TPA
- Third Party Administrator - the company an insurer appoints to process health claims and run the cashless network.
U
- Underwriting
- The insurer's assessment of a risk, which decides whether to offer cover, on what terms and at what premium.
W
- Waiting period
- The time after a policy starts before certain claims become payable.
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