Insurance Terminologies
This page provides a glossary of insurance terms and definitions that are commonly used in the business insurance. New terms will be added to the glossary over time.
A
All Risks Insurance: All risks insurance protects your business assets against losses and damages due to fire, theft and accidents.
Accidental Damage: An unintentional or unexpected incident that causes damage to your property or contents. Example: accidentally knocking over a valuable vase whilst at a client’s office.
B
Business Insurance: Business insurance is insurance that protects businesses from any losses.
Business Interruption (Fire) Insurance: Also known as Consequential Loss insurance, this policy must be taken together with a fire insurance. It protects your business against loss of profit upon business interruption due to fire. The policy covers loss of income, employees’ salary, rental of alternative premise.
Burglary Insurance: In the event of a break-in and/or burglary of your business premises, this policy provide protection against damage to your property and loss of your business assets such as stocks, goods, furniture, equipment.
C
Claim: A request for compensation for a loss covered by your insurance policy.
Commercial Vehicle Insurance: This policy indemnifies business owners against loss or damage to business vehicles due to fire, theft or accident, bodily injury/death to third parties or third-party property loss or damage.
Compensation: A payment received by policyholder for a loss covered by insurance policy.
Consequential Loss: Also known as Business Interruption (Fire) Insurance Coverage: the scope of protection provided in an insurance policy.
Cyber Liability Insurance: This policy is designed to help businesses to protect against potentially distressing outcomes due to cyber-crimes such as security breaches, privacy breaches, employee sabotage or errors, business interruptions and identity theft.
D
Deductible: Sometimes called an “Excess”. It refers to the amount of loss that your business will need to pay out of pocket prior to being able to claim under a policy.
Directors and Officers Liability Insurance: This policy protects the personal assets of directors and officers from liability claims and defense costs if they are sued for wrongful act like breach of duty whilst in employment with a company.
E
Employer’s Liability Insurance: This policy shields employers from any legal liability claims made arising from work related accidents or illnesses sustained by employees.
Errors and Omissions Insurance: Protects your business by covering professional negligence or mistakes that causes financial damage to clients.
Exclusions: Provision in policy to limit insurer’s risk and eliminate risks covered by other insurance such as war and political risks.
F
Fidelity Guarantee Insurance: This policy covers financial losses due to fraud or dishonesty in the workplace committed by your employees.
Fire Insurance: Covers damage to, or loss of, your business premises and the contents of your premises such as fixtures and fittings, equipment and furniture caused by fire and/or lighting. There are exclusions that this policy does not cover such as riot, storm, flood and malicious damage. But these exclusions can be covered with additional premium.
G
Grace Period: A prescribed period from premium due date during which the insurance policy will still be in force despite not receiving payment of premium.
Gross Premium: Total premium anount payable by Insured including brokerage or agent commission.
Group Personal Accident Insurance: Protects you and your employees in the event of injuries, disability or death caused by sudden or unforeseen accident whilst on company business.
Group Hospitalization and Surgical Insurance: Provides medical coverage to your employees, their spouse and children.
I
Incurred Losses: Losses sustained within a specific time period which may or may not be paid.
Indemnity: When one party in a contract agrees to compensate another party for a loss.
Insured: Known as the policyholder, whom the insurer agrees to provide cover against specific losses in an insurance contract.
Insurance: A form of protection from financial losses.
Insurance Limit: An insurance limit is the maximum amount an insurer will pay for a covered claim. The higher the coverage limit, the higher the premium will be.
Insurance Policy: A contract between the insurer and the insured detailing type of insurance coverage, exclusion, the deductibles, premiums and the terms and conditions.
L
Legal Liability: Legal obligations under the law arising from civil actions.
Liability Insurance: Covers legal liability to third parties, including legal costs.
Libel & Slander: Oral or written types of false information.
M
Malicious Damage: Damage caused intentionally or deliberately.
Money Insurance: Covers loss of money by any cause whilst in transit from business premise to the bank or vice versa. It also covers loss of money whilst on your business premise in locked safe due to theft or armed robbery.
N
No Claim Discount: A discount given to policyholder at renewal if a year of insurance is completed with no claim made.
Non-Disclosure: Failure to make a fact or information known which may result in insurer not honouring the policy.
Non-insurance: Not having insurance to cover exposure to business risks.
O
Over Insurance: Insuring something for an amount more than its value.
P
Package Policy: A policy combining various insurance coverage in one package.
Perils: Also known as Special Perils. Peril is something or a situation that might cause harm or loss, examples storm, flood, earthquake, explosion, bush fire.
Plate Glass Insurance: Coverage for accidental breakage of glass in your business premise.
Premium: An insurance premium is the amount payable to insurance companies in exchange for insurance coverage.
Product Liability Insurance: Covers losses for bodily injury or property damage due to defective products.
Professional Indemnity Insurance: Professional Indemnity insurance protects highly regulated professions like Accountants, Architects, Engineers and Lawyers against their legal liability to compensate for someone else’s financial losses, resulting from their professional negligence in conducting a business.
Proposal Form: an application form filled up by anyone who wants to take up insurance.
Public Liability Insurance: This policy indemnify you against legal liabilities for accidental bodily injury to or accidental damage to the property of third parties. The policy also covers legal costs and expenses incurred for the negligence claim filed against you.
R
Risk: The exposure to a specific threat or hazard or unexpected events which may cause financial loss or injury.
Risk Management: A way of managing losses you may encounter
S
Standing Charges: These are expenses which a business still has to pay even if it experiences loss of income due to fire or other damage.
Sum Insured: The maximum amount that an insurer will pay for a claim in a policy.
T
Tariff: Fixed price list to streamline and determine the premium rate which insurance companies can charge consumers or entities for the insurance product.
Third Party: A third party is a party who seeks to be compensated for some injury, damage or loss caused by the insured.
Total Loss: A total loss is where an insured property is completely ruin beyond repair or where the cost of repair exceeds the insured value.
U
Underinsurance: A situation where the value of insurance purchased is lower than the value of item to insure.
W
Workmen’s Compensation Insurance: This policy indemnifies you against all sums for which you are liable to pay in compensation to any employee who are not covered by SOCSO for work-related injuries during the course of their employment under The Workmen’s Compensation Act 1952 or Common Law.