Home Insurance Jargon Buster

You will help yourself greatly if you take the time to know the lingo of home insurance. This will make you more comfortable when committing yourself for a year of home insurance premiums. You can save yourself money, but more importantly, have a better chance of making sure you are covered for what you need, if you understand the terms below.

Policy - This is a contract drawn up between the policyholder and the insurer detailing the terms and conditions under the agreement.
Liability - You have a legal obligation when someone is damaged or injured by you, or something happens that for which you are responsible. This is something for which you are covered by home insurance companies.
Premium - This is a yearly (or sometimes monthly) fee paid by the person purchasing the policy so they can be protected by the insurer.
Insurance Premium Tax (IPT) - This is levied by the government in the UK on almost all insurance products that are bought in the UK.
Buildings Insurance - This is a policy protecting your home's structure and the fixtures and fittings within it against certain risks and dangers, such as subsidence, fire, flooding etc.
Contents Insurance - This policy protects anything in your home that would be removed should you move home, such as your furniture and personal possessions against risks such as theft or damage
Exclusion - Reading your policy wording is particularly important, and you should make sure you understand the policy exclusions before you pay any premiums. These are people, situations or property not protected by your home contents insurance policy.
Sum Insured - The total amount for which contents or buildings are insured. You must make sure that you can insure your possessions and home accurately. Underinsurance is a problem, as it could mean that you need to claim and your insurance company will not pay out in full.
Index Linking - Some UK home insurance companies will use market prices to determine the amounts that are insured. They will update your policy details as material costs change.
Claim - This is when a policyholder takes an action in order to seek remuneration under their policy conditions.
Excess - Sometimes, in order to reduce your insurance premiums, you can agree to pay a certain amount of a claim that you make. This can be almost any sum, and the higher it is, the less your premiums will be.
No Claims Bonus - You can achieve discounts on insurance premiums for every year that you go without making a claim. You build up a no claims bonus record, which you will find very useful.

 

 

 

 

 

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