A Glossary for Understanding Insurance Terminology

Here at IC Insurance Solutions, our team of insurance brokers work tirelessly to source the most effective insurance packages for our clients; however, we've found that many of our clients are unaware of why these packages are the best choices.

Whether you're a large business refamiliarising yourself or a new startup exploring insurance terms for the first time, defining the meaning behind this terminology is a significant commitment that we will make easier for you.

Read on to gain comprehensive knowledge of the most common insurance terms and concepts relevant to business owners and a greater understanding of why the packages we source are so effective.

Understanding Insurance Basics

There are certain aspects of insurance, like complex terminology,  that you need to be aware of, as they are the foundation for all insurance solutions. Let’s take a closer look.

What is Insurance?

In the context of business, insurance is a contractual agreement between a policyholder (usually the business owner) and an insurance company, with services like ours being the brokers who connect these two parties. The agreement guarantees that the provider will financially assist when specific events happen in exchange for regular payments called premiums.

What Are Premiums?

Premiums are the regular payments to maintain your insurance coverage. The regularity of these payments and the amount are negotiated and are heavily dependent on the areas the insurance will cover. The increased risks related to operating vehicles often mean that motor trader insurance premiums are higher than other workplace coverages.

What Are Excesses?

Excesses are the funds that you (the policyholder) need to pay out of pocket when a claim is made before the insurance company provides the rest of the costs. For example, a £500 excess would need to be paid by you on an event insured for £1000, with the insurance provider paying the other £500 later. Excesses affect premiums as committing to a higher excess will make your premium payments smaller, whilst a lower one will make your premiums more expensive.

What is Classed as a Claim?

When a covered loss occurs, you will submit a claim to your provider that details the situation. The insurance company will assess the claim and, if it is approved, will pay the claim in full.

Common Insurance Policy Terms

Now that you're familiar with the foundation of insurance policies, we can explore some of the terminology related to most insurance packages and see how it impacts your business.

What Does Coverage Mean in Insurance?

Coverage is the extent of the protection that the policy provides. One of the challenges that our team solves for businesses is sourcing insurance that has the widest and most detailed coverage to make sure that every possible claim is successful. The coverage will dictate the risks and events for which your provider will provide financial assistance.

For example, a fleet insurance policy might provide coverage for accidents, theft, and natural disasters. Understanding the extent of coverage is then fundamental to understanding why your policy aligns with your specific needs and potential risks.

How Do Exclusions Relate to Business Insurance?

While coverage defines what is protected, exclusions are the opposite as they dictate what is not covered by the insurance policy. These are specific circumstances or events for which the insurer will not provide insurance cover. Exclusions vary significantly between different types of insurance policies, which is why our brokers will review any exclusions with you to avoid harmful gaps in your coverage or recommend supplementary coverages to compensate.

What Are My Insurance Limits?

Every insurance policy comes with limits, which refer to the maximum amount an insurer is willing to pay for a covered loss. These limits will be set on a per-occurrence basis or accumulated over a specific period. The major concern for policyholders is that exceeding limits will mean that there could be no cover over those limits.

Comprehensive VS Third-Party Insurance

Two common terms in insurance that are often confused are comprehensive and third-party insurance. These terms are frequently associated with motor insurance but can be applicable in other contexts as well.

  • Comprehensive Insurance: This is the highest level of coverage available. It protects against successful claims related to personal injuries and vehicle damage. It also financially protects against any of your vehicles being damaged or destroyed in a fire. Any financial losses related to theft are also covered, including the internal contents being stolen and the whole vehicle itself. Medical expenses related to any of the above are also included, as well as accidental damage, such as unexpected damage or harm caused to an asset or person.
  • Third-Party Insurance: This is the minimum cover required by law in the UK. It covers you against costs that arise as a result of injuries you cause to other people and damage to their vehicles.

Tailored Insurance Solutions for Businesses in Bolton

Our insurance brokers in Bolton have decades of experience providing 5-star brokerage services to a broad range of UK businesses and sectors, from nightclubs to sports and fitness. Our goal is always to put the customer first, which is why we work closely with our clients so that we understand their business needs. Contact us to start the process and improve your business's financial protections today.

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brokers working together with our customers to understand and fulfil their insurance needs.
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