Home insurance terms and glossary

Home insurance is there to protect your home and belongings, so it’s important to understand your policy.

But it’s easy to get bogged down in jargon, so we’ve compiled a straight-talking glossary of the commonly used home insurance terms.

Home insurance is there to protect your home and belongings, so it’s important to understand your policy.

But it’s easy to get bogged down in jargon, so we’ve compiled a straight-talking glossary of the commonly used home insurance terms.

Helen Phipps
Insurance expert
minute read
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Posted 17 DECEMBER 2020


The Association of British Insurers (ABI) is the leading trade association for insurance providers. The ABI promotes industry best practice and highlights consumer and business issues surrounding insurance.

Accidental damage

This covers accidental damage to your property or belongings. Some policies include it as standard, or you may be able to add it as an optional extra to both your buildings and contents insurance.

Buildings accidental damage will cover for damage to the structure of your property, permanent fixtures, fitted kitchens and bathrooms.

Poor workmanship and any damage that happens gradually over a long period of time are usually not covered.

Contents accidental damage covers damage to items within your home, for example: furniture, carpets, curtains, electronic devices and freestanding white goods.

Damage caused by pets usually isn’t covered, neither is damage that happens gradually over a long period of time – such as sunlight causing fabric to fade.

Level of cover varies by provider, so please check the provider’s documentation before you buy.


There are additional types of cover you might add to your standard home insurance policy. These typically cost extra to include. Examples of add-on cover include:

  • Home emergency
  • Legal expenses
  • Alternative accommodation
  • Replacement locks and keys
  • New for old
  • Freezer contents cover


Stands for Annual Percentage Rate. This is the amount of interest you’ll be charged if you pay for your insurance monthly, rather than annually.

Buildings insurance

Buildings insurance covers the structure of a building, including walls, the roof, chimneys, windows and fitted fixtures. It will also usually include:

  • Permanent fixtures like the bathtub, toilet or fitted kitchen
  • Permanent outbuildings, such as a garage

Business equipment cover

Computers and printers are usually covered under your contents insurance. But if you run a business from home or take your work laptop home, they may not be. Some insurance providers can extend your home insurance policy to cover business equipment. Otherwise you might want to consider a separate business insurance policy. If you bring office equipment home, check your workplace insurance policy.

Contents insurance

Contents insurance covers all removable items in your home. This includes clothes, furniture, electrical appliances, carpets and curtains.

Cooling-off period

When you take out an insurance policy, you can change your mind and cancel your policy within 14 days without being charged.

Escape of water

Basically, a leak. It’s often defined as ‘water escaping from a fixed water installation’, usually your central-heating system or general plumbing. You wouldn’t think water from a pipe would cause a lot of damage, but it can. Escape-of-water claims often carry a higher compulsory excess (usually around £250), so check your policy. You’re usually only covered for the water damage, not the pipe repair, unless it’s covered by other insurance – eg: if you accidentally drilled through it in a DIY mishap.


When you make a claim on your home insurance, you’ll have to pay a certain amount towards it. This is called an excess. There are two types of excess:

Compulsory – a non-negotiable amount your insurance provider sets.

Voluntary – a set amount you can pay on top of the compulsory excess. Paying a higher voluntary excess can lower your premium.

High risk items

These are items that could be easily stolen from your home, such as jewellery, electrical goods, antiques and more.
Insurance providers want to know about these items as they’re typically more desirable to steal and, if they’re damaged, they can be expensive to replace.

Here are some examples of the top items stolen from UK homes: jewellery or watches, purses, wallets or money, computers or computer equipment, electrical goods and cameras, mobile phones, clothes, handbags or briefcases.

Home emergency cover

This covers you in an emergency, for instance if your home is unsafe or insecure, or if there’s a risk to the property or your family’s health and safety. Policies vary between insurance providers, so check whether it’s included in your standard policy, or needs to be added on as extra cover. Usually you’ll get a minimum cover of £200.

Insurance Premium Tax (IPT)

A compulsory tax on most types of insurance policies. The standard IPT rate is currently 12%.

Insured events

When you make a claim, the cause of the damage must be an ‘insured event’ that is covered in the terms and conditions of your insurance policy. In a standard home insurance policy, you’re usually covered for:

  • Fire
  • An escape of water (water leaking from pipes, radiators, etc)
  • Flood
  • Theft or attempted theft
  • Storms
  • Subsidence
  • Vandalism
  • Falling trees
  • Collision by road vehicles


It’s not always easy to work out how much contents insurance you need. One way to do it is to make an inventory – that is, a room-by-room list of everything you own.

Legal expenses cover

Legal assistance can protect you if you find yourself being sued, or are having to make a claim against someone else. It’s often useful with neighbour issues like boundary disputes or trespassing. Other circumstances when you might need it include:

  • Employment disputes
  • Contract disputes
  • Personal injury claims
  • Clinical negligence

Loss adjustor

In the event of a big claim, like a burglary or fire, your insurance provider will appoint a loss adjustor to assess the situation. Loss adjustors are claims specialists – they are responsible for establishing the cause of a loss and determine whether it is covered by your insurance policy or not.

If you find yourself dealing with a loss adjustor, make sure you give them all the information they need, and explain the circumstances in as much detail as possible. That way your claim can be dealt with quickly and efficiently.

New for old cover

New for old is included as a standard on most home insurance policies. It means that if your belongings are damaged or stolen, they’ll be replaced based on their current value with a new like-for-like equivalent, where possible. Clothes are usually exempt, as there’ll be a deduction made for deterioration.

Non-standard construction

If you live in a listed building, or a house with a thatched roof, insurance providers will consider your home to be non-standard. This may mean you need specialist home insurance. 

Personal possessions

Personal possessions are what you carry with you when you leave the house. This includes jewellery, watches, handbags, purses and tech. When you’re at home, these are usually included in standard contents insurance. But if you take them out and about, you may need extra personal possessions.

Rental contents insurance

Provides cover if you rent your home and your possessions are stolen or damaged. It’s the same as standard contents insurance, you just need to say you’re renting when you get your quote. Contents insurance caters for all sorts of living situations, whether you’re in a shared house, flat or student halls.

Single article limit (SAL)

Typically applies to valuables like jewellery or art. It’s the maximum amount a single item can be worth before you have to declare it to your insurance provider. When you get a quote through Compare the Market, we ask you to add any individual items worth more than £1,500 to the quote. You may need to pay an extra premium to make sure you’re covered, but not always.


When the ground under your property sinks, causing the foundations to shift. Subsidence can be a problem in period properties, which often have shallower foundations. It’s good to make sure you’re covered, as it can be very expensive to fix.

Sum insured

The total amount you can claim if you experience total loss – eg: if your house burns down and you need to completely rebuild and replace everything you own.

The sum insured is usually split between buildings and contents insurance. It’s important to be as accurate as possible when you estimate the value of your home contents to make sure you’re not under or over insured.

Trace and access

Trace and access cover will pay for a plumber to investigate the source of a leak. Without it, you’re only insured for the damage caused by the leak itself, not the disruptive and often expensive work that goes into finding the cause of the leak.


When the sum insured isn’t high enough to cover the value of your property or contents. Being underinsured may mean you pay lower premiums, but will also mean you can claim less. If your home is under-insured by 20%, your claim pay-out could also be reduced by 20%.


Wear and tear

Is damage to your property or its contents due to usage or damage that has occurred over time.

This could include small marks on the walls or appliances breaking down due to ageing – in other words, the damage you’d expect to see if a property is being used every day.

This can also include loose roof tiles or rotten wooden window frames, for example. That’s why it’s super important to make sure your home is well maintained.

Compare home insurance

Now you know what all the terms mean, comparing home insurance policies should be easier.

Terms, conditions and inclusions vary between insurance providers, so check each policy carefully to make sure you’re getting the right level of cover for your home. Compare home insurance with us today and see if you can start saving.

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