Home insurance terms and glossary
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 all too easy to get bogged down in jargon, so we’ve compiled a straight-talking glossary on some of the most frequently used terms concerning home insurance.
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 concerning insurance.
Accidental damage is cover that can be added to both buildings and contents insurance but some policies will come with it included as standard. It could cover any accidental damage to your property or belongings, such as drilling through a water pipe, or spilling red wine on a cream carpet.
Add-ons are any additional types of cover that you’d like to add to your standard home insurance policy. These typically cost extra to include in your policy. Examples of add-on cover include:
- Home emergency
- Legal expenses
- Alternative accommodation
- Replacement locks and keys
Buildings insurance covers the actual structure of a building such as walls, roof, chimneys, windows and fixed floors. It will also typically include:
- Permanent fixtures such as the bathtub, toilet or fitted kitchen
- Permanent outbuildings including sheds, the garage or a greenhouse.
Business equipment cover
Computers and printers are usually covered under contents insurance. But if you use them to run a business from home or you take your work laptop home with you, 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 or check the insurance policy at your workplace if you use business equipment to work from home.
Escape of water
This is basically a leak. It’s often defined as “water escaping from a fixed water installation” which is 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 and escape of water claims often carry a higher compulsory excess amount (usually around £250) so check this on your policy. You will usually only be covered for the water damage itself, not repair of the pipe unless it’s been damaged by an insured event like accidentally drilling through it during a DOY mishap.
- Compulsory – a non-negotiable amount set by the insurance provider
- Voluntary – a set amount that you can pay on top of the compulsory excess. Paying a higher voluntary excess can sometimes help lower your premium
High risk items
These are usually small, high value items that are easy to steal. Things like tablets, laptops, jewellery and mobile phones would usually be considered high risk by insurers. Insurance companies need to know the value of these items as having a lot of these types of items could mean a larger loss if you were burgled.
Home emergency cover
Home Emergency usually provides immediate help to resolve an emergency situation as a result of your home being unsafe or insecure, there being a risk of further damage to the property or a risk to family members 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.
Insurance Premium Tax (IPT)
A compulsory tax on most types of insurance policies. The standard IPT rate is currently set at 12%.
When you make a claim, the cause must be the result of an ‘insured event’ covered in the terms and conditions of your insurance policy. In a standard home insurance policy you could expect to get cover for:
- An escape of water (water leaking from pipes or radiators etc)
- Lightning strikes
- Burglary or attempted burglary
- Falling trees
Legal expenses cover
Legal assistance can protect you against the costs of being sued or having to make a claim against someone else under a range of circumstances which include things like: - legal disputes for your insured home like boundary disputes or tresspassing
- Employment disputes
- Contract disputes
- Personal injury claims
- Clinical negligence
A loss adjustor is typically appointed by an insurance provider to assess all the information and circumstances in the event of a large claim such as a burglary or fire. If a loss adjustor is appointed to your claim, ensure you give them all the information they need, and explain the circumstances as much as possible, so your claim can be dealt with quickly and efficiently.
New for old cover
Typically included as a standard on most home insurance policies, new for old means that any damaged or stolen items would be replaced based on their current market value with a new like for like equivalent where possible. The only usual exception to this is for clothing and linen where there’s often a deduction made for deterioration.
These are belongings that are carried with you when you leave the house such as jewellery, watches, handbags, purses and mobile devices. Although they’re usually all included in standard contents insurance when you’re at home, these items may need extra personal possessions cover if you take them with you when you’re out and about.
Rental contents insurance
Rental contents insurance can provide cover if you’re renting a home and your possessions are stolen or damaged. This is the same as standard contents insurance, you just state during the quote that you’re renting. Contents insurance caters for a range of living circumstances like shared houses, insurance for flats, and student accommodation.
Single article limit (SAL)
This typically applies to valuable items and is the maximum amount an individual item can be worth before you need to individually tell your insurance provider about it if you want it to be covered. When getting 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 cover it but not always.
The sum insured is the total amount you could claim should you experience total loss - for example, your house burns down, and you need to completely rebuild and replace all of your contents.
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 ensure you’re not under or over insured.
Trace and access
Trace and access cover can help pay for the costs of the work needed to investigate and find the source of a hidden leak. Without trace and access cover, you’d only be insured for the damage caused by the leak itself, not the disruptive and often expensive costs that go into finding the leak.
This is when the sum insured isn’t high enough to cover the true value of your property or contents. Being under-insured could mean paying lower premiums, but it could also mean reduced claims settlements, typically by the percentage amount of the under-insured value. For example, if a home is under-insured by 20%, then a claim payout could be reduced by 20%.
Compare home insurance
Now you’ve a clearer idea of some of the frequent terms, comparing home insurance policies should be easier.
Terms, conditions and inclusions vary between insurance providers, so check each policy carefully to ensure you’re getting the right level of cover for your home. Compare home insurance with us today and see if you can start saving.