Businesses running trucks, plant and construction equipment deal with a wide range of insurance terms when arranging cover, reviewing policies or tendering for work. From certificates of currency and public liability through to machinery breakdown and business interruption, these terms often appear in policy documents, contracts and insurance schedules. This glossary brings together common insurance terminology along with examples of risk exposures that commercial insurance policies may respond to. Important: The definitions below provide a general overview only. Insurance terms, benefits, exclusions and conditions differ between insurers and policies. Always review the relevant Product Disclosure Statement (PDS) when considering any insurance cover.
General Insurance Terms
Broker
Also known as an intermediary, a broker operates between the insurance company and the insured party. Brokers assist businesses with identifying risks, arranging cover and navigating policy options. In Australia general insurance brokers must hold appropriate licensing and undertake ongoing compliance training.
Certificate of Currency
A certificate of currency provides evidence that an insurance policy is currently in place. Businesses may be asked to provide this document when entering contracts leasing premises or tendering for work.
Claims Made Policy
A claims made policy responds to claims that are first made against the insured during the policy period. The policy may respond even if the event that led to the claim occurred earlier, provided it falls within the policy terms and conditions.
Duty of Disclosure
The duty of disclosure is the obligation to provide insurers with information that may influence their decision to offer insurance or determine policy terms. In Australia this duty generally requires policyholders to answer questions honestly and provide relevant information when applying for insurance.
Excess
An excess is the amount the insured must contribute toward a claim before the insurer pays the remaining amount covered under the policy.
Indemnity
Indemnity refers to the principle that insurance aims to place the insured back in the same financial position they were in immediately before the loss occurred, subject to the terms of the policy.
Insurance
Insurance is an arrangement where an insurer agrees to provide compensation for specified loss, damage, illness, injury or death in exchange for payment of a premium.
Policy Wording
Before the term Product Disclosure Statement became standard the detailed contract between an insurer and the insured was referred to as the policy wording. It outlines policy terms, conditions, exclusions and benefits.
Product Disclosure Statement (PDS)
A Product Disclosure Statement explains what an insurance policy covers and what it does not cover. It includes policy conditions, exclusions, benefits and instructions for making a claim.
Reinsurance
Reinsurance is insurance purchased by insurance companies from other insurers. It allows insurers to spread large risks particularly during events such as bushfires, floods or cyclones.
Subrogation
Subrogation is the right of an insurer to recover costs from a third party responsible for a loss after the insurer has paid a claim to the insured.
Sum Insured
The sum insured is the maximum amount payable by the insurer for a specific item or section of cover under an insurance policy.
Underwriter
An underwriter is the insurer or the individual responsible for assessing risk and determining whether insurance coverage will be offered and under what terms.
Asset Risk Protection
Accidental Damage
Loss or damage to property caused by an unexpected or accidental event.
Aviation Hull
Loss of or damage to aircraft and aviation related equipment.
Boiler or Pressure Vessel Explosion
Damage to boilers or pressure vessels caused by explosion overheating collapse or similar mechanical failure.
Burglary
Loss of property following forced or violent entry to premises.
Cargo Insurance or Load Cover
Loss or damage to goods transported by road, rail, sea or air.
Contract Works
Loss or damage to building works projects or materials during construction.
Contractors’ Plant and Machinery
Loss or damage to mobile plant equipment drilling rigs and construction machinery.
Corporate Travel
Insurance relating to risks associated with business travel including medical costs, baggage loss and other travel related events.
Crop
Insurance relating to growing crops against events such as fire or hail.
Downtime Cover
Insurance relating to loss of income when equipment or vehicles cannot operate due to insured damage.
Electronic Equipment
Damage, loss or malfunction of electronic equipment and associated data.
Employees Property in Transit or on Premises
Loss or damage to employees’ personal belongings while at work or on business premises.
Extended Warranty
Insurance designed to extend the manufacturer warranty period for equipment or products.
Fire and Perils
Damage to property caused by nominated events such as fire, storm, lightning or other insured perils.
Flood
Damage caused by inundation from natural water sources such as rivers, lakes, dams or creeks.
Glass
Damage to fixed glass including shopfronts internal glass and signage.
Hired-In Plant
Loss or damage to plant or machinery hired by a business under a rental agreement.
Industrial Special Risks
Industrial Special Risks is a property insurance policy designed for large commercial operations that combines property damage cover and business interruption protection.
Livestock and Bloodstock
Loss arising from death, injury or loss of use of animals including livestock or valuable breeding stock.
Machinery Breakdown
Mechanical or electrical failure of plant equipment or machinery.
Machinery Breakdown Consequential Loss
Loss of income or increased expenses arising from business interruption caused by machinery breakdown.
Marine Cargo
Damage to goods transported domestically or internationally including containers.
Marine Containers
Loss or damage to shipping containers including refrigerated containers.
Marine Hull
Damage to vessels, boats or related marine equipment.
Motor Vehicles, Trailers, Caravans, Motorcycles or Mobile Equipment
Loss or damage to registered or unregistered motor vehicles and related equipment.
Personal Valuables Art or Jewellery
Loss or damage to jewellery artwork collectibles and other high value personal property.
Rewriting Records
Costs associated with reconstructing or replacing lost records or data following insured events.
Refrigerated Stock
Loss of refrigerated stock due to refrigeration equipment failure.
Rural or Farm Property
Insurance relating to farm infrastructure machinery and rural property assets.
Terrorism
Loss or damage to property resulting from declared acts of terrorism.
Theft in Open Air
Loss of property stored outside or in open areas without forced entry.
Theft of Property in Premises
Loss of property located within premises including theft without forced entry in certain circumstances.
Tools and Equipment
Loss or damage to business tools equipment or portable devices used on site or in vehicles.
Water Damage or Water Run-off
Damage caused by water escaping from man-made water systems or runoff from artificial water sources.
Weather
Loss resulting from extreme weather events or abnormal weather conditions.
Income and Financial Risk Exposures
Accounts Receivable
Loss arising from the inability to recover debts due to destruction of financial records.
Advanced Consequential Loss
Financial losses caused by delays in project completion following insured damage.
Bonds or Performance Guarantees
Financial guarantees used as alternatives to bank guarantees for contractual obligations.
Business Interruption
Loss of income and increased operating costs following insured damage to property or assets.
Business Interruption – Additional Increased Cost of Working
Additional costs incurred to reduce the impact of revenue loss following an insured event.
Business Interruption – Dependency on Key Customers or Suppliers
Loss of income arising from damage to premises of important customers or suppliers.
Business Interruption – Dependency on Public Utilities
Financial losses caused by interruption of essential utilities such as power, water or telecommunications.
Cancellation and Abandonment
Loss of income and additional expenses when events, projects or performances are cancelled due to specified circumstances.
Commercial Legal Expenses
Reimbursement of legal costs relating to business disputes including employment property or contractual matters.
Computer or Electronic Equipment Breakdown
Damage, loss of income or increased expenses caused by mechanical or electrical breakdown of computer equipment.
Computer Crime, Fraud or Virus
Loss resulting from computer system tampering hacking fraud or viruses.
Computer Electronic – Loss of Data
Costs associated with restoring or replacing software or data following loss or corruption.
Contractual Fines and Penalties
Financial penalties arising from failure to meet contractual obligations following insured damage.
Credit Insurance
Insurance protecting businesses from financial loss due to debtor insolvency.
Cyber Insurance
Insurance addressing liabilities and costs arising from data breaches, cyber attacks or loss of digital information.
Export Credit
Insurance against overseas customer default including risks associated with political interference.
Export Sellers Contingency
Protection where overseas purchasers fail to insure goods or where insurance recovery is unavailable.
Fidelity Guarantee
Loss of goods or money resulting from employee theft or dishonesty.
Intellectual Property
Legal expenses associated with defending patents, trademarks or copyrights.
Kidnap Ransom and Extortion
Coverage relating to ransom payments and associated costs following kidnapping threats or extortion incidents.
Marine Business Interruption
Loss of income and increased expenses following insured marine transit events.
Money
Loss or damage to cash cheques or negotiable instruments on premises or in transit.
Mortgage Protection
Insurance covering mortgage repayments in the event of disability.
Product Tamper
Loss of profits recall costs and other expenses following product contamination or tampering incidents.
Strike
Additional costs arising from labour disturbances or industrial action.
Tax Audit or Investigation Expenses Cover
Insurance covering professional costs associated with regulatory audits or investigations.
Liability Risk Exposures
Association Liability
Liability protection for committee members and officers of non profit organisations.
Broadform Public and Products Liability
Liability for injury or property damage arising from business activities or products supplied.
Completed Operations Liability
Liability arising after construction or project work has been completed.
Contamination Products Insurance
Insurance relating to accidental contamination, malicious tampering or product extortion incidents.
Contractual Liability
Liability assumed through contractual agreements.
Defamation
Liability for damages arising from libel or slander.
Directors and Officers Liability
Protection for company directors and officers against claims arising from alleged wrongful acts.
Employment Practices Liability
Claims arising from employment related matters including dismissal harassment or discrimination.
Employers Liability Accident Make-up Pay
Coverage addressing the gap between workers compensation benefits and an employee’s usual earnings.
Environmental Impairment Liability
Liability arising from pollution related bodily injury or property damage.
Extra Territorial Workers’ Compensation
Workers compensation benefits for employees working interstate or overseas.
Financial Loss
Claims involving financial loss not associated with bodily injury or property damage.
Internet Liability
Liability relating to online activities including defamation misuse or infringement.
Management Liability
Combined policy covering directors officers employment practices and corporate entity exposures.
Marine Liability
Liability relating to vessel operation cargo handling or maritime activities.
Motor – CTP
Compulsory Third Party insurance covering personal injury resulting from motor vehicle accidents.
Motor – TPPD
Third Party Property Damage liability caused by motor vehicles.
Plant Liability
Liability arising from the operation of mobile plant equipment.
Product Guarantee
Liability relating to repair or replacement of faulty products.
Product Recall Expenses
Costs associated with recalling defective products from the market.
Professional Indemnity or Errors and Omissions
Liability for financial loss caused by negligent advice or professional services.
Property in Care Custody or Control
Liability for loss or damage to property belonging to others while in your possession.
Statutory Liability
Coverage relating to penalties and legal costs arising from breaches of legislation.
Trustees Liability
Liability relating to the management of superannuation funds by trustees.
Umbrella Liability
Additional liability protection that extends beyond primary liability policies.
Unregistered Vehicle Liability
Liability for unregistered vehicles operating in public areas.
Workers’ Compensation
Insurance providing benefits to employees injured in the course of employment.
Workers’ Compensation – Journey Cover
Coverage relating to injuries sustained while travelling to or from work.