General

Insurance Glossary

Insurance Terminology can be Confusing

So here is a handy insurance glossary which explains the more common insurance terms in plain English.

Term Meaning
Accident An event causing injury to an insured person and was not intended by them to happen
Actuary Someone with professional training in mathematical and technical aspects of insurance, especially calculating premiums
Broker / adviser Someone who specialises in insurance. They may have arrangements with more than one insurer so they can place their client’s business where it best suits the client
Claim A request for payment according to the policy terms made by the policy owner to the insurer
Cover The amount of protection an insurance policy provides
Exclusion A provision in a policy that excludes cover for certain events or conditions, E.g. dangerous pastimes or pre-existing conditions for life insurance
Insured Someone covered by an insurance policy
Memorandum of transfer The document that records a change of ownership on a policy
Nominated / joint second owner A person who you’ve chosen to receive benefits payable from your policy
Policy document / policy wording A document outlining terms and conditions of insurance agreement for a specific insurance policy
Policy owner The person who owns the policy – this can be the person who is insured, or someone else. The policy owner is able to request changes to their policy
Policy summary Document detailing your policy benefits
Policy schedule The document that states the benefits of your policy
Premiums The regular payments made to an insurer in order to keep the policy going
Renewal The insurer and policy owner agree to continue insurance from one risk period to the next
Sum insured/cover level/benefit The amount the insurer agrees to pay out under the policy’s terms
Term The period of time your policy is intended to run: until your death, for a specified number of years, or until a specified age
Underwriter Someone who assesses the risk of providing insurance to the person applying
Glossary of Insurance Terms
Glossary of Insurance Terms

Below is another Glossary from State Insurance

Accidental – Used to describe an event that’s unexpected and unintended.

Agreed value – The amount we agree as the sum insured for any item which is the subject of an insurance policy. This is always shown in the insurance policy schedule.Claim

When loss or damage occurs that’s likely to be covered by an insurance policy, this is the action that the policy-holder takes to obtain the benefits provided by the insurance policy.

Cover – Cover is the amount of protection provided by an insurance policy.

Dependent children – Children who are under 21 and who aren’t self-supporting.

Duty of disclosure – When you apply for insurance you have a duty of disclosure. This means you must tell us everything you know that an insurer would want to take into account when considering your application for insurance or determining the cost and terms of your application.

The duty of disclosure doesn’t just apply when you take our your insurance. If something happens at any time that you think we ought to know about, then this duty means you are bound to let us know about it. Examples might include criminal convictions, traffic offences other than minor infringements, or modifications to your vehicle or home.

You also need to let us know about any person or organisation who has a financial interest in an insured item.

Need advice explaining these glossary of terms? Contact us today.

EQ cover – This is the cover provided by the Earthquake Commission in the event of damage to houses and their contents caused by natural disaster such as a flood or earthquake. It’s funded by the compulsory levy which is included in every home and contents policy premium.

Event – A single event or a series of events which have the same cause.

Excess – This is the amount a person making a claim contributes towards the cost of the claim. For example, the standard excess for our home cover is $400, so a policy holder pays the first $400 of any claim on their home policy. The excess is deducted for each and every event that is claimed for.

Sometimes we may vary the amount of excess depending on the particular situation.

Family – For the purposes of a travel insurance policy ‘family’ is defined as two close family members travelling either together, or with their dependent children or grandchildren.

A close family member is defined as your spouse, de facto partner, fiancé, fiancée; or child, step-child, grandchild; or brother, sister, brother-in-law, sister-in-law; or son-in-law, daughter-in-law; or parent, step-parent, grandparent, guardian or parent-in-law.

Imposed excess – This is the term that we use for an excess that we have applied to your insurance cover due to your personal situation.

Indemnity value – An item’s current value allowing for its age and condition immediately before the loss or damage happened.

Individual – For the purposes of a travel insurance policy, an individual is one person travelling either on their own, or with their children or grandchildren under the age of 21 who aren’t self-supporting.

Liability – When you are legally responsible for damaging someone else’s property. For example, if you crash into someone’s fence, or you cut down a tree and it falls on your neighbour’s house, you are liable or legally responsible for the cost of repair.

Linked policy discount – If you insure both your home and your contents at the same address, you can choose to link them as a single policy called HomePack. This may qualify you for our linked policy discount.

Market value – What your car was worth before it was damaged. This refers to the reasonable cost to buy a replacement item of similar age, general condition and model or specification.

Modification – For vehicles, this means any change to a vehicle that’s different to the manufacturer’s original specification or recommendations. These can include changes to the engine, suspension, body kit, or wheels.

For your home, this means alterations and extensions to the original structure.

Multi Policy Discount – If you have your contents insured with State and you take out another home, car, contents, motorcycle or landlord policy with us you may qualify for a Multi Policy Discount on your premiums.

Named driver – Any driver listed on a vehicle’s insurance policy schedule.

Period of cover – This is the period of time that an insurance policy is valid for. It’s always shown in an insurance policy’s schedule.

Premium – This is the money that must be paid for your insurance policy. Depending on the type of cover you have, your premium is made up of the company premium which goes to State, the Earthquake Commission levy, the Fire Service levy, and GST.

Present value – This is the reasonable cost to repair or replace an item in New Zealand that is of comparable age, quality and capability, and is in the same general condition.

Specified item – Any item that is listed in the policy schedule with a corresponding specified sum insured.

Sum insured – The maximum amount payable in respect of the loss or damage of the insured item.

Need advice explaining these glossary of terms? Contact us today.

Uneconomic to repair – Used when an insured item is stolen and not recovered, unsafe to repair or would cost more to repair than replace.

Use – The use of an insured item will depend on the item and the policy it’s insured under. It’s best to check the details of your policy so you’re clear about what use is covered for any item you’ve insured.

For example, a private car or motorbike generally will be covered while the vehicle is being used for private, domestic, social or pleasure purposes, and in some cases while being used in connection with a business. It specifically excludes cover while the vehicle is being used by the insured or person using the vehicle in their capacity as a salesperson, commission agent, service person or commercial traveller; insurance rep, agent or broker; land or real estate agent; mortgage broker or mobile mortgage manager; stock or station agent; courier driver, delivery person or taxi driver; or a member of a motor trade. It also excludes cover while being used to carry fare-paying passengers, to carry, haul or tow any goods, plant, machinery or samples in connection with a trade or business, and while racing or on any racetrack.

Years of insurance discount – If you have held your insurance policy with us for more than a year you may qualify for this discount.

Working manually – For the purposes of a travel insurance policy, working manually means using your hands or physical strength to carry out tasks. e.g. as a builder, plumber, plasterer, mechanic.


The majority of insurance companies have a glossary of terms for general insurance and also specific to their policy wordings.

When you take out an insurance policy we suggest you familiarise yourself with your policy document and refer to the glossary for terms you are not quite sure of.

Want more insurance glossary terms? A quick Google search will bring back a large number of glossary terms for your reference.

Follow us on Facebook

Review My Claim
Review My Claim