Insurance Glossary

This facility brings thousands of insurance terms right to your fingertips! As our industry evolves and responds to new technology and methodologies, our terminology will likewise adapt and new terms will be added to this Glossary.

As always, we would welcome your participation by notifying us of any terms that you would like to see included in this source, as this may be of benefit to our industry as a whole. For your convenience, a link is provided at the end of the search results, for this purpose.

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TermDefinition
> Lower or reduced
Ab Initio Ab initio is a Latin term. Where an Insured has provided false or fraudulent information when applying for insurance, the insurer can avoid the contract ab initio, meaning from inception. A policy contract avoided in this way is deemed as not having been in effect at all. The Insurance Contracts Act allows an insurer to avoid or cancel a policy ab initio (from inception) if the Insured has made fraudulent misrepresentations or deliberate non-disclosure when proposing the insurance to the insurer.
Abandonment Arising, usually during the course of a claim settlement, the Insured may be able to or have the right to, abandon or surrender insured property to the Insurer in lieu of financial settlement or recompense from the insurer, as a partial or total settlement of the claim.
Absolute Means that any loss due to the excluded peril whether as the remote or proximate cause is not covered.  E.g. This policy does not cover any loss occasioned by or happening through faulty workmanship, faulty design or faulty materials. Please refer to the actual policy wording before making your final decision.  
Absolute Liability The term used to describe liability for damages even though prima facie fault and or negligence cannot be proved.
Acceptance Acceptance of the insurance contract by an insurance underwriter. Usually refers to the point in time at which the insurer places cover on a proposed item(s).
Accident Cover Insurance covering a claim for injury or death arising from an unforeseen event (Accident) or violence.  Can be subject to test or requiring evidence to establish the cause as being Violent, External and Visible means.  This test or requirement is usually applied, because one may reasonably argue that becoming ill is an accident, thereby making an "Accident Only" type policy a De Facto Accident and Illness Policy.  Applying the Violent, External and Visible means test and or requirement more clearly defines the intent of the cover provided.
Accident Year May also be referred to as "year of occurrence". Insurers calculate Profits or Losses based on information for the accident year rather than strictly a fiscal year basis.  Loss payments and reserves on losses are allocated to the year in which the loss has occurred (accident year). Information on loss payments and or reserves for losses which have occurred within a particular accident year are monitored in time intervals (e.g. monthly, quarterly, yearly). The losses allocated to a given accident year are measured against the earned premium income of the same annual period. Statistical information gathered on an accident year basis is important to insurers for future underwriting decisions.  Loss incurred but not reported are part of this equation.  See also IBNR.
Accidental Damage Mostly refers to damage to property rather than injury.  May also be referred to Fortuitous Loss and Damage.  Damage or injury occurring from an unexpected, unforeseen mishap or untoward event.  Loss arising from an event which is not expected or designed. In many policies such as an ISR or Business Pack the meaning of this term is defined.
Accounting Year May also be called fiscal or financial year, and may vary from the calendar year. In Australia, the accounting year is typically from 1 July to 30 June, but it can be altered by agreement with the Australian Tax Office. In New Zealand, the accounting year is from 1 April to 31 March.
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