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How To Become an Insurance Pro - Insurance Terminology Busted

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Insurance comes with its own language that is spoken by traditional insurance brokers and insurance agents. It uses terminology designed to confuse and intimidate ordinary (and smart) business people. Understanding many of the common labels and descriptions can make small business insurance simpler for all. In this article we bust the terminology so that you can be a pro when buying business insurances and seeking public liability insurance cover and New Zealand quotes.


Buying Insurance

  • Duty of Disclosure is a legal obligation to provide true and accurate information to insurance companies when applying to buy insurance, making changes and renewing an insurance policy.

  • Endorsement is an amendment to an insurance policy usually restricting the levels of insurance cover and taking precedence over the general contract.

  • Excesses or Deductible is the portion of the insured loss (in dollars) paid by the policyholder.

  • Exclusions are things an insurance policy explicitly excludes from its business insurance cover.

  • Interested Party refers to a financier of an asset or business that is being insured. They have a stake in the outcome of a claim, especially if the asset financed by them is declared a total loss.

  • Limit of Indemnity is the maximum amount that will be paid in the event of a claim. Indemnity value usually applies to liability insurance policies such as public liability insurance, statutory liability and employers’ liability.

  • Mid-term Adjustment is a change that is made to a business insurance policy at any time between inception date and expiry date.

  • Peril is the cause of property damage or personal injury e.g. storm, fire and a flood.

  • Policy Period is the time period during which insurance coverage is in effect. It starts with an inception date and finishes with an expiry date.

  • Policy Wording is a written contract setting out the legality of an insurance agreement.

  • Premium is the amount a policyholder pays for insurance (the price charged) and it usually consists of the insurance premium, which goes to the insurer, as well as government levies and a commission, which is kept by the insurance broker or agent.

  • Sub-Limits are the maximum amount that will be paid in the event of a claim.

  • Sum Insured is the amount an asset such as a property, fitout, equipment and stock is insured for. It is a factor used by insurers when working out how much insurance premium to charge.


Insurance Paperwork

  • Proposal is the application form that is filled in so that an insurer can decide whether to offer insurance cover, and how much insurance premium to charge.

  • Policy Schedule sets out what is insured, who is insured, any interested parties, the policy period and any claims excess and policy exclusions and limits. The policy schedule forms part of the insurance contract between the policyholder and the insurer.

  • Insurance Certificate or certificate of currency is a document that that shows how much insurance is in force on a specific date. You can request a certificate at anytime from Insure Online and it is free of charge.

  • Renewal Invitation comes in the form of an email or letter to remind policyholders that their business insurance will expire shortly. It shows the insurance premium due asks a policyholder to check their current insurance and to renew it, usually for another year.


Read more about the meaning and definition of different types of insurance for a business in our Newsroom.

Now that you’ve got a grip on insurance terminology, go to to get a quote and buy business insurance, public liability and other small business insurance products online in less than 10 minutes. Please note, we give general advice only. You should read the policy wording for specific insurance definitions before choosing insurance products.