Do you know the difference between your indirect, consequential and actual total losses? Insurance it seems has a language all of its own – and that’s before you’ve looked at the small print!

Like every industry, property insurance has its own jargon, so to help enlighten you, we’ve pulled out a few common words and offered some straight forward explanations:

Accidental damage: damage to your property that occurs suddenly as a result of an unintentional, unexpected and non-deliberate external action.

Actual total loss: where the insured property is either completely destroyed or so badly damaged, it is too costly to be repaired.

Assessor (or loss adjuster): a person who represents the insured to determine the extent of the insurer’s liability for loss when a claim is submitted. They help approve the claim by checking the details to see if it’s valid and whether it meets the terms and conditions of the policy.

Catastrophe: a sudden violent and widespread disaster that results in substantial loss (e.g. a bushfire, flood or storm).

Consequential loss: this is the loss which happens as a result of damage or another peril. For example, following damage from a massive storm, your tenants may have to move out, resulting in you losing income while the property is being repaired.

Contents sum insured: the amount which it would cost you to replace all of the contents of your property.

Cooling-off period: the period of time you may cancel your policy and receive a full refund of the premium unless a claim has been made.

Cash settlement: the amount an insurer may offer to pay you and close your claim instead of repairing or rebuilding your insured asset.

Depreciation: this is the natural loss in value due to factors such as age and general wear and tear.

Duty of disclosure: you must tell the insurer everything about you and your situation that is relevant as this will affect the insurer’s decision to insure you.

Defined events (or insured events): events listed on your policy that cause loss and damage.

Embargo: a restriction applied by an insurer on accepting new policies in some areas or under certain circumstances. An embargo means you can’t take out or purchase insurance when an event, such as a bushfire, is already occurring or is known to be extremely likely to occur (e.g. during a natural disaster such as a bushfire or cyclone).

Endorsement: an amendment or specific change on your policy.

Excess (or deductible): the amount you must contribute towards each claim.

Exclusions:  things your insurance provider won’t pay out for.

Exposure: the amount of loss you might experience. A policy usually put limits on different types of exposure.

Indirect loss: loss or damage that happens as a result of a different loss or damage.

Liability: where a person or organisation is responsible for the event leading to a claim. For example if someone gets hurt on your property because you had failed to repair something.

Malicious damage: damage which has been caused deliberately.

Mitigation: what you might be able to do to prevent or at least reduce the risk of the loss from happening or getting worse.

Non-disclosure: if you aren’t honest with your insurer, it may decide not to pay out on a claim, because you didn’t disclose all the relevant information.

Over-insurance: where something is insured for more than what it is worth.

Peril: something or a situation that might cause harm or loss, such as a cyclone or bushfire.

Risk: how likely something may happen that might cause injury or financial loss.

Third party: Generally, your insurer is the first party, and you are the second, so the third party is  generally a person who doesn’t have any involvement with creating the contract, but could be affected by it.

Under-insurance: Not a position any landlord would want to be in, because this is when the lump sum of your policy doesn’t cover the value of the items you are insuring.

Utmost Good Faith – all parties to an insurance contract are required to act towards each other at all times and in respect to all things with the utmost good faith (fairness, honesty, reasonableness, standards of decency, fair dealing).

When you’re looking at insurance, if you’re not familiar with the terms, we always advise asking what it means in layman’s terms so you can make an informed decision.

We also always advise speaking to a specialist and read the small print when you’re comparing policies so you know exactly what you’re covered for, and what you’re not.

Probably better to pay a bit more for your insurance and know you’re completely covered in the event of an unfortunate, costly situation than finding yourself not covered at all.

The plus is, landlord insurance is often a tax-deductible expense, so it’s a win win situation!

While we cannot recommend an insurance company, we can advise on which companies we see landlords get the best results with when they do have to make a claim.

Give us a call on 02 4956 9777 or pop into our Cardiff office for a no-obligation chat. Alternatively, send us an email to: mail@newcastlepropertymanagement.com.au – we’d love to hear from you.