Every industry has its jargon, and the insurance industry is no different.

In a previous article, we explained in plain English some common words and phrases you’ll find in your insurance policy; in this article, we’ve explained some more insurance terminology:

Arbitration: the process of solving legal disputes between an insured and an insurer by use of a private tribunal (or arbitrator) outside of the court system.

Benefit: what you receive from your insurer when your claim is agreed and processed (e.g. funds to repair damaged property). It can also be called a settlement or payout.

Building insurance: gives protection for the physical structure of your building (e.g. the framework of a house) from damage. This often includes cover for fixtures and fittings such as kitchens and bathrooms. Cover for building insurance does differ, so you will need to check your policy.

Building sum insured: the amount of money it would cost to rebuild your property if it was completely destroyed or badly damaged and is uninhabitable. It does not include the value of the land. It is the maximum amount an insurer will pay out in the event of a claim.

Claim: the formal request you make to your insurance company for coverage or compensation for a loss or event covered in your policy.

Contents insurance: covers the contents within the property. This typically covers all non-fixed items (e.g. sofa and dining room table) and not fixed items (e.g. kitchen unit). Conditions often apply.

Coverage: includes what is covered (your property), who is covered (you the owner), the features (e.g. loss of rent and tenant damage) and the amounts the policyholder can recoup if things go wrong.

Certificate of Insurance: the formal document issued by the insurer to prove your insurance policy. It includes the main details of the type of insurance cover, its value, excess limits, the premium and the period of time the insurance cover is valid (usually 12 months).

Inspection: a regular and official visit to a property to check everything is being maintained and in good working order. The inspection will highlight any areas which need repair or work. Many landlord insurance policies require regular inspections as part of the terms and conditions of cover.

Limit:   the maximum amount that your insurer will pay out for a particular loss.

Loss: the financial loss to the policyholder, such as damage to the property or rent default. It is something that you can claim for under your policy.

Non-insurance: there is no insurance in place to cover your exposure to a risk.

Negligent (or negligence): when you don’t use reasonable care in a situation where you have an obligation to do so, such as repairing a dripping tap or broken tile.

Occurrence: an event that results in a loss (for example. an accident, a burglary, or a natural disaster).

Policy: the binding legal contract between you and your insurer. It highlights your insurance cover.

Premium: the amount of money you pay to your insurance company for your insurance policy, in return for the insurance company’s promise to cover you if something that is covered by your policy, goes wrong.

Product Disclosure Statement (PDS): a document which explains exactly what is and is not covered under your policy. This allows you to make an informed decision about the cover you are purchasing and should be read alongside the policy wording.

Policyholder (or the insured): a person or entity who has entered into a contract with an insurer and holds an insurance policy.

Renewal: when you agree to continue your existing insurance policy for a further period.

Tenancy agreement: the written agreement made between a landlord and their tenant.

Uninhabitable: not fit for people to live in.

Unoccupied: the property is not being lived in.

Wear and tear: the general day-to-day and low-level damage caused by continuous use. This is not covered in landlord insurance policies.

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 to read the small print when you’re comparing policies so you know exactly what you’re covered for, and what you’re not.

For property investors, we strongly recommend you use a specialist landlord insurance provider; there are risk factors you will need to consider, such as non-payment of rent and indemnity. Many general insurance provider policies offered to landlords do not cover all the risk factors. Don’t be guided on price alone – it’s worth paying a few more dollars for the peace of mind.

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 result when they do have to make a claim.

Our team is always keen to share its knowledge and help you get the best out of your property. We’re always here for an informal chat to answer questions, so give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office.

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