Insurance · 29 October 2015

A jargon-busting business insurance glossary

Insurance is key, but it helps to be able to cut through the noise
Insurance is key, but it helps to be able to cut through the noise

As with most things financial, dealing with insurance can demand a dictionary. Essentially a legal contract, a policy brings a lot of legalese – your average insurance document may be filled with a slew of tricky terms.

It’s safe to say our insurance forebears haven’t made life easy, so to help you learn the lingo we’ve built a business insurance glossary. Keep it to hand when buying a policy, as it’s important to have clarity, and don’t be afraid to seek explanations should any more unclear terms arise.

Average clause

A clause in most insurance policies which allows the insurer to reduce a settlement, should the policyholder under-insure their business. For instance, should you only insure 50 per cent of the value of your premises and make a claim, the insurer would only pay 50 per cent of the value of any loss.

Employers’ liability insurance

Employers’ liability can cover claims made by staff for injury or illness, that they think has been caused by their work or workplace. As we’ve previously outlined, it’s a legal requirement for any business that has one or more employees.


The amount of money you’ll need to pay towards the cost of an insured claim. Most insurance companies impose an excess as it helps them keep their overall premiums lower, and some will offer you the opportunity to pay a voluntary excess in exchange for lower premiums.

Insurance premium tax (IPT)

IPT is a tax charged on all general insurance premiums. The rate is set by HMRC. As of 1 November 2015, the standard rate is 9.5 per cent (an increase on the previous rate of 6 per cent).


The maximum amount your insurer will pay out to. The “limit” may apply to individual claims or specific time periods, so be sure to check this.

Loss adjuster

These are experts you might encounter in the event of a claim. They’ll impartially assess the scale of any damage and help you settle on an agreement with your insurer, their role to ensure a fair claims process.


A complex legal term which applies in situations where you haven’t taken proper care in your work. In UK law, clients have a right to expect a “duty of care” and if this is flouted then they can challenge you legally. Covers like professional indemnity and public liability insurance are built to protect, should such issues arise.


A term that simply refers to the price of your insurance policy. The insurance company calculate this according to the risk of a claim occurring.

Professional indemnity insurance

A business insurance cover that can protect you from claims made against you, due to a problem with your work or professional advice. See the cover in action here.

Public liability insurance

A core business insurance cover that’s important for any business that interacts with the public. It can help protect you if someone is injured or their property is damaged, and they blame your business. Read our run-through of example claims.


A key part of your policy documents, the schedule is issued once you’ve accepted your insurance. It lists the details of your specific policy, like the covers given, the limits, the sums insured and the excess.

Sums insured

The maximum amount payable in the event of a claim, which you’ll find listed in your schedule (see above).

Third party

This term refers to the individual or business making a claim against you. The second party is the insured, and the insurer is the first.

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Keith Lynn is a senior product manager at Simply Business, with almost ten years of experience – both working and studying – in the insurance industry. He has been with the company for four years as part of the products team. Much of his time is spent working with numerous insurers to improve the products they offer through Simply Business. Prior to his current role, he obtained a BA in International Insurance and European Studies at the University of Limerick.

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