The insurance glossary
Understand the words.
See the bigger picture.
Clear explanations of 194 insurance terms, with practical examples and questions to take into your next insurance conversation.
Start with a term below, then follow the related definitions and business insurance guides. Meanings and cover depend on the relevant policy and law.
194 terms
A
Actual cash value
Actual cash value is a valuation expression commonly used in overseas insurance, particularly the United States. It often describes replacement cost reduced for depreciation, although the contract and relevant jurisdiction determine the exact method.
Additional insured
An additional insured is a person or organisation included within insurance protection alongside the principal insured, usually through policy wording or an endorsement. The scope of that inclusion can be limited to specified activities or relationships.
Additional premium
An additional premium is an extra amount charged for insurance beyond the premium already agreed. It can arise when an insurer accepts a change to the insured risk, cover or information used to calculate the price.
Adjustable premium
An adjustable premium is initially calculated using estimated exposure and later recalculated using agreed actual figures or declarations. The policy specifies the adjustment basis, reporting requirements and any minimum amount retained by the insurer.
Admitted insurer
Admitted insurer is a regulatory label used in some overseas jurisdictions, especially US states, for an insurer authorised to conduct specified insurance business there. It should not be treated as the standard Australian classification.
Aggregate deductible
An aggregate deductible is a deductible arrangement that applies across a defined collection of losses during an agreed period. It concerns the insured’s accumulated retained amount rather than simply an excess on one claim.
Aggregate limit
An aggregate limit is a combined maximum applying to a defined group of claims, losses or benefits over a specified period. It can apply to a whole policy, a section or a particular extension.
Aggregate limit of indemnity
An aggregate limit of indemnity is the maximum amount available for the liabilities covered by a specified aggregate during an agreed period. It usually appears in liability insurance and must be read with the policy’s limit provisions.
Agreed value
Agreed value is an amount the insurer and insured agree to use for specified valuation or settlement purposes under a policy. Its effect depends on the wording and does not remove other claim requirements.
Australian financial services licence
An Australian financial services licence, commonly abbreviated AFSL, is an authorisation issued by ASIC for specified financial services. Its conditions define the services and products the licensee may deal with, subject to the applicable regulatory framework.
Average clause
An average clause is a property insurance provision that can reduce a claim when the insured amount is below the value required by the policy. It may affect partial damage, not only a total loss.
B
Basis of settlement
The basis of settlement is the policy framework used to determine how an insured loss will be valued and addressed. It may involve repair, replacement, reinstatement, an agreed amount or another specified calculation.
Beneficiary
A beneficiary is a person or entity entitled to receive a benefit under a particular arrangement. The term is common in life insurance, superannuation and estates, but its meaning must be checked in the document concerned.
Binding authority
Binding authority is permission given by an insurer to another party to enter into specified insurance arrangements on its behalf, within agreed limits. The scope depends on the actual authority.
Breach of duty
A breach of duty is a failure to meet an obligation owed to another person or imposed by law. The duty and required standard depend on the relationship and circumstances.
Broker of record
Broker of record is a term for the broker recognised as appointed to service an insurance arrangement. Australian documents may instead use a letter of appointment or another authority description.
Building cover
Building cover is insurance for specified physical buildings and associated property interests against covered loss or damage. The wording determines which structures, fixtures and improvements are included.
Business continuity plan (BCP)
A business continuity plan sets out how an organisation will maintain or restore critical activities after a disruption, including responsibilities, priorities, resources and workable alternatives.
Business interruption insurance
Business interruption insurance may address specified financial losses and additional expenses when a covered event disrupts the business. The insured trigger, calculation basis and recovery period are central to the cover.
Business owners policy (BOP)
A business owners policy, commonly shortened to BOP, is a United States insurance package typically combining selected property, liability and business interruption cover. It is not a standard Australian product classification.
C
Cancellation
Cancellation is the ending of an insurance contract before its scheduled expiry. It differs from non-renewal, where the policy is not continued into the next insurance period.
Certificate of insurance (COI)
A certificate of insurance is a document summarising selected details of an insurance arrangement. In Australia, a certificate of currency commonly serves as evidence that specified cover is in place.
Claim
A claim is a request for an insurance benefit or, in liability contexts, a demand or proceeding against an insured person or business. The policy may give the word a specific definition.
Claim process
The claim process is the sequence for notifying an insurer, supplying relevant information, assessing cover and loss, and communicating a decision or settlement under the applicable insurance arrangement.
Claimant
A claimant is a person or organisation seeking compensation or another benefit. In insurance discussions, the claimant may be the policyholder, another insured person or a third party alleging loss.
Claims-made policy
A claims-made policy uses the timing of a claim against the insured as a central coverage trigger. Many wordings also require notification during the policy period or a specified reporting window.
Coinsurance clause: multiple insurers
Coinsurance can describe an arrangement in which two or more insurers directly insure agreed proportions of the same risk. The placement documents identify each participant and its share of the cover.
Coinsurance: property
In property insurance, coinsurance can mean a clause that makes the insured bear part of a loss when the declared or insured value falls below the value required by the policy.
Combined ratio
The combined ratio is an insurance performance measure that brings together claims costs and underwriting expenses relative to the relevant premium or revenue base. Its exact definition depends on the reporting framework.
Commercial auto insurance
Commercial auto insurance is an overseas label commonly used for insurance covering vehicles used by a business. In Australia, commercial motor, business motor and fleet insurance are more usual descriptions.
Commercial flood insurance
Commercial flood insurance is cover for specified business losses caused by flood, where the relevant policy includes that event. It may be part of property insurance or arranged through an extension or specialist placement.
Commercial general liability (CGL)
Commercial general liability, or CGL, is a policy label particularly associated with overseas markets. For Australian businesses, public and products liability insurance is often the relevant starting point, but the terms are not automatically interchangeable.
Commercial property insurance
Commercial property insurance protects specified business property against loss or damage caused by events covered by the policy. Buildings, fitouts, equipment and stock may be insured together or in separate sections.
Compensation payments
Compensation payments are amounts paid to address an injury, damage or other recognised loss. In an insurance context, their basis may be a statutory scheme, a legal liability settlement or a benefit expressly defined by a policy.
Condition precedent
A condition precedent is a contractual requirement expressed as needing to be satisfied before a particular right, obligation or cover can arise. In insurance, its operation depends on the wording, circumstances and applicable law.
Consignment
Consignment is an arrangement in which an owner supplies goods to another party to sell on the owner’s behalf, usually retaining ownership until sale. The agreement determines the commercial responsibilities between those parties.
Contamination
Contamination is the presence or introduction of a substance or material that makes property, products or an environment unsafe, unsuitable or impaired. Insurance definitions may be narrower than the term’s everyday meaning.
Contents cover
Contents cover addresses specified movable property used by a business, such as furniture or equipment, where that property and the cause of loss fall within the policy.
Contingency planning
Contingency planning means preparing alternative actions for a disruption that could prevent a business from carrying out an important activity. It turns a foreseeable problem into a planned response.
Contingent business interruption
Contingent business interruption refers to cover for defined business income loss arising from disruption at another organisation on which the insured depends, subject to the policy’s dependency provisions.
Contractual liability
Contractual liability is responsibility arising under an agreement. In insurance discussions, particular attention is given to liabilities a business accepts that may exceed its obligations without that contract.
Contribution between insurers
Contribution between insurers concerns how insurers may share responsibility when more than one policy covers the same insured interest, risk and loss. The legal and policy requirements need assessment.
Corporate authorised representative
A corporate authorised representative is a company authorised to provide specified financial services on behalf of an Australian financial services licensee, within the scope of its authorisation.
Coverholder
A coverholder is an organisation authorised to carry out specified insurance functions under delegated authority. In the Lloyd’s market, it can enter insurance contracts for a syndicate within a binding authority agreement.
Crime cover
Crime cover is a broad description for policy protection against specified dishonest or criminal acts that cause an insured loss. The label alone does not define the covered mechanisms.
Crime insurance / fidelity
Fidelity insurance traditionally addresses an employer’s defined loss from employee dishonesty. Crime insurance can be broader, but the actual policy determines whether external fraud and other mechanisms are included.
Crisis management
Crisis management is the coordinated handling of a serious event that threatens a business’s people, operations or reputation. It combines decisions, communication and recovery actions under pressure.
Cyber incident
A cyber incident is an event that affects, or may affect, the confidentiality, integrity or availability of information or systems. It can involve malicious activity or other security failures.
Cyber liability insurance
Cyber liability insurance may address defined liabilities arising from privacy or network-security events. Many cyber policies also include separate first-party incident response, recovery or interruption sections.
D
Death benefits
A death benefit is an amount that may become payable after an insured person dies, provided the applicable policy or compensation scheme requirements are met.
Declared value
A declared value is a value supplied to an insurer for an asset or exposure, using the valuation basis and date required by the particular policy.
Deductible / excess
An excess is the part of a covered loss that the policy leaves with the insured. Deductible is a related label, common in overseas and specialist wordings.
Defamation
Defamation concerns an allegation that material communicated to someone else unlawfully harmed a person’s reputation. The applicable law, meaning of the material and available defences determine whether liability arises.
Deposit premium
A deposit premium is an initial premium paid before the final premium is determined under an agreed adjustment process. It is not necessarily a refundable security deposit.
Depreciation
Depreciation is a reduction in an asset’s value over time, often reflecting age, use or condition. Its insurance treatment depends on the agreed basis of settlement.
Deterioration and spoilage
Deterioration and spoilage describe stock becoming unusable or less valuable, often because its required temperature or storage conditions were not maintained.
Directors and officers insurance (D&O)
Directors and officers insurance is intended to address specified claims alleging wrongful acts by people acting in insured management roles, subject to its wording and exclusions.
Directors and officers liability
Directors and officers liability is the potential legal responsibility of individuals for actions or omissions in managing an organisation. It exists separately from any insurance policy.
Discrimination
Discrimination involves treatment or a requirement that may unlawfully disadvantage someone because of a protected attribute. The applicable law and circumstances determine whether conduct is unlawful.
Dishonesty
Dishonesty describes conduct involving a lack of honesty, such as deliberately misappropriating an employer’s money. A crime or fidelity policy may give the term a specific definition.
Duty of disclosure
The duty of disclosure concerns information an applicant must give an insurer before entering certain insurance contracts. Different rules apply to consumer insurance contracts and other contracts.
E
Earthquake insurance
Earthquake insurance refers to cover for loss caused by an earthquake where that cause of damage is included in the relevant property policy or extension.
Employee wages
Employee wages are amounts paid for work, but insurance policies and workers compensation schemes can use definitions of wages or remuneration that extend beyond ordinary salary payments.
Employer liability
Employer liability is an employer’s potential legal responsibility connected with workers and employment. Its scope depends on the alleged harm, employment relationship and applicable Australian jurisdiction.
Employment practices liability
Employment practices liability is potential responsibility for employment-related wrongdoing, including allegations about recruitment, workplace conduct or ending employment. It is an exposure, distinct from insurance purchased to address it.
Employment practices liability insurance (EPLI)
Employment practices liability insurance may address defined claims arising from employment-related wrongful acts, such as alleged discrimination, harassment or wrongful termination, according to the policy wording.
Endorsement / rider
An endorsement is a document or provision that changes the terms of an insurance policy. Rider is a related term often encountered in life insurance or overseas material.
Entity cover
Entity cover is insurance for specified claims against the organisation itself, rather than only claims against its directors, officers or other insured individuals.
Environmental liability insurance
Environmental liability insurance may address specified pollution-related liabilities and costs, such as third-party claims or cleanup expenses, where the policy’s conditions and definitions are satisfied.
Errors and omissions
Errors and omissions refers to mistakes or failures in professional work. E&O insurance is an international label broadly associated with professional indemnity cover in Australian business discussions.
Excess layer
An excess layer is a separate level of insurance intended to respond above a specified underlying amount, provided the layer’s attachment and coverage requirements are met.
Excess of loss reinsurance
Excess of loss reinsurance is an arrangement under which a reinsurer may reimburse an insurer for covered losses above an agreed retention, up to the reinsurance contract’s limit.
Exclusion
An exclusion is a policy provision that removes specified events, activities, property, people or types of loss from otherwise available cover, subject to its precise wording.
Expense ratio
An expense ratio compares specified insurance business expenses with a stated premium or revenue measure. It is usually expressed as a percentage, with the calculation basis defined by the report.
Extension of cover
An extension of cover adds or broadens a defined part of an insurance policy. It may be built into the wording or introduced by an endorsement.
Extra expense
Extra expense describes additional spending after a disruption to keep a business operating or reduce its loss. Australian business interruption wordings may use increased cost of working or related terms.
F
Facultative reinsurance
Facultative reinsurance is reinsurance arranged for a particular risk or policy, with the reinsurer deciding whether to accept that individual placement and on what terms.
Fines and penalties
Fines and penalties are financial sanctions imposed for breaches of law or regulation. Whether any associated amount can lawfully be insured depends on the legislation, jurisdiction and policy.
Fire and theft cover
Fire and theft cover refers to insurance addressing those specified causes of loss. Its scope depends on whether the term describes motor insurance, business property or another policy.
First-party claim
A first-party claim is a claim by an insured for its own covered loss or benefit under a policy, rather than liability for harm alleged by someone else.
Fixed operating costs
Fixed operating costs are expenses that do not immediately fall in proportion to reduced sales or production. They can continue while a business is unable to trade normally.
Fleet policy
A fleet policy groups multiple business vehicles under one insurance arrangement, with the insured vehicles, cover levels and operating conditions determined by the schedule and wording.
Flood insurance
Flood insurance is cover for damage caused by water meeting the policy’s flood definition. It must be distinguished from stormwater, rainwater runoff and other sources of water damage.
Fraud
Fraud generally involves deliberate deception to obtain an advantage or cause loss. The particular criminal, civil or insurance meaning depends on the conduct and the applicable definition.
G
H
Harassment
Harassment describes unwelcome conduct that may offend, humiliate or intimidate someone. Whether it is unlawful, and under which law, depends on the conduct and context.
Hazard
A hazard is something with the potential to cause harm. Risk considers how that harm could occur, how likely it is and how serious the consequences could be.
Hold harmless agreement
A hold harmless agreement is a contractual promise concerning another party’s exposure to specified loss or liability. Its practical effect depends on the wording and applicable law.
I
Incident / potential claim
An incident is an event that may cause harm or loss. A potential claim is a situation that could lead to a demand, allegation or request for insurance assistance.
Income protection
Income protection insurance may replace part of an insured person’s earnings when illness or injury prevents them from working and the policy’s disability and other requirements are met.
Income replacement
Income replacement describes money intended to substitute for earnings that have stopped or reduced. It is a purpose or benefit description, not necessarily the name of a particular insurance product.
Indemnity
Indemnity generally concerns compensating a person for a covered loss or liability. In insurance, the extent of that compensation is governed by the policy and applicable law.
Inland marine insurance
Inland marine insurance is principally a United States insurance classification addressing various movable property and transport-related exposures. It is not a standard Australian business policy label with one fixed equivalent.
Insurance broker
An insurance broker is an intermediary who can help clients understand insurance options and arrange cover within the scope of the broker’s authorisation and agreed services.
Insurance brokerage
Insurance brokerage can mean the business or activity of arranging insurance through a broker. It can also refer to remuneration, so the intended meaning should be clarified.
Insurance policy
An insurance policy is the contract setting out the insurance arrangement, including the risks accepted, parties insured, period, limits and conditions. Several documents may together form that contract.
Insurance quote
An insurance quote sets out proposed pricing and cover terms based on information supplied to an insurer. It is a step toward arranging cover, rather than reliable evidence that insurance has already started.
Insurance renewal
Renewal is the arrangement of insurance for a further period when the current policy expires. The new period may have different pricing, conditions, limits or underwriting requirements, even when the insurer stays the same.
Insurance warranty
An insurance warranty is a term described as a warranty in a policy or proposal, often concerning a fact, activity or precaution. Its legal effect depends on the contract and applicable insurance law.
Insured event
An insured event is an event falling within the cover described by a policy. Whether a particular loss results from that event and satisfies other requirements still needs assessment.
Insured person
An insured person is an individual included within a policy’s definition of people entitled to specified protection or benefits. They may be named or belong to a defined group.
Investigation costs
Investigation costs are expenses incurred in responding to an inquiry or investigation, which may be insured only when the relevant policy defines and includes that particular process.
L
Lapse
A lapse is an interruption or ending of insurance that has not continued as expected, commonly discussed when cover expires or a required payment has not been maintained.
Legal defence costs
Legal defence costs are expenses associated with responding to and defending a claim or proceeding, such as approved solicitor, barrister and expert costs within the applicable insurance provision.
Legal expense insurance
Legal expense insurance is cover for specified costs of pursuing or defending defined legal disputes, subject to the policy’s categories, eligibility rules and claims procedure.
Legal requirements
Legal requirements are obligations imposed by legislation or other applicable law, which should be distinguished from insurance conditions, commercial preferences and requirements imposed by a contract.
Liability
Liability means legal responsibility for a loss, injury, damage or obligation. In insurance discussions, it usually concerns what an insured person or business may owe another party.
Limit
A limit is a stated cap on an insurer’s payment obligation for a defined claim, event, benefit or period, subject to the rest of the policy.
Loss adjuster or claims adjuster
A loss adjuster is a specialist who investigates a loss and assesses relevant facts or costs for a claim. Claims adjuster is another term, particularly common in overseas material.
Loss assessment
Loss assessment is the process of examining what happened, identifying the loss and estimating its value. It is distinct from deciding whether the policy covers that loss.
Loss frequency
Loss frequency describes how often losses or claims occur over a defined period or unit of exposure, such as claims per vehicle-year or incidents per location.
Loss occurrence
A loss occurrence is an event, or a group of related events, treated as one occurrence under the policy. The definition can affect limits, excesses and aggregation.
Loss of use
Loss of use means being unable to use property or equipment for its intended purpose. Whether resulting costs are insured depends on the cause and relevant policy section.
Loss payee
A loss payee is a person or organisation identified to receive some or all of a claim payment for specified property, often because it has a financial interest in that property.
Loss ratio
Loss ratio compares claims costs with a defined premium measure, expressed as a percentage. The result depends on whether the calculation uses paid or incurred claims and which premium basis applies.
Loss severity
Loss severity describes the financial size of an individual loss or the typical cost of losses in a defined group. It is different from how often incidents happen.
M
Management liability insurance
Management liability insurance is a package or group of covers addressing specified exposures arising from the management of an organisation, with separate sections and definitions that vary between products.
Medical expenses
Medical expenses are costs of treatment and related health services. In an insurance claim, their treatment depends on the scheme or policy, the injured person and the circumstances.
Minimum premium
A minimum premium is the lowest premium an insurer will charge or retain under a specified arrangement. A minimum quoted price and a minimum retained after adjustment are different concepts.
Mismanagement
Mismanagement is a broad description of inadequate management or oversight. It is not, by itself, a standard insurance trigger or proof that a director or company has breached a legal duty.
Misrepresentation
Misrepresentation means communicating an inaccurate or misleading statement. In insurance, it can concern information supplied when seeking cover or an allegation about statements made by the insured business.
Moral hazard
Moral hazard describes the possibility that insurance or another protection changes incentives in ways that increase risk or expected loss. It does not mean that every insured person behaves dishonestly.
Morale hazard
Morale hazard is a traditional insurance term for carelessness or indifference that can increase loss, sometimes because a person assumes insurance will deal with the consequences.
Motor policy
A motor policy is an insurance contract addressing selected vehicle exposures, such as damage to an insured vehicle or liability for damage it causes, according to the cover purchased.
N
Named insured
The named insured is the person or legal entity identified as insured in the policy schedule. Other people or entities may also qualify through the policy’s definitions or endorsements.
Named perils
Named perils cover insures loss caused by events specifically listed and defined in the policy, subject to exclusions and other conditions. An unlisted cause is not made insured by the label.
Natural disasters
Natural disasters are serious events arising from natural hazards, such as flood, bushfire, cyclone, severe storm or earthquake. A disaster label does not itself establish insurance cover.
Non-admitted insurer
Non-admitted insurer is principally an overseas regulatory label, particularly in the United States, for an insurer not admitted in the relevant jurisdiction. It is not a standard Australian licence classification.
Non-disclosure
Non-disclosure means information has not been provided when an applicable duty requires it. Its significance in insurance depends on the contract, the questions asked and the governing legal rules.
Non-renewal
Non-renewal is a decision not to continue an insurance contract for a new period after its scheduled expiry. It differs from cancellation during the current period of cover.
O
Occurrence-based policy
An occurrence-based policy generally connects cover to specified injury, damage or another defined event occurring during the insurance period, even if the resulting claim is made later.
Open perils and all risks
Open perils or all risks describes an approach that starts with a broad grant of cover and then applies exclusions and conditions. It never means that every possible loss is insured.
Optional add-ons
Optional add-ons are benefits or separate products that can be selected in addition to a base insurance arrangement, usually for an additional cost and subject to their own requirements.
P
Payment outage
A payment outage is a disruption that prevents a business from accepting, authorising or processing payments through its usual systems. It describes an operational event, not a standard insurance product.
Per-occurrence limit
A per-occurrence limit is the maximum amount available under a specified policy provision for one defined occurrence. The occurrence may encompass several claims or affected parties.
Peril
A peril is a cause of loss, such as fire, theft or storm. It differs from a hazard, which is a condition that can increase the likelihood or severity of loss.
Permanent disability
Permanent disability describes a lasting impairment or incapacity, but the precise meaning and any insurance entitlement depend on the policy or statutory scheme being considered.
Policy terms and conditions
Policy terms and conditions are the provisions that define the insurance agreement, including cover, exclusions, obligations, limits, claims procedures and the circumstances in which benefits may apply.
Policy trigger
A policy trigger is the event or set of conditions that must occur before a particular insurance section can potentially respond. Identifying a loss is only the beginning of checking whether the trigger is met.
Policy wording
The policy wording sets out the standard terms of an insurance product or section. It must be read with the schedule and any endorsements that tailor the contract.
Policyholder
The policyholder is the person or entity that enters into and holds the insurance contract. Depending on the arrangement, other people may also be insured or entitled to specified benefits.
PR consultants
PR consultants provide public relations and communications services, which can include media advice, campaign planning, reputation management and preparation or publication of material for clients.
Premium
A premium is the amount charged for an insurance contract or period of cover. The total invoice can also include government charges, broker fees and other separately identified costs.
Pro rata premium
Pro rata premium is a charge or calculation based on a proportion of a full premium, commonly reflecting part of an insurance period. The policy determines when that method applies.
Product liability
Product liability concerns legal responsibility for injury, damage or other recognised loss arising from products a business makes, imports, sells or supplies. The applicable legal basis depends on the circumstances.
Product recall
A product recall is an organised response to remove or reduce a product safety risk by identifying affected goods and taking action with suppliers and customers, such as repair, replacement or refund.
Product recall insurance
Product recall insurance is specialist cover that may address defined expenses and losses from withdrawing products after a qualifying event. The recall trigger and included costs vary considerably between policies.
Professional indemnity insurance
Professional indemnity insurance addresses specified claims alleging loss arising from professional services, advice, errors or omissions, subject to the insured activities, definitions and conditions of the policy.
Professional negligence
Professional negligence is a legal allegation that a person providing professional services failed to exercise the required care and that the failure caused a recognised loss. The elements depend on applicable law.
Profits
Profit is the amount remaining after specified costs are deducted from revenue. The costs included determine whether the figure is gross profit, operating profit, net profit or another measure.
Property damage
Property damage generally means physical harm to property, but an insurance policy may define it more specifically and sometimes include associated loss of use. The relevant definition controls the discussion.
Property insurance
Property insurance describes cover for specified physical assets against loss or damage from events insured by the contract. For a business, those assets can include buildings, machinery, contents and stock.
Public liability insurance
Public liability insurance concerns a business’s legal liability for specified injury to other people or damage to their property arising from insured business activities. It may also address associated defence costs.
R
Rehabilitation costs
Rehabilitation costs are expenses for services that help an injured or ill person recover function and participate in suitable work. In workers’ compensation, eligibility and payment rules depend on the relevant scheme.
Reinsurance
Reinsurance is an arrangement through which an insurer transfers an agreed portion of its insurance risk to another insurer. It operates behind the policy bought by a business and has its own contract terms.
Replacement cost
Replacement cost is the estimated expense of replacing damaged or lost property with an equivalent new item, or rebuilding an equivalent structure, according to the valuation basis required by the policy.
Replacement value
Replacement value is a valuation of property by reference to the cost of an equivalent replacement. Insurers and valuers may use it similarly to replacement cost, so its meaning must be read in context.
Reputation protection
Reputation protection is a broad label for measures that reduce harm to a business’s standing with customers, suppliers and the public. In insurance, it may refer to a narrowly defined response benefit.
Reserving and claims reserves
A claims reserve is an estimate of money an insurer expects to need for an unpaid claim or group of claims. Reserving is the process of establishing and reviewing those estimates.
Residual risk
Residual risk is the risk that remains after existing controls and treatments have been considered. It describes an exposure still needing attention, acceptance or further action rather than a problem that has disappeared.
Restoration
Restoration is work undertaken to return damaged property or systems to an appropriate usable condition. In an insurance claim, its scope and recoverable cost depend on the insured damage and settlement provisions.
Retroactive date
A retroactive date is a date used in some claims-made policies to limit how far back the acts, errors or omissions underlying a claim may have occurred. It is distinct from the current policy’s start date.
Return-to-work programs
Return-to-work programs organise how an employer supports people to remain at work or resume suitable work while recovering from injury or illness. They combine workplace arrangements, communication and review.
Risk appetite
Risk appetite describes the types and amount of risk an organisation is prepared to accept while pursuing its objectives. In insurance placement, insurer appetite also describes the risks an insurer is interested in considering.
Risk financing
Risk financing is the way a business plans to fund the financial consequences of risk. It can combine insurance, retained losses, cash reserves and other arrangements appropriate to the organisation.
Risk management
Risk management is the organised process of identifying, assessing and responding to uncertainty that could affect business objectives. It includes reviewing whether chosen controls and contingency arrangements work in practice.
Risk tolerance
Risk tolerance is a practical boundary for how much exposure or variation an organisation is willing to operate within. It gives measurable limits to the broader direction expressed by risk appetite.
Run-off cover
Run-off cover is insurance arranged to address certain later claims arising from work or conduct before a business, practice or role ceased. It is particularly relevant to claims-made liability policies.
Run-off period
A run-off period is the specified time during which a run-off or related reporting arrangement operates. The phrase describes a timeframe; it does not by itself establish the insurance protection available within it.
S
Salvage
In property claims, salvage is damaged property that retains recoverable value, or the value recovered from it. In marine contexts, the word can also concern specialised rescue services and salvage remuneration.
Short-rate cancellation
Short-rate cancellation describes a method under which cancellation before expiry results in the insurer retaining more premium than a simple time-based calculation would suggest. The actual refund depends on the contract and applicable rules.
Statutory liability
Statutory liability is responsibility arising under legislation. It can involve duties, enforcement action or consequences for contraventions, depending on the law and circumstances. It describes the underlying legal exposure, not an insurance product.
Statutory liability insurance
Statutory liability insurance is a policy section or product addressing specified exposures arising from alleged breaches of legislation. It may consider defined defence or investigation expenses and other expressly insured liabilities, subject to law.
Sublimit
A sublimit is a smaller maximum applying to a particular type of property, expense, event or benefit within an insurance policy. It can significantly reduce the amount available for a specific part of a claim.
Subrogation
Subrogation is the process by which an insurer can exercise an insured’s rights against a responsible third party in connection with an indemnified loss. Its scope depends on the circumstances, policy and applicable law.
Sue and labour clause
A sue and labour clause is a marine insurance provision concerning reasonable measures taken to protect insured property from loss or reduce insured damage. The historic phrase does not simply mean legal action or staff wages.
Sum insured
The sum insured is the amount recorded for a particular insured interest or section of a policy. It is a starting point for understanding the maximum available, subject to the contract’s calculation and limit provisions.
Supply chain disruption
Supply chain disruption occurs when goods, services or information needed for business operations are delayed, interrupted or unavailable. It can affect suppliers, transport routes, utilities, technology providers and customers further along the chain.
T
Temporary relocation
Temporary relocation means moving business operations to an interim location following a disruption. Insurance may address certain relocation or additional operating expenses when the relevant policy trigger and cost conditions are satisfied.
Theft
Theft is the dishonest taking of property, but an insurance policy may use a specific definition and conditions to decide which theft losses are covered. The everyday meaning is not enough to establish cover.
Third party
A third party is a person or organisation outside the two principal parties to a particular contract or relationship. In insurance, the relevant relationship must be identified before deciding who counts as a third party.
Third-party claim
A third-party claim is a demand or proceeding by someone seeking compensation or another remedy from an insured person or business. It differs from the insured’s own request for payment for damaged assets.
Third-party injury
Third-party injury is injury suffered by someone outside the relevant insurance contract or insured relationship. In business liability discussions, it often concerns customers, visitors or others affected by the business’s activities.
Transit cover
Transit cover addresses specified loss or damage to goods while they are being transported. It may be arranged for individual movements or as an ongoing policy, with defined journeys, property and transport methods.
Treaty reinsurance
Treaty reinsurance is an agreement under which a reinsurer accepts a defined class or portfolio of an insurer’s risks according to pre-agreed terms. Individual qualifying risks are generally included without separate negotiation for each one.
U
Umbrella insurance
Umbrella insurance is a liability insurance label, particularly common in overseas markets, for cover that can sit above specified underlying policies and may address some additional exposures. Its scope is entirely wording dependent.
Underwriting
Underwriting is an insurer’s process for assessing a proposed risk and deciding whether to offer insurance and on what terms. It can affect price, limits, excesses, exclusions and required risk controls.
Utmost good faith
Utmost good faith is an insurance-law principle requiring parties to act honestly and fairly in their dealings under the contract. Its application depends on the relevant legal framework and facts.
V
W
Waiting period
A waiting period is a specified time requirement that affects when a particular insurance benefit can begin or qualify. Its exact operation depends on the section and should not be confused with claim-processing time.
Waiver
A waiver is the relinquishment of a right in a particular context. In insurance discussions, it may concern an insurer’s reliance on a condition or contractual restrictions on recovery against another party.
Workers’ compensation insurance
Workers’ compensation insurance operates under statutory schemes to address qualifying work-related injury or illness. Depending on the scheme and claim, benefits can include wage support, treatment, rehabilitation and other prescribed assistance.
Wrongful acts
Wrongful act is a defined term used in some liability policies to describe conduct that can form the basis of a claim. The definition may include specified errors, omissions, statements or breaches of duty.
Wrongful termination
Wrongful termination is a broad label for an allegation that employment ended improperly. In Australia, the actual legal claim may involve unfair dismissal, general protections, unlawful termination or breach of contract, which are distinct pathways.
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