COMMON INSURANCE TERMS:

Sum Insured:

 The maximum amount payable in the event of a claim under contract of insurance. It is your responsibility to ensure the sum insured is adequate whether your policy is written on an Indemnity basis or Reinstatement basis.

Indemnity:

 A principle whereby the insurer seeks to place the insured in the same position after a loss as he occupied immediately before the loss (as far as practicable). Where an item is insured on an “Indemnity” basis, a deduction for wear and tear will be made when settling any claim for

damage or loss. Wear and Tear is the amount deducted from claims payments to allow for any depreciation in the property insured which is caused by its age or usage.

Maximum Indemnity Period:

Under a Business Interruption insurance the period during which cover is provided for the disruption to the business following the occurrence of an insured peril. This period must be calculated carefully to ensure that it is long enough to enable your business to fully recover from the effects of serious insured damage.

Utmost Good Faith:
 Insurance contracts are contracts of utmost good faith (uberrima fides), which means that both parties to the contract have a duty to disclose, clearly and accurately, all material facts

relating to the proposed insurance. Any breach of this duty by the proposer may entitle the insurer to repudiate liability.

Reinstatement:

Making good. Where insured property is damaged, it is usual for settlement to be effected through the payment of a sum of money, but a policy may give either the insured or insurer the option to restore or rebuild instead.

Business Interruption:

 Also known as Loss of Profits, Loss of Revenue, Consequential Loss or Increased Cost of Working, this will provide cover for the effect on your business as a result of an insured peril (loss or damage) at your premises or other designated locations. For covers other than Increased

Cost of Working, cover is triggered by a demonstrable loss of turnover in the period following the loss, which is subject to a Maximum Indemnity Period.