Explaining the Commonly used Terms of Home Isurance

Policy - This is a the contract drawn up between the policyholder and the insurer, it details the terms and conditions of your policy.

Public Liability - You have a legal obligation if someone is damaged or injured whilst in your home, or something happens there for which you are responsible. This is something that is usually covered by your Home and Contents insurance.

Premium - This is a yearly (or it can be paid monthly) payment made by the owner of a property so they can be covered by the insurance company for damage to their home or contents in the home.

Insurance Premium Tax (IPT) - This is levied by the UK Government on almost all insurance products that are sold in the UK. (Some insurance products sold by some friendly society are not subject to IPT.)

Buildings Insurance - This is a policy designed to protect your home's structure and the fixtures and fittings within it. Buildings Insurance, commonly called Home insurance, insures you against certain named risks and dangers, such as subsidence, fire, flooding etc.

Contents Insurance - This policy insures anything in your home that could be easily removed should you move home e.g. your furniture and personal possessions. The risks covered include theft, accidental damage, fire, flood etc.

Exclusion - Exclusions are risks or situations or property which is not insured by your Home and Contents insurance policy. You will find details of all exclusions within your policy documents. Please ask about exclusions before you take out the insurance.

Sum Insured - This is the total amount of money for which contents or buildings are insured. You must make sure that you include every possession accurately. Underinsuring can save money in the short term but can cause massive problems in the event of a claim. If you are under insured your insurance company may not pay out the full value of your claim.

Index Linking - With some companies, Index Linking is an optional extra. It is a method by which you can ensure that your sums insured keep pace with cost inflation. Some UK home insurance companies will use RPI (Retail Price Index) to determine how much your contents insurance cover should increase by each year. They will update your buildings insurance as building costs change. Your premium will be increased in proportion to the increase in the insured value.

Claim - This is when a policyholder request their insurer to make a payment under the terms of the policy.

Excess - All insurers will require you to pay the first part of any claim. This is called the "excess" and the value of the excess will vary between insurers. Sometimes you can agree to pay a higher excess than the minimum set by the insurance company. If you do this, you will reduce the cost of your premiums.

No Claims Bonus – With some home insurance policies you can qualify for a discount on your premium for each year that you don’t make a claim.

Uk Home Insurance from LloydsInsuranceUnderwriting.co.uk