A-Z Glossary of Property Insurance Terms​

A

Actual Cash Value (ACV)
Actual cash value (ACV) coverage, on the other hand, factors in depreciation, paying you what the item was worth at the time of loss, not what it would cost to replace it.

Assessment Report 

Report from an Assessor or Building Specialist advising on cause of loss and assessment of damage.

Australian Financial Complaints Authority (AFCA)

The Australian Financial Complaints Authority (AFCA) provides fair, independent and effective solutions for financial disputes. It facilitates any consumer or small businesses with a complaint about banking, credit, insurance, superannuation, or investment companies. 

Australian Securities & Investment Commission (ASIC) 

The Australian Securities and Investments Commission (ASIC) is the integrated corporate, markets, financial services and consumer credit regulator. It’s an independent Australian Government body set up under and administering the Australian Securities and Investments Commission Act 2001 (ASIC Act), and carrying out the majority of their work under the Corporations Act.

Authorised Representative (AR) 

An Australian financial services licensee may appoint ‘authorised representatives’ to provide specified financial services on its behalf. Acting as an AR can be a cost effective way of operating a financial services business although most insurers require their MGAs & TPAs to hold their own AFSL.

B

Broker 

Licensed advisors who help facilitate the insurance buying process and provide policy holders with advice and assistance to ensure adequate protection. They act as an intermediary between a consumer and an insurance company, helping their client find a policy that best suits their needs. An insurance broker represents consumers, not insurance companies.

Business Relationship Manager 

An account manager who helps look after PIP business partners. This person can assist with knowledge on products, services, process and provide the tools & training required to assist property investment specialists.

Building Calculator

This Calculator is an external online tool to help estimate the cost to rebuild your property depending on factors like the materials and technology used. It requires you to input information such as property size, featured inclusions, along with the type of construction materials used for the building. Please note this is an estimated cost only and may not be appropriate for the individual.

Building Sum Insured (BSI)

Sum insured is the amount agreed upon by you, the policyholder, and the insurer at the time of purchasing the home insurance policy. This should not include the land value as this is irrelevant for insurance purposes. While the sum insured is generally the maximum amount we will pay you for the replacement of your property and/or contents, after an insured event occurs there are some benefits that may be paid for on top of that amount. It’s important to read your policy documents.

C

Certificate of Currency

Certificate of Currency lists the included policy benefits and sums insured relating to your cover. This certificate acts as proof that a policy has been issued. If the policy is paid within credit terms, the certificate acts as proof the policy is current. This certificate will include the policy holders name, risk address and can include the interested party name for financing purposes (mortgagee or lender).

Certificate of Insurance

Means the certificate we issue at inception, on renewal or when a variation is applied. The certificate will show your Policy number, together with the details of your cover including the sections of the Policy which apply to you. Coverage for any cover option is indicated where a dollar amount is listed next to it.

Claims History

The history of losses suffered by an insured which have been covered by insurance. Some claims histories also record events notified to the insurer which did not result in actual claims pay-outs—e.g. events below the policy excess, and may not be limited to losses solely at the risk address noted on the Certificate of Insurance.

Code of Practice 

PIP (Property Insurance People) supports and subscribes to the General Insurance Code of Practice. The General Insurance Code of Practice (GICOP) was developed with the Insurance Council of Australia (ICA) to further raise standards of practice and service areas across the insurance industry.

The Code Governance Committee (CGC) is an independent body that monitors and enforces insurers’ compliance with the Code. You can obtain more information on the General Insurance Code of Practice and the CGC and how they may assist you at www.codeofpractice.com.au.

Coverage Limit
The maximum amount an insurance policy will pay for a covered loss. It’s important to understand policy limits to ensure adequate protection.

Credit Terms

The period of time the client has to make payment for their policies. 

Deed of release

Document for completion by the insured confirming that they agree with a cash settlement offer made in finalisation of the claim.

Duty of Disclosure 

When you answer our questions that are relevant to our decision about whether to accept the risk of insurance and, if so, on what terms, you must take reasonable care not to make a misrepresentation to us before the insurance contract is entered into, or before a contract is renewed. 

E

Effective Date 

The date on which the policy becomes binding or active.

Excess
Means the amount(s) stated in the Certificate of Insurance, or otherwise stated in the Policy for each applicable section or subsection, that you are required to pay or bear as the first payment towards your Claim.

Exclusions
Specific conditions or circumstances that are not covered by an insurance policy. Understanding exclusions helps avoid unexpected costs after a loss.

F

First Notification of Loss (FNOL) 

Submission of a claim with a declaration of the claimed event. 

Financial Services Guide 

Our Financial Service Guide contains information about the financial services we offer, our remuneration and relationships with the insurer, our terms and conditions of trade and cooling off period.

Fraud
Intentional deception to secure unfair or unlawful gain in an insurance claim. Insurance fraud can lead to severe penalties and denial of coverage.

G

Gap In Cover

A period during which the property is not covered by insurance, usually due to late payment where payment is received outside credit terms and the policy has lapsed. In this instance, cover would be reinstated with effect from the date payment was received by our office.

General Insurance Code of Practice (GICOP)

The General Insurance Code of Practice was introduced in 1994 by the Insurance Council of Australia as a voluntary Code and it has been regularly reviewed and updated.

It sets out the standards that general insurers must meet when providing services to their customers, such as being open, fair and honest. It also sets out timeframes for insurers to respond to claims, complaints and requests for information from customers.

The Code is intended to be a positive influence across all aspects of the general insurance industry including product disclosure, claims handling and investigations, relationships with people who are experiencing vulnerability, and reporting obligations.

H

Hazard
A condition that increases the likelihood of a loss occurring. Examples include faulty wiring or a leaky roof, which can lead to claims.

I

Indemnity Cover 

A type of insurance that covers loss, damage, or liability, by restoring policyholders to their pre-incident position without profit. Payments may be reduced for wear and tear.

Insured 

An insured is someone protected under an insurance contract. A named insured is just another term for the policyholder — the person or entity who owns and can modify the policy.

Insured Event
An occurrence that is covered (or claimable) under the insurance policy. Knowing what constitutes an insured event is vital for understanding what your policy provides cover for.

J

Joint Tenancy
A form of property ownership where two or more people own an asset equally. In insurance, this can affect total liability coverage and claims.

L

Landlord Insurance

Specialist cover for property investors against financial risks to rented property, such as rent loss, tenant rent default, damages and theft. Landlord insurance can include the property contents and extend to the building and permanent fixtures (if required). This insurance helps landlords manage financial stability in the event of tenant related loss.

Liability

As a property owner, you have a duty of care to ensure that anyone on your property is safe from foreseeable harm. If a tenant or 3rd party is injured, or their property damaged due to negligence, you may be held legally liable. Liability risk can range from minor claims to significant sums, depending on the situation. Understanding your legal obligations regarding liability will ensure that you have adequate insurance coverage.

Loss Adjuster

An external professional appointed to assess a property for loss in the event of a claim. They help determine the cause of loss, extent of damage and can prepare a scope of work and potential timeline to restore the property and estimate the claimable losses suffered by the property owner.

Loss of Rent or Rent Loss (LOR)

Refers to the period of time that a property owner cannot charge rent to a tenant as the property is deemed uninhabitable due to insured damages covered by the policy. The period of rent loss is the reasonable time it takes to repair the property to a liveable state.

M

Malicious Damage
Damage to a property which is motivated by spite, vindictiveness or criminal intent. Examples include holes kicked or punched in walls and doors, graffiti and doors knocked off their hinges. If the act is of a criminal nature, sometimes a police report can support the cause of loss.

N

Notice to Vacate (NTV)

A legal notice served to a tenant in accordance with State legislation, advising them to remedy a lease breach within a certain timeframe. If remedy terms are not met, the NVT will advise them the date by which they are to hand possession of the property back to the owner.

O

Occasional Use
A term that describes properties used sporadically for their intended use. This may affect your cover options. Insurers may offer different terms for properties not used on a full-time basis..

P

Perils
Specific risks or causes of loss covered by an insurance policy (e.g., fire, flood, storm).

Policy holder

A policyholder is a person who has purchased the insurance policy. Thus a policyholder is the owner of the policy and is the name listed on the insurance certificate. 

Policy term
These will be the dates and period of time for which cover is provided by the policy.

Premium
The amount paid for an insurance policy, typically on a monthly or annual basis. Premiums will vary depending on coverage inclusions, limits and risk factors.

Product Disclosure Statement (PDS)

The Product Disclosure Statement (PDS) is a critical document that outlines the details of your insurance policy. It includes essential information such as your rights and obligations, the cooling-off period, and the duty of disclosure. The PDS specifies what is covered under the policy, key features, insured events, claim limits, exclusions, benefits, and the insurer’s procedures for handling your policy.

Property Manager 

A real estate professional employed by the property owner to manage the rental property and tenancy agreement under instruction of a Managing Authority Agreement. Under permission from the insured, a property manager can liaise with an insurer on behalf of the policy holder in relation to payment of a premium from the owners rental account and assist with providing supporting property documentation at the time of a claim.

Q

Quote
An estimate of the insurance premium and coverage options provided by an insurer to the intended policy holder. Quotes expire and can only be honoured if authorised/confirmed with the documented timeframes. Please note a quote does not mean your property is covered. 

S

Scope of Works

An itemised list of repair works and estimated pricing required to resolve insured damages.

Sum Insured
This is the maximum limit claimable if an insured loss occurs, unless there are additional benefits provided by the Policy – Refer to the PDS for full details. Whilst some sums insured are nominated by the policyholder, there may be other sums that are a fixed limit provided by the insurer per policy benefit & claimable event.

T

Target Market Determination (TMD) 

A Target Market Determination is a document which describes who a Product is intended to be appropriate for based on a consumer’s needs.

Tenant Default

This is the tenant’s failure to pay rent in accordance with their lease agreement. This arises when a tenant falls behind on payments and the required frequency of payments. It can lead to legal action initiated by the property owner &/or property manager. Tenant default remedies are governed by State legislation. Tenant default does not involve damage to the property; it reflects the financial obligations of the tenant to pay rent by a certain due date (weekly, fortnightly or monthly).

Third Party 

A person or people that are neither the property owner nor tenant of the insured property.

U

Underinsurance
A situation where the coverage limits are insufficient to replace or repair the insured property. This can lead to significant financial losses after a claim.

Underwriter

A person authorised to assess the risk factors of a property or insured at policy inception, duration and renewal to determine if insurance cover can be applied or continue. Insurers will set underwriting guidelines which become the rules for which risks are accepted or declined. The guidelines are based on the benefits and limits available to the insurer to offer via a policy.

V

Vacancy
A condition where a property is unoccupied for an extended period, potentially impacting coverage terms.

Valuation
The process of determining the worth of a property. It’s important to understand if a valuation relates to the market value of a property (for sales purposes) or if the valuation is reflective of the property replacement costs (which relates to insurance requirements).

W

Waiver
The voluntary relinquishment of a known right or claim. In insurance, waivers may affect coverage or claims processes.

Z

Zero Deductible
A policy option where the insured doesn’t have to pay out-of-pocket for covered claims.