Editorial attribution: Professional Insurance UK Editorial Team
Editorial review: 28 June 2026
This glossary explains common UK business-insurance terms in plain English. Definitions are general orientation only. A policy may define a term differently, and the definition in the applicable wording, schedule or endorsement controls the contract.
It is part of the wider Business Insurance Resources collection.
Use Understanding Business Insurance Documents to see where terms appear and Business Insurance Requirements in the UK when a term is connected with a legal, professional or contractual obligation.
A
Aggregate limit
The maximum the insurer will pay for all covered claims, events or losses within a stated period or section, subject to the wording. An aggregate limit can be exhausted by more than one claim.
Any one claim
A limit stated to apply separately to each covered claim, subject to aggregation language, connected-claim provisions and the rest of the policy. It should not be assumed to mean the same as “any one occurrence”.
Any one occurrence or event
A limit that applies to a covered occurrence or event. Several losses may be treated as one event where the policy’s aggregation wording says so.
Average
A policy provision that may reduce a property claim proportionately where the sum insured is lower than the value required by the policy. The formula and circumstances depend on the wording.
B
Broker
An insurance intermediary that may arrange, administer or advise on insurance within its permissions and agreed service. The broker is not normally the insurer and its precise duties depend on the arrangement and law.
Business description
The description of the activities insured. It can affect underwriting and the scope of cover. New or inaccurately described activities should be raised through the appropriate channel.
Business interruption insurance
Cover designed to protect specified income, profit, revenue, increased costs or other financial consequences after an insured interruption. It usually depends on a trigger defined by the policy, often linked to insured physical damage unless a non-damage extension applies.
C
Cancellation
Ending a policy before its scheduled expiry. Rights, notice, refunds, fees and consequences depend on the policy and applicable law.
Certificate of insurance
A document evidencing specified insurance, often for a legal, contractual or administrative purpose. It is not normally the complete policy and may not show every exclusion, condition or sub-limit.
Claim
A request for payment, indemnity, defence or another benefit under a policy. Some wordings define claim narrowly and distinguish it from a circumstance, incident or loss.
Claims-made policy
A policy commonly triggered by a claim first made against the insured, and usually notified, during the policy period or an allowed reporting period, subject to the wording. Professional indemnity and directors’ and officers’ policies often use claims-made structures.
Coinsurance
An arrangement in which more than one insurer shares an insured risk. It can also describe a policyholder’s retained percentage in some contexts. Check the document’s definition.
Condition
A contractual requirement that may affect cover, claim payment or the insured’s obligations. The consequences of breach depend on the term, facts and applicable law.
Condition precedent
A term expressed to make an insurer’s liability or a particular obligation dependent on compliance. The legal effect depends on the wording, the type of term and applicable legislation; the label alone is not conclusive.
Contribution
The principle or policy mechanism under which insurers covering the same interest and loss may share the cost. The policyholder should still notify insurers as required rather than deciding contribution privately.
Cover or coverage
The protection provided by an insurance contract, subject to its insuring clauses, definitions, limits, exclusions, conditions and endorsements.
Cyber insurance
Insurance that may cover specified cyber incidents, data events, response costs, liability, extortion, crime or business interruption. Scope varies substantially, and insurance does not replace cyber-security or legal-compliance measures.
D
Declaration
A statement, confirmation or periodic submission made by the insured. It may relate to the accuracy of information, turnover, wages, stock or another adjustable factor.
Deductible
An amount or portion of loss borne by the policyholder. In UK commercial policies, “excess” is more common, but the contractual effect must be checked.
Directors’ and officers’ liability insurance
Cover designed for specified claims against directors, officers or other insured persons arising from alleged wrongful acts in their managerial capacity, sometimes with related company reimbursement or entity cover.
Duty of fair presentation
The duty under the Insurance Act 2015 applying to non-consumer insurance before the contract is entered into and when relevant variations are agreed. Broadly, the insured must disclose material circumstances it knows or ought to know, or give sufficient information to put a prudent insurer on notice to ask further questions, in a reasonably clear and accessible way.
E
Employers’ liability insurance
Insurance against specified liability for injury or disease suffered by employees in connection with their employment. Compulsory regimes apply in Great Britain and separately in Northern Ireland, subject to their scope and exemptions.
Endorsement
A document or term that adds to, removes or changes the standard policy wording. Endorsements must be read with the schedule and wording.
Excess
The amount of a covered loss or claim the policyholder must bear, subject to the policy. Different excesses can apply to different sections, causes or claims.
Exclusion
A term removing specified losses, causes, activities, property, people, territories or circumstances from cover. An exclusion must be read with definitions, extensions and endorsements.
Extension
An addition to standard cover. It may have its own conditions, exclusions, waiting period or sub-limit and may be narrower than the main section.
F
Financial Conduct Authority (FCA)
The UK conduct regulator for financial services and markets, with responsibilities that include rules for insurance distribution. The Financial Services Register should be used to check a firm’s current status, permissions and restrictions.
First loss basis
A basis sometimes used where the maximum foreseeable loss is lower than the total value at risk. The sum insured and any average provision must be checked carefully.
Franchise
In insurance, a threshold below which no payment is made but above which the policy may pay the loss in accordance with its terms. It is different from an excess, although the words are sometimes confused.
G
Gross profit
A defined business-interruption measure that may differ from the accounting meaning. The policy definition and calculation basis must be used.
I
Indemnity
The principle of placing an insured, so far as money can and subject to the contract, in the financial position it would have occupied immediately before the insured loss. Some policies provide benefits on another agreed basis.
Indemnity period
For business interruption, the period during which covered results of the business are affected by an insured event, subject to the maximum period stated in the policy. It is not necessarily the same as the period of insurance.
Insurance intermediary
A person or firm carrying on insurance distribution activities, such as arranging, advising or assisting in administration, within the relevant legal and regulatory framework.
Insurance Product Information Document (IPID)
A standardised summary for many non-life insurance products, designed to give concise information about main cover, restrictions, obligations, territory, duration and cancellation. It does not replace the full contract.
Insured
A person or entity protected under a policy. The term can include the policyholder and additional categories defined by the contract, but not everyone connected with the business is automatically insured.
Insurer
The entity that accepts the insured risk and promises the contractual insurance benefit. Its identity should be shown in the policy documents.
L
Limit of indemnity
The maximum amount payable under a liability section, subject to its basis, aggregation, defence-cost treatment, sub-limits and other terms.
Loss adjuster
A person or firm appointed to investigate, assess or assist with a claim, commonly for an insurer. Appointment does not itself confirm that the claim is covered.
Loss assessor
A person or firm engaged by a policyholder to assist with preparing or negotiating a claim. Fees and the scope of service should be understood before appointment.
M
Material circumstance
For the Insurance Act 2015 duty of fair presentation, a circumstance that would influence the judgement of a prudent insurer in deciding whether to take the risk and, if so, on what terms.
Mid-term adjustment
A change to the policy during its period, such as adding an activity, premises, vehicle, entity or limit. It may alter premium, terms and effective dates.
N
Notification
Giving an insurer or specified recipient information about a claim, circumstance, incident or change in the manner and time required by the policy. Ordinary correspondence with another party may not satisfy a notification condition.
O
Occurrence-based policy
A policy generally triggered by an insured event or injury occurring during the policy period, even if a claim is made later, subject to the wording and limitation rules.
P
Period of insurance
The dates and times during which the policy applies, as shown in the schedule and subject to cancellation or extension terms.
Policy
The insurance contract and the documents forming it. This often includes the wording, schedule and endorsements and may include other identified documents.
Policyholder
The person or entity that enters into the insurance contract. The policyholder may not be the only insured person or entity.
Policy schedule
The document personalising the standard wording by identifying the policyholder, period, business, selected sections, limits, sums insured, excesses and endorsements.
Policy wording
The document containing the standard insuring clauses, definitions, exclusions and conditions. The applicable edition must be read with the schedule and endorsements.
Premium
The price charged for the insurance, normally before or including Insurance Premium Tax and any separate fees as stated. Instalment credit charges may be governed by a separate finance agreement.
Professional indemnity insurance
Professional indemnity insurance is liability insurance designed for specified claims arising from professional services, advice, design, error or omission. It is commonly claims-made and may be compulsory for some professions or required by contract.
Proposal form
A form used to collect information for underwriting. It should be retained with submitted answers, attachments and later corrections.
Public liability insurance
Liability insurance designed for specified claims by third parties for injury or property damage connected with the business. It is not universally compulsory for every UK business, although contracts, venues or sector rules may require it.
R
Reinstatement
Depending on context, restoring damaged property or restoring a sum insured or limit after a loss. Any automatic or paid reinstatement of a limit depends on the wording.
Reservation of rights
A statement that an insurer is investigating or taking steps while reserving its position on cover or another right. Its effect depends on the wording and circumstances.
Retroactive date
A date used in some claims-made policies to restrict cover for work, acts or omissions occurring before that date, subject to the wording.
Risk
The possibility of loss or the subject matter and circumstances assessed by an insurer. In a policy, the term may have a specific definition.
Run-off cover
Insurance maintained after a business or professional practice stops or changes, commonly to respond to later claims arising from earlier work under a claims-made structure. Duration and terms depend on the requirement and policy.
S
Statement of fact
A record of information and assumptions used in arranging or underwriting insurance. It should be checked and corrected rather than treated as automatically accurate.
Sub-limit
A lower limit applying within a broader section or overall limit. A sub-limit may be per claim, per event or aggregate.
Subrogation
The insurer’s right, after paying or accepting an indemnity obligation, to pursue recovery from a responsible third party in the insured’s name or otherwise as the law and policy permit.
Sum insured
A monetary amount applying to property, business interruption or another insured item. It may be the maximum payable but can also interact with average, index-linking, inner limits and the valuation basis.
T
Third party
A person or entity other than the two principal parties to the insurance contract. In liability insurance, it commonly means someone alleging injury, damage or loss caused by the insured.
Territorial limits
The geographical area in which specified activities, events or property are covered. This is different from jurisdictional limits governing where claims or proceedings may be brought.
U
Underinsurance
A situation in which the insured value, limit or selected protection is insufficient for the exposure or loss. Consequences depend on the policy and may include application of average, a restricted payment or an uninsured balance.
Underwriter
A person or insurer function that assesses a risk and decides whether to offer insurance and on what terms.
W
Warranty
A policy term requiring specified conduct or circumstances. Under the Insurance Act 2015, breach of warranty generally suspends the insurer’s liability for losses occurring while the breach continues, subject to the Act and the contract, rather than automatically discharging liability from the date of breach.
Waiting period
A period that must pass before specified cover or benefit begins after an event. Common examples appear in business interruption and cyber sections.
Terms that are often confused
Certificate, schedule and wording
A certificate evidences specified insurance. A schedule personalises the policy. The wording contains standard contractual terms. They perform different functions and should not be treated as interchangeable.
Limit, sum insured and sub-limit
A limit commonly caps liability cover or a specified benefit. A sum insured commonly applies to property or business interruption. A sub-limit is a lower cap within broader cover. The policy may use these expressions differently, so the relevant definition and section must be checked.
Excess, deductible and franchise
An excess or deductible is generally an amount borne by the policyholder. A franchise is generally a threshold with a different payment effect once exceeded. The actual contractual mechanism matters more than the label.
Claims-made and occurrence-based
A claims-made policy commonly focuses on when a claim is first made and notified. An occurrence-based policy commonly focuses on when the insured event or injury occurred. Retroactive dates, reporting periods, notification clauses and aggregation can materially affect either structure.
Insurer, broker and loss adjuster
The insurer accepts the insurance risk. A broker or other intermediary may arrange or advise on the policy. A loss adjuster may investigate or assess a claim, often for the insurer. One organisation can perform more than one role only where its status and responsibilities permit, so identify who is acting for whom.
Public liability and employers’ liability
Public liability commonly concerns third-party injury or property damage connected with the business. Employers’ liability concerns specified employee injury or disease and is subject to compulsory regimes. The categories can overlap factually, but their policy and legal bases differ.
How to use this glossary
When a term affects a decision or claim:
- Find the term in the applicable policy wording.
- Check whether the schedule or endorsement changes it.
- Read connected definitions and aggregation provisions.
- Check whether the same word is used differently in a contract, statute or professional rule.
- Obtain written clarification or advice where the effect is material.
Important limitations
Insurance terminology is not perfectly standardised. Similar words can have different meanings between policies, and legal consequences depend on the exact text and facts.
This glossary does not interpret an individual policy or provide personalised advice.
Next step
Read Business Insurance Explained for the wider cover map, then use Understanding Business Insurance Documents to locate the controlling terms in an issued policy.