Terms commonly used in Home and Contents Insurance

Buildings Insurance - This is a policy designed to protect your home's structure and its fixtures and fittings. In fact anything that's permanently fixed to the property is covered. Buildings Insurance (also called Home Insurance) insures you against certain named risks and dangers, such as subsidence, fire, flooding etc.

Claim - This is when a policyholder requests their insurance company to make good or make a reimbursement as a result of an loss event covered by the policy's conditions.

Contents Insurance - Contents insurance covers anything in your home that could be easily removed (e.g. your furniture and personal possessions), against risks such as theft, damage, fire and flood etc.

Excess - All policies will require you to pay the first £x of any claim. (The actual value will vary between insurers.) You can agree to accept a higher excess and this will reduce the cost of your premiums.

Exclusion - An exclusions is a risks or situations or property which is not insured by your Home and Contents insurance policy. The exclusions will be detailed within your policy documents..

Index Linking - With some insurers, Index Linking is an optional extra. Index Linking is a system by which you can ensure that the value of your insured sum keeps pace with price inflation. Some UK home insurance companies use the Retail Price Index to calculate the annual rate of inflation. With Index Linking your insurer will automatically work out how much your contents insurance cover needs to rise each year. They will then similarly adjust your premium.

Insurance Premium Tax (IPT) - IPT is levied by the British Government on almost all insurance sold in the UK. (Some insurance sold by some Friendly Societies is not subject to IPT.)

No Claims Bonus - Sometimes you can qualify for a no claims discount for every year that you don't have a claim.

Policy - This is the insurance contract which is drawn up between the policyholder and the insurer. It contains full details of what is insured - and what is not!

Premium - This is a monthly or annual payment given to the insurance company for the insurance cover being provided by the insurer.

Public Liability - You have a legal obligation if someone is damaged or injured whilst in your home or on your property. Most Home and Contents policies cover you for this risk.

Sum Insured - This is the amount of money for which your home and its contents are being insured. You choose this value. You must ensure that you include all your possessions accurately. Underinsuring is a false economy - it may save you money in the short term but will cause massive problems in the event of a claim. If you are under insured your insurance company is unlikely to pay out the full value of your claim.