The Pangea Insurance Jargon Buster

Sophie Taylor • February 27, 2026

Don't get thrown off by jargon - let us explain what common insurance terms mean.

We've created a jargon buster with some of the most common phrases that get used in the insurance world, broken down into clear, simple explanations.

Bookmark this page and come back whenever you need a quick answer!

Additional covers
Types of cover that are not included with your standard insurance policy. These covers are optional, and you can choose to add them to your policy if you want them.
Aggregation Clause
A policy clause that groups multiple losses into a single claim.

Often used in commercial insurance - can significantly affect how much you’re paid.
Basis of Settlement
Explains how a claim will be calculated.

For example: replacement as new, indemnity, or market value.
Cover Limit
The maximum amount of money that your insurer will pay out on a single successful claim. This may also refer to the maximum that they’ll pay out on claims per year.
Cooling-Off Period
A set time (usually 14 days) during which you can cancel a policy.

You may still be charged for time on cover.
Claim
A request you make to your insurer when something goes wrong and you want to use your policy.

You only claim if the event is covered by your policy.
Declarations Page / Statement of Fact
A summary of the key information used to set up your policy.

Errors here can invalidate cover - always check carefully.
Endorsement
A change or addition to your policy wording.

This could add cover, restrict cover, or clarify terms.
Excess (or Deductible)
The amount you must pay towards a claim before your insurer pays the rest.

Example: If your excess is £250 and your claim is £1,000, the insurer pays £750.
Exclusions
Situations or events that your policy does not cover.

Always check exclusions carefully - this is where surprises often happen.
Indemnity
The principle that insurance should put you back in the same financial position you were in before the loss — not better.

Insurance isn’t designed to profit you.
IPT (Insurance Premium Tax)
A government tax applied to most insurance policies in the UK.

Currently charged at different rates depending on cover type

Lapsed
A policy will lapse if it comes to the renewal date and the policy holder hasn’t paid to renew the policy.
Liability
Your legal responsibility if you cause injury or damage to someone else or their property.

Common in business, public liability, and motor insurance
Loss Adjuster
A specialist appointed by insurers to investigate and assess claims.

They work for the insurer - not the policyholder.
Material Fact
Any information that could influence an insurer’s decision to offer cover or set a premium.

If in doubt - disclose it.
Mid-term adjustment
A change made to your policy between the date you bought it and the date it will be renewed.
No Claims Bonus / No Claims Discount
A discount you earn for not making claims over a certain period.

More claim-free years usually mean cheaper premiums.
Renewal
When your policy comes to an end and is offered again for another term.

Premiums and terms can change at renewal.
Policy
The contract between you and the insurer that explains what’s covered, what’s excluded, and under what conditions.

This is the rulebook for your insurance.
Premium
The amount you pay for your insurance policy — usually monthly or annually.

Think of it as the subscription fee for your insurance cover.
Sum Insured
The maximum amount the insurer will pay for a claim.

If your sum insured is too low, you may be underinsured.
Third-party
A person that is not involved with your business. Some examples of third parties may be clients, customers, members of the public etc.
Underinsurance
When the sum insured is less than the true value of what you’re insuring.

This can result in reduced claim payouts - even for partial losses.

Why Insurance Jargon Matters

Misunderstanding insurance terms can lead to:

Unexpected claim rejections
Inadequate cover
Paying more than necessary

That’s why using a broker for your insurance policies is beneficial and helps with peace of mind that you are covered correctly, after all, it's our job to translate insurance into real-world advice.

If you’re unsure what you need or what your current policy really covers, we’re here to help. Contact Pangea Insurance Brokers for clear advice, tailored cover, and no jargon.

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