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Glossary of insurance terms

Insurance terms can sometimes be confusing. Here's a handy guide to help clear things up!

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Car insurance

Contents insurance

House insurance

General insurance


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Car insurance

Insurance Term Meaning

Accessory or accessories   

An automotive part installed in or on your vehicle which is not supplied or fitted by the manufacturer of your vehicle as standard equipment for your make and model of vehicle e.g. a body kit, engine modifications, aftermarket wheel etc

Agreed value

The value of your vehicle that we have agreed to at the time of insuring your vehicle or at any change in cover or at renewal. The amount is shown in the certificate of insurance and is set at the beginning of each period of insurance

Modifications or modified

Changes or alterations to your vehicle from the manufacturer’s standard specifications, including but not limited to engine, sound system, steering, suspension, tyres or wheels


The vehicle shown in the certificate of insurance including spare parts, attached equipment, tools and breakdown equipment supplied by the manufacturer as well as any accessories and/or modifications specifically listed on the certificate of insurance



Contents insurance

Insurance term Meaning


A group of objects brought together in order to show or study them as a hobby, such as but not limited to stamps, coins, collector cards, medals, trophies, models or libraries of unusually large numbers of books, CD’s DVD’s, other digital media or comics


Any of the following tangible items that you own or hire and that are usually kept in or around the Situation:

Electronics including phones, mobile phones, tablets, home office equipment, MP3 players, laptops, PC's, stereos and stereo equipment, TV's, digital media equipment,   cameras

Personal effects including clothing, footwear, jewellery, cosmetics and toiletries, spectacles, dentures and hearing aids

Media/hobby items including books, CD's, DVD's computer game software, craft and hobby materials, collections

Household items including furniture, furnishings, art works, ornaments, electrical appliances   not plumbed or wired into your home, kitchenware, crockery, cutlery, food items, household linens, rugs and carpets not glued or tacked to the floor

Outdoor items including outdoor furniture, portable spa pools, gardening equipment, handyman equipment

Sports and camping equipment including watercraft, bicycles

Dependent children

Children aged up to 24 years who are single and who have no children of their own and who live with you. Dependent children must be totally or substantially reliant on their parents for support


The Earthquake Commission Act 1993 or any amendments or any Act(s) in substitution of the Act


The domestic building you own, lease or rent at the situation and any domestic structure on the domestic land that goes with it


An act or omission during the period of insurance including repetitive or continual exposure to the same conditions as a result of which you are charged with an offence under Sections 9, 11, 12, 13, 14, or 15 of the   Resource Management Act 1991 or any amendments or any Act(s) in substitution   of the Act.  Where the elements of an occurrence take place during more   than one period of insurance the occurrence shall be treated as taking   place during the period of insurance in which the first act/omission forming part of the occurrence took place

Personal aids

Devices or equipment designed to aid a disability such as but not limited to dentures, hearing aids, prosthetic limbs, wheelchairs and mobility scooters

Present day value

The cost at the time of the loss or damage of rebuilding, replacing or repairing your contents to a condition no better than new less an appropriate allowance for depreciation and deferred maintenance


The location which is shown in the Certificate of insurance


Any of the following: canoe, dinghy, inflatable dinghy, kayak, kiteboard, kontiki-type fishing equipment, surfboard, surf ski, wave ski, windsurfer and their accessories


House insurance

Insurance Term Meaning

Current value

The cost at the time of the loss or damage of rebuilding, replacing or repairing to a  condition no better than new less an appropriate allowance for depreciation and deferred maintenance


Earthquake Commission Act 1993 or any amendments


The domestic building(s) shown in the certificate   of insurance you own at the situation including its fixtures, fittings (other than floor coverings not permanently fixed or glued in place,   drapes and blinds), walls (including those walls and retaining walls   essential for the building or positioning of your domestic building(s) but not including retaining walls), gates, fences, underground and overhead   services extending to the public mains, and any other domestic structures on   the same site (other than unsealed driveways or paths)

Minor alteration

A minor alteration is a non-structural  alteration to your existing house that does not require plumbing or electrical work and does not require a building consent


An act or omission during the period of insurance including repetitive or continual exposure to the same conditions as a result of which you   are charged with an offence under Sections 9, 11, 12, 13, 14, or 15 of the Resource Management Act 1991. Where   the elements of an occurrence take   place during more than one period of   insurance the occurrence shall   be treated as taking place during the period of insurance in which the first act/omission forming part of the occurrence took place

Present day value

The lesser of:

  1. the market value of your house at the time   of the loss or damage, less the value of the land it is situated upon as an unoccupied site or

2.    the sum insured

Recreational features

An item listed on the certificate of insurance as a Recreational feature.  This is limited to: swimming pool, spa pool (permanently fixed or built in), tennis court (permanent material such as concrete  or tar seal but not grass) and sauna (permanently fixed or built in)

Replacement cost

The reasonable cost to repair or rebuild your house (as applicable) to a standard   that is reasonably equivalent to its appearance, size, functionality and   relative quality when new, but without necessarily reproducing it exactly

Retaining walls

A wall that is built for the sole function of retaining land and that is not essential for   the building or positioning of your domestic building(s) (because these are included in your house definition). It does not include retaining walls that are incomplete or any retaining   wall over 1.5 metres above ground that does not have any required local authority consent 


The location which is shown in the certificate of insurance

Special features

An item listed in the certificate of insurance as a Special feature. This is limited to the following: solar power system and solar water heating system

Sum insured

The figure specified in the certificate of insurance being the most that we will pay under this policy for each event during the period of insurance, unless the benefit states it is in addition   to the sum insured


General insurance

Insurance Term Meaning

A sudden unforeseen and unintended event

Agreed Value

The value of an insured item, agreed between an Insured and the Insurer at the beginning of a period of cover, which does not change throughout the period of cover

Annual Premium

The amount of premium which must be paid annually to keep a policy fully in force

Bodily injury  

Bodily injury (including death), illness, disability, disease, shock, fright, mental anguish or mental injury


Termination of an existing policy before it is due to expire


Notification to an insurance company that payment or some benefit is required because a loss which is covered by the policy has occurred


A person who makes a claim

Claim Form

A form a claimant must complete and provide to the Insurer so that it can assess and settle the claim. These can be obtained from the Insurer

Certificate of insurance

The certificate of insurance first issued to you or any further certificate issued as a result of a change to the policy or a renewal of the policy (whichever applies)

Comprehensive Policy

A policy which covers most risks relating to an insured item, with certain named exclusions. Often used in motor vehicle and liability insurance


The insurance protection/ policy provided to the customer


Statement, signed by the insured, warranting that the information provided by the customer is in fact true


The refused acceptance of an insurance application

Duty of Disclosure

Duty on an Insured to disclose material facts to an Insurer

Earthquake Commission (EQC)

A New Zealand Government agency established to provide cover in the event of earthquakes to residential property owners


The amount of any claim which you must bear. The excess applies to each and every event that results in a claim. Where a Benefit or Optional benefit specifies an additional excess, that additional excess will apply over and above any other excess in your certificate of insurance


The risks, perils or property defined in the policy as not being covered

Expiry Date

The date that cover under an insurance contract comes to an end

Inception Date

The date a contract of insurance comes into force and an Insurer goes on risk (i.e. the effective date)

Insurance Contract

A formal contract between the Insured and Insurer agreeing to the level of cover which is to be provided and the terms and conditions of that cover. It is generally made up of 3 separate documents – the Policy Wording, the Policy Schedule/Notice and the Proposal, Application or Declaration

Insurance Policy A written contract of insurance cover

A person who is insured under a contract of insurance


An organisation that provides insurance

Lapsed Policy

A policy terminated because of non-payment of premiums, or that has expired at the end of the period of cover without renewal

Liability Protection

Insurance which provides protection for the Insured from damage arising out of the Insured's negligence to a third party's property


A liability incurred, or injury, harm, damage or financial detriment suffered by a claimant

Market Value

The value of an asset based on current market valuation, e.g, the amount for which the item could be sold for on the open market

Named Insured

The person or party designated in the policy as the insured, as opposed to someone who may be covered by the policy, but is not specifically named

Natural disaster damage

Sudden and accidental physical loss or sudden and accidental physical damage as a direct result of earthquake, natural landslip, volcanic eruption, hydrothermal activity or tsunami and includes loss or damage occurring (whether accidentally or not) as a direct result of measures taken under proper authority to avoid the spreading of or to otherwise reduce   the consequences of an earthquake, natural landslip, volcanic eruption, hydrothermal activity or tsunami. It does not include any loss or damage for which compensation is payable under any Act of Parliament other than the Earthquake Commission Act 1993 or any amendments or any Act(s) in substitution of the Act

Natural landslip

The movement (whether by way of falling, sliding, flowing or by a combination thereof) of ground-forming materials composed of natural rock, soil, artificial fill or a combination of such materials, which, before movement, formed an integral part of the ground but does not include the movement of ground due to below-ground subsidence, soil expansion, soil shrinkage, soil compaction or erosion

No Claims Bonus

A discount or reduction in insurance premium allowed if no claims are made by an Insured in one or more consecutive proceeding years


A failure by an insured to disclose a fact which is material to the acceptance of a contract of insurance by an insurer

Period of insurance

The period shown in the most current certificate of insurance


A document issued to an Insured from an Insurer setting out the terms and conditions of the insurance contract

Policy Limit

The maximum amount payable under a policy of insurance


A prescribed amount paid by the Insured as consideration for cover provided by the Insurer


The reactivation of suspended or cancelled insurance. Restoration of full amount of insurance or reinsurance after a claim has been paid, with or without the payment of additional premium


A process where the Insured and Insurer agree to continue insurance from one risk period to another. e.g.usually a yearly period


A hazard, exposure or chance of loss

Sum Insured

The maximum amount covered under a contract of insurance.e.g. A house insured for the sum of $400,000


The period of time your policy is intended to run: until your death, for a specified number of years, or until a specified age

Third Party

Any person other than the Insured who has suffered or caused an injury or loss (the Insured and the Insurer are the first and second parties to the insurance contract)

Total Loss
A loss where the cost of repair exceeds the market value of the insured item or where it is uneconomical to repair the item. The Insurer will generally pay the Insured the replacement or indemnity value of the damaged item limited to the total sum insured under the contract
Uneconomic to Repair

Used when an insured item is stolen and not recovered, unsafe to repair or would cost more to repair than replace

Unused premium

Premium for the days you have paid for, but will not be insured (calculated as at the effective date of cancellation)


A situation where the sum insured is less than the true market value of the item insured


The process an Insurer goes through in evaluating, accepting or rejecting insurance risk

We, us or our

Trade Me Insurance

Wear and Tear

An amount deducted from a claim for damage to an insured item because of depreciation in the items value due to usage

You or your

The person(s) named in the certificate of insurance as the policy holder. Where you jointly own the vehicle, contents and/ or house this policy insures you jointly


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