Our Insurance Glossary

Act of God: Nugent v Smith (1876) “Natural causes directly and exclusively without human intervention and that could not have been prevented by any amount of foresight and pains and care reasonably to have been expected”.

Addendum: A document setting out agreed alterations to an insurance contract. (See Endorsement).

Additional Premium: A further premium payable by the insured as a result of a policy amendment or the disclosure of further information that has increased the risk, or due to the sums insured or limit of indemnity being increased.

Bona-Fide Sub-Contractor: Contractors who work without direction or control from the insured, hold their own insurance and usually provide their own materials and tools.

Cancellation: Termination of a policy before it is due to expire. There may be a cancellation clause in a policy setting out the condition under which the policy may be cancelled by notice. The period of notice could be anything from 48 hours to 3 months. In most cases this will result in a return premium being paid by the insurer to the insured.

Declaration Adjustment: Many liability policies are set up on the basis of estimated wages and turnover for the next year. An insured is required to complete, at the end of the insurance year, actual wages and turnover for the business insured and if that is more than originally estimated, the insurer has the right to charge the additional premium that should have been payable at the beginning of the year.

Employers Liability Insurance: Insurance by employers in respect of their liability to employees for injury or disease arising out of, and in the course of, their employment. With some exemptions this insurance is compulsory in Great Britain, and can only be provided by an authorised insurer.

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