cove insurance

Insurance Glossary.

The Cove team explains all the common insurance terms.

Insurance terminology can be quite confusing! That’s why the team at Cove have written our own mini insurance dictionary to explain common insurance terms.


Accessories – Non-standard extras which have been added to a vehicle for reasons other than enhancing the cars performance. Accessories can include navigation systems, mag wheels, and stereos.

Accident – A sudden and unforeseen event that was not intended. What this isn’t is gradual wear and tear or something deliberate.

Actuary – A professional who is focused on the technical and mathematical aspects of insurance, especially during the process of risk management and calculating premiums.

Agreed Value – The amount for which you and your insurer agree to insure your vehicle / item / home. Your agreed value is typically shown within your insurance policy schedule. We at Cove will make it a little easier to find in the ‘details of coverage section’.

Apportionment – Describes the process of allocating damage across multiple events.


Broker – A insurance broker is a professional who specialises in insurance, and can advise their clients on how to best insure their valuables and / or themselves.


Car InsuranceCar insurance is a common type of insurance covering vehicle related incidents

Chatbot – An intelligent computer program that is designed to simulate human conversation to make the process of transacting over the internet easier and more intuitive.

Claim – The process of a policy-holder lodging a request to their insurer to obtain the benefits provided by an insurance policy.

Cover – The amount of protection provided by an insurance policy.

Consequential loss – Additional expenses that arise as a consequence of a main event taking place. During a house insurance claim for example, undamaged property may be replaced to create a uniform appearance alongside the repaired damaged property.

Current value – The market value of your home prior to accidental damage taking place. The current value takes into account age, wear and tear, and depreciation.


Dependent children – Children who are under 21, and are not yet self-supporting.

Depreciation – Takes the age and condition of an asset into account to establish what the asset is worth immediately before it was damaged or lost.

Duty of disclosure – When applying for insurance you have a duty of disclosure. This essentially means that you must tell your insurer everything you believe that the insurer would want to take into account when considering your insurance application, and determining the cost. Your duty of disclosure does not just apply when you first purchase insurance, it is important throughout the life of any insurance policy. If your circumstances change in any way in relation to an insurance policy you hold, you must let your insurer know about it. Examples could include modifications or renovations to your home or vehicle, or any traffic or criminal convictions you have received since buying your insurance policy.


Excess – Your excess is the amount you must pay towards the cost of an insurance claim. You can set your excess when purchasing the insurance policy, and in most cases you can opt to pay a higher excess in return for lower monthly premiums, or vice versa.

Exclusion – A provision within an insurance policy that means certain circumstances are not covered.

EQ – A common abbreviation for earthquake used within the New Zealand insurance industry.

EQ Cover – This is the cover which is provided by the New Zealand Earthquake Commission in the event of damage to both houses and their contents that is a direct result of a natural disaster such as a flood or earthquake.

EQC Cap – Your home insurance cover with your chosen insurer becomes triggered once the value of the damage to your home from any one event reaches the maximum amount the Earthquake Commission will pay ($115,000).

Event – A single event or series of events that have a common cause.


Imposed Excess – An insurer may impose a non-standard excess on your policy if you are more likely to make a claim.

Indemnity value – In relation to a contents insurance policy, the indemnity value is the item’s current value, taking into account its age and condition immediately before the loss or damage occurred.

Insured – The person named on the insurance policy. In most cases this is the person who owns the property being insured.


Lapsed policy – A policy that has been terminated either because the policy holder has failed to pay premiums, or has expired at the end of the period of cover without renewal.

Liability – When you are deemed legally responsible for the damage to someone else’s property.

LIM – An abbreviation for Land Information Memorandum, and refers to the information held by a council about an individual property.

Loss Adjuster – A professional whose role it is to assess damage and make a recommendation outlining the most suitable methods for repair.


Market Value – A reasonable retail value of an asset immediately before it was lost or damaged. An items or vehicles market value is essentially the reasonable cost to buy a replacement of similar age and condition.

Modification – Additions to a vehicle which have been added with the intention of changing its performance. Examples include performance mufflers, turbos, and blow-off valves.


Named Driver – Any individual driver that is listed on a car insurance policy schedule.

Natural Disaster – Includes earthquakes, volcanic eruptions, natural landslides, tsunami, hydrothermal activity, or fire resulting from any of these. Gradual or slow moving landslides are not included under the definition of natural disaster.


Other driver – Refers to the driver of the other vehicle in an accident.


Period of Insurance – The time that you are insured for, which is shown within your policy schedule.

Personal Liability – Refers to the legally-enforceable liability that an individual has for a loss or damage suffered by someone else. For example, you you leave your car at the top of a road without the handbrake on, and it rolls down the hill and through another homeowners fence, you’ll be legally liable (personally liable) for the damage that car has caused.

Policy – Your policy is the insurance contract with your insurer.

Policy document – The document which outlines the terms and conditions of insurance for a particular policy. Your policy document sets out what is and isn’t covered under your policy.

Premium – The payments that are made for your insurance policy. Your premium is made up of the company premium which goes to your insurer, along with various government levies such as the Earthquake Commission levy and the Fire Service levy. In many cases you can choose to decrease your premium payments by increasing your excess.


Quote – When purchasing insurance online you will be presented with an insurance quote upon answering a set of questions. The quote can then purchased at a time that suits you.


Specified Item – A specified item is a unique item that is individually named on a contents insurance policy, and can include either unique items or collections of rare items. Your insurer will be able to advise what items need to be specified on a contents insurance policy.

Sum Insured – The sum insured value is the maximum an insurer will pay in the event of a total loss. Your sum insured is set when you first purchase a home insurance policy, and can be amended during the term of the policy by speaking with your insurer.


Underwriter – A professional who assesses the risk of providing an insurance policy to an individual.



The content presented on this page is provided for informational purposes only. Cove Limited makes no representations or warranties as to the accuracy, completeness or timeliness of the information. Each person should consult a qualified advisor for advice specific to their circumstances. Cove Limited assumes no liability for actions taken in reliance upon the information contained herein.