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Terminology

A Quick guide to insurance terminology


U
Under-insurance

Under-insurance occurs when a property is insured for less than it would cost to replace it. When a situation of under-insurance occurs, a valid claim will be subject to an average.

If you understate the insured value, you may be paying an incorrect amount of premium and therefore be under-insured. Should you then have a claim, the payment will be calculated in proportion to the actual sum insured and the actual value at risk at the time of loss or damage, and your claim payout will be adjusted accordingly.

(See the definition of Average.)




Uneconomical to repair

This refers to the situation where the insurer considers it possible to safely repair damaged property, but the cost of doing the repairs is more than the value of the property, less its expected salvage value. The insurer may, in such a situation, not consider it financially worthwhile to repair the property concerned, and so the damaged property will be a "write-off" or "written off."

(See the definition of Write-off.)

A vehicle is "uneconomical to repair" when the cost of parts, the availability of parts, the repair duration, and or/motor vehicle rental costs or other costs associated with the repair are high in relation to the value of the vehicle.




Unoccupied

If premises are unoccupied at regular intervals or for an extended period of time, they pose a higher risk of theft and/or damage and therefore will result in a higher premium being charged and/or excess being applicable in the event of a claim, or the claim may even be rejected. Most insurers use a 30 or 60 "consecutive days’ "exclusion clause for such premises, and some insurers may state the exclusion as 30 or 60 days "cumulative" over a period of 12 months.

An example of a "consecutive period exclusion clause" is a family vacation of more than 30 or 60 days, depending on the policy wording, during which there is no domestic employee or person looking after the property at regular intervals.

An example of a "cumulative period" is where a person travels often for business, where the cumulative days away are more than 30 or 60 days over a 12-month period, depending on the policy wording, and there is no domestic employee or person looking after the property.