Glossary of Insurance Terms
This glossary is intended to provide you with an easy to understand explanation of common terms used in the insurance context. Note that this glossary does not provide legal definitions. You must always refer to the relevant insurance policy or other contract when interpreting your rights and obligations, and the definitions contained in this glossary do not replace any definitions contained in any policy of insurance that you now hold or may hold in the future with AAMI. In the event of an inconsistency between definition in this glossary and a definition in an AAMI policy of insurance or other legal document, the definition in the policy or legal document will always prevail. Importantly, use of this glossary is governed by AAMI's Website
Terms of Use. Whilst reasonable efforts have been made to ensure that the information provided in this glossary is accurate. AAMI does not warrant the accuracy, adequacy of completeness of the information provided in this glossary, which is provided on as "as is" basis. Please read the AAMI Website
Terms of Use for further information.
Act of terrorism - The use of violence for political ends and includes any use of violence for the purpose of putting the public, or any section of the public, in fear, but only if committed by a person or persons acting on behalf of or in connection with any organisation.
Additional costs - (other than medical costs, which we are not allowed to pay by law),
Defence costs incurred with our written consent Any other costs and expenses incurred with our written consent.
ADR - Any form of alternative dispute resolution (not including any form of dispute resolution provided or ordered by courts, tribunals or other statutory bodies) which is agreed between us and you as appropriate for a particular commercial dispute.
ADR clause - A clause embodied in your written contracts in the following terms or in substantially those terms as approved by us:
"If any dispute arises in relation to this contract, the parties must, before instituting any legal proceedings, use their best endeavours to resolve the dispute and must participate in good faith in alternative dispute resolution presided over by a mediator agreed by both parties."
Agreed value - The amount we agree to insure your vehicle for. This amount is shown in the schedule.
Annual income - The gross income during the 12 months immediately before the date the damage occurred.
Appointed solicitor - The solicitor appointed to act for you, with our approval.
Attendance expenses - The salary or wages of an insured employee for the period he or she is absent from work to attend either as a witness on your behalf or on behalf of another insured employee and at the request of the appointed solicitor, or as a defendant at a court, tribunal or arbitration hearing as the case may be or as a jury member for each half or whole day of such attendance to the extent that they are not recoverable from the court, tribunal or arbitration hearing or from the other side on the case or action; they must be calculated on the basis that: the period of absence from work includes that time taken to travel to and from the hearing and shall be calculated to the nearest half day taking an eight hour day to be a whole day for this purpose and as the maximum period for which a claim can be made in respect of one day. For full time employee one whole day’s salary or wages equals 1/250th of the insured employee’s annual salary or wages at the time of such attendance. For part time employees the salary or wages for the period of absence from work shall bear the same proportion to their weekly salary or wages as the period of absence from work to their normal working week for you.
Auditor - An officer who is authorised under Commonwealth, State or Territory legislation to carry out an audit of your taxation or financial affairs or a designated liability.
Average weekly income - The average Weekly Income for the 12 months preceding the date of the damage. If the business has not yet completed the first Financial year, then the average weekly Gross Income for the period which it has operated for.
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Boilers and pressure plant - Those parts of the permanent structure of the machinery described in the schedule which are subject to internal steam gas or fluid pressure (other than atmospheric pressure) including fittings and direct attachments which are connected to the permanent structure without intervening valve or cock.
Supporting structures of the machinery described above (other than foundations, masonry or brickwork) such as furnace doors, access doors, external combustion chambers smoke boxes and casings.
Metal parts of pressure and water gauges and their connections to the permanent structure.
Buildings - Buildings and structural improvements, including services, fences, walls, gates and landlord’s fixtures and fittings.
Business - The business described in the schedule, including the ownership of any premises shown in the schedule.
Business buildings - Buildings and structural improvements including services, fences, walls, gates and landlord's fixtures and fittings, which are used solely or primarily in connection with the business, but excluding your home.
Business contents - Business equipment, plant, fixtures, fittings, business furniture and tools of trade used in connection with the business, business documents, patterns, models, moulds, dies or lasts, but limited to the value of such items in your financial records used in connection with the business, paintings, works of art, antiques and curios up to $5,000 any one item, and $20,000 for all such articles, unless a different amount is shown in the schedule, used in connection with the business, business contents also includes: Tenant's improvements (when you are the tenant but not the owner of the premises), and Landlords fixtures and fittings for which you as tenant are legally liable, but excluding your contents.
Business property - Business buildings, business contents, stock, capital additions and any other business items specified in the schedule, owned by you or for which you are legally responsible, which are used solely or primarily for business use but excluding: business money, explosives, aircraft and/or watercraft of every kind and description, or registered motor vehicles and trailers, unless these items are specified in the schedule.
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Capital additions - Alterations or additions to buildings or contents at the premises carried out after the commencement of the period of insurance.
Cigarettes & liquor - Cigarettes, cigars, tobacco, liquor and spirits.
Commercial dispute - A dispute between you and any other party arising out of or in connection with your business.
Computer equipment - Electronic data processing equipment comprising a central processing unit with flexible programming ability, video display units, printers, hard disks, floppy disk drives, micro diskettes including read/write heads, electro/mechanical motors and passive components, but does not include software.
Contents (home) - Any of the items that you either own, or are legally responsible for, but only if you normally keep them in your home, or at the site or in the case of glass, at the premises (subject to the conditions of the policy).
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Damage - Sudden and unforeseen physical damage.
Damage to property - physical loss or damage to or destruction of tangible property including resultant loss of use loss of use of tangible property. Where damage to property is as a consequence of a latent cause we will consider the damage to property to have happened when it was first discovered.
Direct - Here we mean the situation when a customer deals directly with the insurer instead of through an intermediary (eg. Broker).
Documents - Documents, manuscripts, business books, computer system’s records, plans or designs. These items are only insured for their value in an unused or blank state as stationary or media as the case may be.
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Employee - Any person engaged in the business under a contract of service or apprenticeship.
Employee dishonesty - The unlawful taking of property or money by an employee while working for you in connection with the business (whether acting alone or in collusion with others) with the intent to: cause loss to you or benefit any person or organisation other than you.
Event - One incident or all incidents of a series consequent on, or attributable to, one source or original cause
Excess - The first amount of each and every claim that shall be paid by you, after the application of any limits. The excess will be deducted after the application of any limits or terms imposed by the policy.
For example if a limit of $1,000 applies, and an excess of $250 is payable by you, the amount we pay will be $750.
If you suffer loss or damage which leads to a claim under more than one section of the policy, or for more than one item of property: The highest excess is payable but Only one excess is payable.
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Financial Services Guide (FSG) - If you are interested in Business Insurance Commercial Motor or certain sections of Business@Home™ cover you will be provided with an FSG. The document provides you with information about AAMI Business Insurance to help you to decide whether to use the financial services we provide.
Fixture(s) - Any item that is permanently attached or fixed to your home. You would not normally take this type of item with you if you moved house. For example, kitchen cupboards, built-in wardrobes or bathroom fittings such as taps and towel rails.
Flood - The inundation of normally dry land by water escaping or released from the normal confines of any natural water course or lake, whether or not altered or modified, or of any reservoir canal or dam.
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General items - Unspecified tools of trade, but excluding mobile telephones, laptop computers, video cameras and specified items, shown in the schedule.
Goods - Stock, plant and/or machinery that you buy, sell or use in connection with your business.
Gross income - The money paid or payable to you for goods sold, services rendered, or rental received, less the purchase price of stock.
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Indemnity period - The period beginning when the damage took place, and ending when the business is no longer affected by the damage, or the period show in the schedule, whichever is the sooner.
Insured employee - All of your employees, including directors, business partners and managers.
We will treat any statement, claim, act or omission by any one of the insured persons as a statement, claim, act or omission by all of them.
Insurance period - Normally the period of time beginning on the date shown by "Start Date" on the schedule, and ending at 4:00pm on the date shown by "Expiry Date" on the schedule.
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Legal costs and expenses - Costs and disbursements reasonably and properly charged or incurred by the appointed solicitor or by any mediator appointed by any ADR body in accordance with any applicable statutory or court scale of fees.
Legal liability - Covers you for your legal liability for personal injury to another person (other than employees) or damage to property owned or controlled by someone else, which happens during the period of insurance and which is caused by an occurrence in connection with the business.
Limit of indemnity - The sum specified in the schedule as the maximum sum payable by us for all claims made or legal proceedings commenced arising from one act, omission, accident or dispute. For each period of insurance the sum specified in the schedule as the maximum sum payable by us under Section 9 with respect to all claims made or legal proceedings commenced within the period of insurance.
Loss - Sudden and unforeseen physical loss.
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Machinery - Any item or component of an item including electronic and other integral parts which generates, contains, controls, transmits, receives, transforms, or utilises any form or source of energy or power as described in the schedule.
Machinery does not include computers equipment, telecommunication transmission and receiving equipment, lighting facilities, audio visual amplification and surveillance equipment, research and diagnostic electro-medical equipment, office machines, coin/car operated machines, storage tanks and vats, stationary and mobile pressure vessels containing explosive gasses, domestic type hot water systems, mobile plant, ducting, reticulating electrical wiring, water and gas piping and any other machinery not owned by you or not installed or used at the premises unless specified in the schedule.
Market value - The amount you would have to pay to buy a vehicle similar to your vehicle immediately before the loss or damage, taking into account its make, model, age, kilometres travelled and condition.
To determine the market value we may refer to an excepted motor vehicle valuation guide used by the motor industry.
Money - Current coin, bank notes, or negotiable instruments such as but not limited to cheques, stamps vouchers or tickets all belonging to the business, or for which you are legally responsible.
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Negotiable instruments - A legal document that represents money and that can be legally transferred in title from one person to another.
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Occurrence - An event, including continuous or repeated exposure, or all events of a series consequent on, or attributable to, one source or original cause.
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Period of insurance - Normaly the period of time beginning on the date shown by "Start Date" on the schedule, and ending at 4:00 p.m. on the date shown by "Expiry Date" on the schedule.
Personal effects - Clothing and personal belongings normally worn or carried but excluding personal computers, musical instruments, curios, works of art, money or credit cards.
Personal injury - Death, bodily injury, sickness, disease, disability, shock, fright, mental injury, mental anguish, or loss of consortium resulting from any of them; or the effects of false arrest, false imprisonment, wrongful eviction, wrongful detention, and humiliation libel, slander, defamation of character or invasion of the right of privacy assault and battery not committed by, or at the direction of, you unless committed for the purpose of preventing or eliminating danger to persons or property where the personal injury consists of any latent medical condition, we will consider the personal injury to have happened at the time that the medical condition was first diagnosed.
Premises - The premises specified in the schedule.
Pressure pipe systems - In respect of boilers and pressure plant any pressure pipe systems with valves, fittings, traps and separators which contain steam condensate, gas or fluids under pressure (other than atmospheric pressure) and which is generated in whole or in part within the machinery specified in the schedule, including any feed water piping between such boiler and its feed pump or injector, but not including any such pipe systems which form part of any other vessel or apparatus. In respect of refrigeration and air-conditioning machinery specified in the schedule the interconnecting coils and pipe-work containing transfer media.
Product - Anything (after it has ceased to be in your possession or control) including its packaging or container which is manufactured, grown, extracted, produced, processed, assembled, constructed, erected, installed, repaired, serviced, treated, sold, supplied, resupplied or distributed in or from Australia or its external territories by you in the normal course of the business, and also includes directions, markings, instructions or warnings given or omitted to be given by you in connection with such products.
Product Disclosure Statement (PDS) - Your Product Disclosure Statement (PDS) consists of 3 parts:
Part 1: which contains general information about your AAMI Business policy;
Part 2: which contains the general terms and conditions of your AAMI Business policy;
Part 3: which contains the individual policy wordings for each section of cover you have chosen.
Professional fees - If you are interested in Business Insurance Commercial Motor or certain sections of Business@Home™ cover you should consider the PDS before you choose your insurance. The document contains information about the significant features of the policy including the risks, benefits and costs of cover arranged through AAMI Business Insurance. You should consider the PDS in your decision to buy insurance.
Fees and disbursements of the professional adviser incurred at our request; but does not mean or include fees and disbursements which: form part of an annual or fixed fee or cost arrangement; or relate to any subsequent objection or appeal or request for review in respect of the audit, or any assessment, amended assessment or concluded decision or the auditor; or were rendered by a third party in relation to which our written consent was not obtained before those fees were incurred; or which relate to or are associated with the preparation of any accounts, financial statement and/or documents or to any attendance which would have been or would or should ordinarily or prudently have been prepared prior to or at the time that the lodgement of any return and or document was required to be lodged in connection with a designated liability.
Property - Buildings, contents, stock, capital additions and any other items specified in the schedule, owned by you or for which you are legally responsible, but excluding:
Money
Glass and Signs
Explosives
Aircraft and/or watercraft of every kind and description
Registered motor vehicles and trailers unless these items are specified in the schedule.
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Risk - Can be described as the chance of something happening, measured in terms of impact, probability and consequences. The consequences may be either positive or negative. Risk in a general sense can be defined as the threat of an action or inaction that will prevent or hinder the ability of the business to achieve its business objectives.
Risk management - Can be described as the culture, processes and organisation that facilitates the business to manage opportunities and adverse effects, by providing understanding and knowledge of alternative risks. As it is not possible or desirable to eliminate all the risk, the objective is to implement cost effective processes that reduce risks to an acceptable level, reject unacceptable risks, and transfer other risks through insurance and other means.
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Schedule - The schedule attached to and forming part of the policy, or if the policy has been renewed the schedule issued with the renewal notice.
Seasonal increase periods - 20 days prior to and including Easter Sunday 10 days following Easter Sunday 1 December to 29 January the following year (inclusive).
Signs - Advertising or identification signs made out of glass or electrically illuminated permanently fixed to the building or contained within the premises.
Spam - Unwanted, unsolicited commercial messages received by email or SMS.
Specified items - An item owned by you that is shown and specified in the schedule.
Stock - Stock in trade and cigarettes and liquor.
Stock in trade - Merchandise and customers’ goods for which you are legally liable including the value of the work done and any containers or packaging materials used in connection with the business, but excluding cigarettes and liquor, and bullion.
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Territorial limits - Australia including its external territories and anywhere else in the world except North America or state or territories incorporated in or administered by any country in North America.
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Unspecified items - Items owned by you or for which you are legally responsible and which are items in a category listed in the schedule up to a limit of $1,000 each item and a maximum total of $5,000.
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Weekly benefit - The amount shown in the schedule.
Weekly income - The gross income received by you for each week the business is in operation, during the indemnity period.
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