CII IF5 key terms

A mutual duty on insurer and insured to deal openly and honestly, disclosing material facts and avoiding misleading conduct, underpinning the fair presentation of risk at inception and throughout the relationship.

The insured's obligation to disclose every material circumstance it knows or ought to know, and to do so in a reasonably clear and accessible way, before the contract is entered into.

A fact or piece of information that would influence a prudent insurer's judgement when deciding whether to accept the risk, what terms to impose, or what premium to charge.

The requirement on a proposer to volunteer information relevant to the risk rather than waiting to be asked, subject to what the insured knows and ought to know.

The graded set of insurer responses to a qualifying breach of fair presentation, ranging from avoiding the contract, to reducing a claim proportionately, to treating the contract as if the breach had not occurred.

A breach of the duty of fair presentation that is deliberate or reckless, or that is neither and would have made a difference to the insurer's decision had the truth been disclosed.

A breach of the fair presentation duty where the insured knew the information was relevant and failed to disclose it, or did so without caring whether it was relevant.

The remedy that treats a contract as never having existed, returning the parties to their pre-contract position; it is available for deliberate or reckless breaches of fair presentation and for certain breaches of warranty.

A legally recognised relationship to the subject matter of insurance such that the insured benefits from its preservation or suffers loss from its destruction or damage.

The rule that a property or liability insurance payment should restore the insured to roughly the financial position held before the loss, neither profiting nor being left out of pocket.

The insurer's right, after paying a claim, to stand in the insured's shoes and pursue recovery from a third party who caused the loss, limited to the amount paid.

The right of one insurer to recover a share of a loss from another insurer that covers the same interest and risk, ensuring the insured does not recover more than the loss.

A situation where more than one policy covers the same insured interest against the same risk, so that contribution between insurers may become necessary.

The principle that knowledge held by the insured's agent, and information an agent ought to have passed on, can be attributed to the insured when assessing fair presentation.

A promise or condition in a policy that suspends cover for the period of any breach, rather than discharging the insurer from the whole contract for past cover.

A term that must be satisfied before the insurer's liability arises or continues, such as notifying a claim within a stated period or keeping specified records.

A policy clause that reduces the claim payment in proportion to any under-insurance, where the sum insured is less than the value of the property at risk.

The maximum amount an insurer will pay under a policy, which may be reduced by policy terms such as average, excesses, and the operation of any limit of liability.

The first amount of each claim that the insured must bear itself before the insurer pays, often used to deter small claims and share risk.

A sum deducted from the loss before the insurer calculates its payment, commonly used in commercial and liability policies as an alternative to a simple excess.

The improvement in value when a damaged item is replaced with something newer or superior; insurers may deduct the difference so the insured does not gain from the loss.

The specific property, liability, life, or interest that a policy protects, which must be identified clearly enough for the risk and cover to be understood.

The dominant, effective cause of a loss, determined by looking at the chain of events rather than merely the last event, and used to decide whether a peril is covered.

A risk or event specifically named in the policy as covered, such as fire, theft, or accidental damage, provided any relevant conditions are met.

A policy term that removes specified losses, causes, or circumstances from cover, often because they are uninsurable, better managed by the insured, or covered elsewhere.

The Latin phrase meaning 'of the utmost good faith', describing the heightened honesty expected of both parties to an insurance contract because of the information imbalance between them.

The Financial Conduct Authority, which regulates the conduct of insurers and intermediaries in the UK, including fair treatment of customers and the rules on financial promotions.

The Prudential Regulation Authority, which supervises the financial soundness and solvency of insurers and deposit-takers, working alongside the conduct regulator.

The FCA standard requiring firms to act to deliver good outcomes for retail customers across products, price and value, consumer understanding, and consumer support.

The principle that firms must put the fair treatment of customers at the heart of their business, covering outcomes such as suitable advice, clear information, and fair claims handling.

Advising on, proposing, or carrying out other work preparatory to the conclusion of insurance contracts, including selling and administering policies for customers.

A firm or person that arranges insurance between a customer and an insurer, acting as an agent of one or both parties and owing duties of care and disclosure.

An intermediary who typically acts for the customer rather than the insurer, advising on cover, placing the risk with suitable insurers, and assisting with claims.

The actual or apparent power given to an intermediary to act for a principal, which determines whether the principal is bound by the intermediary's acts and knowledge.

The UK dispute-resolution body for financial services, which can decide complaints about insurers and intermediaries informally and award limited compensation.

The insured's duty to tell the insurer about a loss promptly and in the required form, so the insurer can investigate and reserve its position.

The insurer's process for receiving, assessing, and settling claims fairly and promptly, including investigation, valuation, and payment or reasoned decline.

The regulated process for recording, investigating, and responding to customer complaints within set time limits, with referral rights to the ombudsman if unresolved.

The prudential framework setting capital, governance, and risk-management requirements for insurers, aimed at protecting policyholders and supporting financial stability.