Appendix 3: Glossary

Insuring public assets.
Common terms used in this paper
Carrying value The amount at which an asset is recognised in an entity's financial statements after deducting any accumulated depreciation and accumulated impairment losses.
Cover The scope of protection provided by an insurance policy.
Excess A portion of an insurance claim that the insured party must pay. It is usually the first part of the loss claimed, up to a value set out in the insurance policy.
Indemnity value The current value of an asset that takes into account its age and condition at the time of loss or damage.
Insurance broker An independent agent who advises people wanting insurance, and arranges insurance cover for them.
Policy exclusion A provision within an insurance policy that eliminates cover for certain circumstances or specific losses.
Premium The amount required to be paid to obtain a specified amount of insurance cover for a set period.
Reinstatement A provision within an insurance policy that results in insurance cover continuing to be provided following an event that results in a claim.
Reinsurance Insurance purchased by an insurer that transfers a portion of their risk to other parties (the reinsurers). The risk is assumed by the reinsurer in return for a part of the premium the insurer receives.
Replacement cost The amount that would be required currently to create an asset with the same service capacity as an existing asset.
Self-insurance A way of managing risk by having access to funds, either cash or borrowings, for use when an unexpected loss happens, rather than having insurance.
Sum insured value The maximum amount an insurer will pay out under an insurance policy. If there is a loss limit and the insurance pay-out is capped, this is taken into account.

page top