Wednesday, July 28, 2010

deductible and excess

Feeling a bit guilty that I haven't blogged in more than a week, but then I'm also feeling guilty that I haven't finished all the things that I need to finish.  So, here's a quick one, largely in other people's words, starting with an email from an American colleague in another department at Sussex.  The difference is in insurance terminology.  Let's say you were (BrE/AmE) burgled/(AmE) burglarized and the insurance company agreed to cover your losses.  Of course, they never cover the full amount that you claim for; there will be, say $100 or £50 (or some such number) that is not paid, as per the insurance contract.  In BrE that's the excess, whereas in AmE it's the deductible.  My colleague writes:
It kind of comes down to how you think about it. In American English, you start with the total, e.g., £200. Then, you deduct the deductible (e.g., £50). So, you are left with the amount you can claim (£150). In contrast, in British English, you start with nothing* then, there is the excess (£50) and anything in excess of that amount you can claim (£150) towards the total (£200).
Her footnoted comment is that the differences in perspective are not terribly surprising, given the stereotype of Americans as positive-thinking and the British as, well, not.  I'd explain excess slightly differently: you start with a claim for £200. The insurance company gives you £150, so your claim exceeds (is in excess of) the settlement by £50.  I'm not sure that this is any less 'positive' in its perspective than deductible is.

On another insurance note, in BrE, you're more likely to see some insurance products or companies with assurance in their names, rather than insurance.  One particularly sees it in the context life assurance (vs AmE life insurance)--but this is rarer and rarer.  On the  differentiation of assurance and insurance, the OED says:
Assurance is the earlier term, used alike of marine and life insurance before the end of 16th c. Its general application is retained in the titles and policies of some long-established companies (e.g. the London Assurance Corporation). Insurance (in 17th c. also ENSURANCE) occurs first in reference to fire (1635 in INSURE v. 4), but soon became coextensive with assurance, the two terms being synonymous in Magens 1755 (see ASSURANCE 5). Assurance would probably have dropped out of use (as it has almost done in U.S), but that Babbage in 1826 (see quot.) proposed to restrict insurance to risks to property, and assurance to life insurance. This has been followed so far that assurance is now rarely used of marine, fire, or accident insurance, and is retained in Great Britain in the nomenclature and use of the majority of life insurance companies. But in general popular use, insurance is the prevalent term. Mr. T. B. Sprague, followed by others, considers assurance, assure, assurer, etc., the proper words for the action of the company or persons undertaking the risk, insurance, insure, insurer, etc., for that of the person paying the premium. This would be in some respects a useful distinction, if it could be carried out; but it would leave the members of mutual societies at once assurers and insurers.
That, happily, is about the extent of my experience with insurance-related terminology. If you know of any more, feel free to relate your examples in the comments.

24 comments:

Clarissa at Talk to the Clouds said...

I think the first explanation is a great example of the dangers of dividing cultures into convenient dichotomies: everything becomes a victim of confirmation bias if you're not careful. For example, I'm constantly running across examples of instances in which English is vague and Japanese is specific, but most English teachers and Japanese teachers constantly harp on the notion that the reverse is true. I think it eventually causes problems when Japanese students can't see places in English where they need to be more vague to be polite, and probably also causes native English speakers to miss spots in Japanese where they need to be more specific to be understood. I wouldn't be surprised if similar misunderstandings arise between British and American co-workers--it's a constant struggle for intercultural trainers of any kind (language teachers or HR personnel or whoever) to make sure that a little intercultural awareness-raising doesn't either come off as or get interpreted as a stereotype!

(Dichotomies are useful because they give us a framework, and I'm not criticizing the use of them; just reflecting on some of the problems that sometimes arise.)

Um, anyway, that has nothing to do with deductible and excess. I can see it from either way, but I imagine it would make my head hurt at least briefly to have to deal with it in the heat of a claim.

Anonymous said...

Babbage as in Charles Babbage? I had no idea he was in the insurance business.

Anonymous said...

... or the assurance business, for that matter.

John Cowan said...

Babbage was not in the insurance business, but he dabbled in an astounding number of things: the Wikipedia entry calls him a "mathematician, philosopher, inventor, and mechanical engineer", and that's not even mentioning his proposed correction to Tennyson's poem "The Vision of Sin".

There are two very remarkable terms I know of associated with the insurance business. The first is average, which was originally a customs duty on imported goods, then any extra charge over the usual price for carrying goods by ship, then the loss to owners of goods carried in ships lost at sea, then the equitable distribution of this loss by an average-adjuster, then the arithmetic mean resulting from dividing the total loss by the number of merchants whose goods were carried in that ship, and finally any arithmetic mean whatever.

The other is the term traditionally applied to the business of insuring the carriage of goods by wagon (or truck, nowadays); this was considered an extension of marine insurance, and was therefore dubbed the inland marine business.

To me as an AmE-speaker, life assurance sounds like the business of someone who undertakes to keep you alive no matter what.

mollymooly said...

The OED entry you quote dates from 1901. The modern distinction in British English between "Life Insurance" and "Life Assurance" is that the former pays out only if you die, whereas the latter pays out even if you don't. See What is the difference between Life Assurance and Life Insurance?

DaveBush7 said...

As someone who started buy such products in the 1970 it was explained to me that life insurance was for a policy with a time limit - you were insuring yourself against something that might happen, whereas a life assurance policy didn't have a time limit and would pay out when you died (not if).

MM said...

I always believed that excess was the correct BE term, but I gather from insurance translators that 'deductible' is used in UK reinsurance. In fact, insurance terminology is what I might call a tin of worms. Since I avoid translating insurance texts whenever possible, I can't say any more. To quote another translator on a mailing list: 'Cutting to the quick, I am using deductible from the reinsured's point of view in non-proportional reinsurance contracts where the resinsurer 'only becomes involved in a loss when it exceeds the insured's deductible': Law of Reinsurance, Devereux Chambers, OUP(confusingly called in the US by some reins. cos.: annual aggregate excess deductible).'

lynneguist said...

Lots of interesting comments and clarifications--thanks!

Re Charles Babbage, see this.

Robbie said...

I always understood that insurance was protection against something that might or might not happen (e.g. fire, theft), and assurance was protection against something that was bound to happen sooner or later (e.g. death).

But I could be wrong!

Anonymous said...

Years ago, when my parents and I had seen a revival of the 19th century play "London Assurance", my uncle asked if it was about an insurance company. In fact, the title refers to the self-assurance of a young man from the city as opposed to a country-bred one.

Kate (Derby, UK)

flatlander said...

I was under the impression that what AmE calls "homeowner's" or "renter's" insurance ("hazard", in the biz) is called "fire" insurance in BrE, but I could be wrong. The only time I've heard "fire insurance" in AmE is in the 12 Ladybugs song from Sesame Street.

Andy JS said...

I remember a quiz show in the UK which often asked the question: "what is the difference between insurance and assurance?" and the answer was that assurance is for something which definitely will happen, it's just a question of when. Insurance is for something which may or may not happen.

Wendy said...

Homeowner's or renter's insurance (in the US) is generally an elective combination of coverages to address risks and hazards of ownership, one of which may be fire insurance. As an example, I live just outside of a legally defined flood zone, so I am not required to carry flood insurance as a portion of my homeowner's coverage. My neighbor, who is inside the flood zone, is required to carry flood insurance. (Of course insurance regulations differ one state to the next, so mileage may vary.)

I'm not as familiar with UK insurance regulations, so can't really speak to the nature of fire insurance there. My cousin who lives ivo London has home and contents insurance, with an "accidental loss and damage" bit that covers fires. I think that "accidental loss and damage" bit would be called a rider, but her broker does not use the term rider to describe that portion of her coverage. Of course, I'd also normally call her "broker" an insurance "agent", so there are really scads of fun language terms relating to insurance to play with and misunderstand.

Richard Gadsden said...

What Americans call homeowner's insurance is called either "house insurance" or "buildings insurance" in the UK. "House insurance" is a generic term for two specific insurances - buildings insurance and contents insurance.

House insurance is not legally compulsory, but mortgage lenders require buildings insurance as part of the contract.

On the car side of insurance, BrE has "third party" (AmE: liability), "third party, fire and theft" or "comprehensive" (inf. "fully comp").

Only third party insurance is legally required.

ros said...

Just to add that in the UK, home and contents insurance is often split. Landlords would be expected to have their own home (buildings) insurance, while tenants are responsible for contents insurance, if they choose. I've rented for the best part of 20 years and mostly not bothered.

Shaun Clarkson said...

And further to the differences in teminology on car insurance, a huge difference in practice is that in the UK (and, I suspect, the EU in general) as a minimum a driver must have insurance for unlimited third party liability. There are illegal uninsured drivers, but no such thing as an under-insured driver here.

Robbie said...

Well, you're arguably underinsured if you only have third-party and the car is stolen! At least underinsured in the sense that your policy won't cover what happened.

Buildings and contents insurance are separate in the UK, but I'd guess most people buy them together from the same insurer for the sake of convenience. Both policies would come into play in the event of something big like fire or flood. (Although if you live in a proven flood area, most basic policies won't cover against flooding; you'll need a specialised third policy for that.)

David Young said...

Scottish Widows (a major British insurance company) has evidently given up on the ins/ass-urance distinction; from their website:

"Life cover, also known as life assurance or life insurance, can pay out a cash sum in the event of your death."

Scotland, of course, has always used words differently to England, so if Scottish Widows retains its scottish roots this may be no guide to general UK usage.

John Cowan said...

I have homeowners' insurance that covers my house and its contents, and also the contents of the apartment that is my primary residence. I don't know if the City of New York insures the buildings it owns, of which this is one.

flatlander said...

I believe that liability coverage is the mandatory minimum for auto insurance in all 50 states, if daytime TV commercials are any indication.

It's interesting that building and contents are insured separately in the UK; in the U.S. those are combined (except for renters you can get coverage for just contents). Usually a rider is required for jewelry, furs, and artwork, so we pay separately to cover my diamond engagement ring.

Coverage also extends to when an item is outside the home. For example, if I take my laptop on vacation and it's stolen from the hotel, homeowner's would cover that (minus the deductible).

Shaun Clarkson said...

The point about the difference in mandatory car insurance is that in the USA there are state by state minimum requirements for liability cover. For instance, according to the list here
in Alaska the minimum legal cover is $50,000 for injury per person to a total per accident of $100,000 and $25,000 for property damage. In Britain the insurance must cover you for an unlimited financial liability.

Although it's normal to buy contents and building insurance separately companies will usually offer a discount for having both policies with them. We would also have riders for individual valuable items, but I'm not sure if that's the term used here.

Maht said...

One important use of "then" is in the subtle insult :

A : blah blah
b : Ok, there we are then.

Did you see it ?

There We Are Then

lynneguist said...

Maht, you might want to put that comment at the 'then' post--check the August 2010 archive (then).

CeeJay90 said...

Assurance means there is going to a loss. Life Assurance, you ARE going to die. INsurance requires the intervention of a contingency. IE you house MAY burn down but it is not ASSured it will.
Assure....a certainty
Insure a possibility

Deductible comes off the claim payment, an Excess id the amout above which the policy will pay. In the initial example if the loss is 250 rather than 200 with a deductiblw the payment would be 150 with an excess the payment is 200 ( the amouint of the losss over the excess.