What clicks on your mind when you hear the term insurance cover? Insurance is not as complicated as most people make it sound. Before you go resolve to acquire an insurance cover, we are here to make it even easier for you to decipher by breaking down the terminologies mostly used in insurance.
Insurance – This is whereby an insurance company offers financial protection/ reimbursement against losses for an individual or company. Insurance provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
Insurer- A person or company that underwrites an insurance risk; the insurance company takes on the risk
Insured- The person or company, who has taken insurance cover, pays premiums and is to be compensated for loss by the insurer. Insurance broker- An independent professional person registered under the Insurance Act and advises customers on insurance. The broker operates as your agent, and not that of any insurance company. In Kenya, most Brokers are members of the Association of Insurance Brokers of Kenya (AIBK). This is a person who sells insurance policies to customers on behalf of the insurance company.
Insurance agent- A person who sells insurance on behalf of an insurance company.
Insurance policy- This the document that dictates the terms and conditions of an insurance policy.
Certificate of insurance- a document containing or showing verification of the insurance and contains information on types and limits of coverage, an insurance company, policy number, named insured, and the policies’ effective periods.
Premium- The amount payable to the insurer. Could be in installments or as per the agreement with the insurance company
Claim- Formal request by a policyholder to an insurance company for compensation or coverage for an incurred loss
Sum insured- The maximum amount that an insurance company will pay upon a claim made by the insured to cover a liability incurred. It relates to the value of goods at risk and this is the basis upon which the premium is calculated.
Third-Party- Any other person who may be affected by your actions – for example, in a car accident, it would relate to damage to their car. In this context, it is well to recognize that the first party in an insurance policy is you, and the second is your insurance company and the third is the other person or
Underwriter-The person who decides how much to charge and who manages the account that bears the cost of claims by evaluating and analyzing the risks involved in insurance.
WELCOME TO INSURANCE!