What is Insurance? Terminology of Insurance

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By Tarun Gawer

Insurance is a method of protection or security from monetary loss. It is a kind of risk management, primarily used as a protection wall against any uncertain loss. If you are insured or policyholder than you can protect yourself from an undesired loss.

What is Insurance? Terminology of Insurance

Who are Insurer and Policyholder?

Any company which provides insurance to us is known as an insurer, insurance carrier, underwriter, or simply as an insurance company. A person who gets insurance from any insurer is known as an insured or as a policyholder.

What is Insurance Policy and Premium?

What is Insurance Policy and Premium?

The policyholder receives an agreement or contract from an insurance company known as an insurance policy. This Insurance policy describes the circumstances and situations under which the insurance company will pay or compensate for the policyholder. The money that insurance company charges for insurance coverage is called an insurance premium. If the policyholder undergoes a loss which is potentially covered by the insurance policy, the policyholder can submit a claim to the company for processing by a claims handler.

Now if you want to be insured and you want protection from uncertain risks than you can choose any insurance policy according to your need. There are many companies that are providing insurance such as AIG, MetLife, etc.

Go form this Guide before purchasing Insurance

Go for a Guide before purchasing Insurance

But before going towards any insurance policy, we recommend you to first go for a guide that improves your terminology about insurance. You can improve your terminology here too. We have collected all the Terms regarding insurance, insurance policy, insurance company and every term that is somewhat related to this topic.

Also visit: National Insurance Company

The definitions in this collection of words are provided only for common informational ideas. They are in the form of short descriptions of all terms, used in the insurance field. In the case of any difference between the definitions in this Insurance Dictionary and the definitions in the actual insurance policy, the definitions contained in the actual insurance policy shall govern.

Terminology of Insurance

Here is the list of the terms used in Insurance field:

  • ACCIDENT – An event, which happens by chance. An accident, also known as an unintentional act.
  • ADJUSTER – A body who studies the loss and negotiates a settlement with the claimant or policyholder on the insurance company’s behalf.
  • ALL RISK – Covered risk in an insurance policy against loss of policyholder except those that are specifically excluded.
  • BASIC RATE – The standard or usual assessment for a given type of risk.
  • BROKER – An independent body or firm who represents the insured person to the insurance company. They will talk to insurance companies in place of the actual policyholder. Brokers are responsible for managing premiums but do not have the power to give risk coverage on the insurer’s behalf without their specific agreement. They are very helpful for those people who are unaware of insurance terminology.
  • CANCELLATION – End of risk coverage or insurance within the policy period by the voluntary act of the insurance company or insured, made in accordance with terms in the contract or by mutual agreement.
  • CLAIM – Notice to an insurance company that under the terms of a policy, a loss of policyholder may be covered.
  • COMPULSORY INSURANCE – Any kind of insurance that is strictly required by law.
  • DIRECT LOSS – A loss that is a direct result of a particular risk. For example, fire damage to a fridge( refrigerator ) would be a direct loss. And Spoiling of bread in the fridge as a result of the fire damage would come in an indirect loss.
  • EFFECTIVE DATE – The starting date from which an insurance policy or bond goes into effect, and from which assurance is provided.
  • EXCLUSIONS – Specific causes and circumstances noted in the policy that are not covered according to policy.
  • EXPIRATION – The date on which an insurance policy will end.
  • INSPECTION – Fair checking on facts about a claimant, generally by a commercial inspection agency.
  • INSURABILITY – Acceptability of a candidate for insurance to the insurance company.
  • INSURANCE – A kind of risk management, primarily used as a protection wall against any uncertain loss. The insurer agrees, for compensation for losses suffered by the policyholder.
  • INSURANCE POLICY – A legal report issued to the applicant setting out the terms of the contract between an insurer and insured.
  • INSURANCE TO VALUE – Insurance drafted in an amount approximating the amount of the property insured.
  • INSURED – The person who may have a risk of financial loss and is protected by the policy. INSURED is sometimes called the “policyholder”.
  • INSURER – The Insurance Company.
  • PERSONAL PROPERTY – Any property of a policyholder other than real property.
  • POLICY – Legal report issued to the applicant setting out the terms of the contract of insurance from the insurance company.
  • POLICYHOLDER – The person who has a risk of financial loss and is protected by the policy of insurance.
  • PREMIUM – The price an insurance company charges from the insured for insurance coverage.
  • PROPERTY INSURANCE – Property Insurance pays an insured whose property is destroyed, stolen, or damaged by a covered risk. The term property insurance covers direct or indirect property losses covered in several lines of an insurance policy.
  • PROTECTION – Term used to denote the insurance provided under the terms of a policy. The term is also used to show the existence of fire-fighting facilities in a place known as a “protected” area.
  • RENEWAL – The continuation of something (insurance) after expiration of the policy.
  • SETTLEMENT – Usually a policy compensation or claim payment. It denotes an adjustment between both parties to the policy contract as to the amount and method of payment.

Also read: How to Get The Best Car Insurance in New York at Cheapest Rates

Here we have covered all the common terminology of insurance that is used in the field of insurance. You can go through all before contacting any insurance company or broker. So, that you can understand the policy and risk coverage assured by the insurance company. If you will not understand this basic terminology then you may be fudged.

Insurance can be of anything, like:

  • insurance for dogs
  • insurance for kids
  • insurance for cars and etc.

So, before buying any insurance we recommend you to first deeply understand insurance and different Insurance Policies.

So, after reading this post if you have some queries, comment us now with your questions. We will surely reply to your questions. Thanks for reading this article on complete information about insurance.

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