Insurance Jargons: 15 Key Insurance Terms You Should Know

July 24th, 2018

Insurance Jargons: 15 Key Insurance Terms You Should Know

No matter how big or small your business is, without sufficient insurance coverage you are vulnerable to unnecessary loss. The popular saying that ‘Knowledge is Power’ is true especially when it comes to insurance as most people do not know that with the right insurance cover and company they can guard themselves as well as their companies from risks like lawsuits, accidents, and natural disasters.

This post will help you become familiar with the commonly used terms and jargon of the insurance industry and also a reference page when you read through quotes or policies to make sure you’re clear on what your provider is offering.

 

Broker

A broker is a specialist who can help you find the most appropriate insurance products to suit your needs. They understand the market well, so on your behalf, they can get and compare quotes, read the fine print, negotiate deals and explain what it means for you.

 

Certificate of Liability Insurance

A Certificate of Liability Insurance is an official document that states the dates that your policy becomes active. It can be used to prove you have insurance coverage if a client requires proof of such coverage. Law Union & Rock’s online application process makes it possible to receive a Certificate of Liability Insurance within hours of submitting your application.

 

Claimant

Anyone who makes a claim on your insurance policy. This insurance industry term may refer to you or a third-party when requesting payment from an insurance company. The type of claimant differs depending on how comprehensive your insurance coverage is.

 

Duty of Disclosure

When you apply for an insurance policy or renew or extend your existing policy, it is expected of you to tell your insurance company everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you. You don’t need to disclose something you don’t know, that the insurer knows or ought to know, that is common knowledge, that reduces the insurer’s risk, or something that’s not relevant or the insurer has told you that you don’t need to disclose. In the insurance business, honesty is the best policy.

 

Excess

This is a percentage of your claim that you are expected to pay in the event of an insurance claim being settled. Compared to what you will receive from the insurer, this payment is usually a small amount. So in effect, you are accepting a small part of the financial risk yourself.

 

 

General Insurance

This includes policies that protect your property and your financial risk, including home building and contents, motor vehicle and travel insurance. The policies do not include life insurance and health insurance products.

 

Indemnity

Indemnity under an insurance policy is the coverage that is provided to you to protect against a loss, damage or injury.

 

No Claim Bonus

The no claim bonus is a discount on the premium, an insurance company may offer its policyholders that have not made any claim in a couple of years.

 

Over Insurance

This is when you insure something for an amount of money that is more than its actual value.

 

Policy

The actual contract that documents your insurance cover. This document contains all of the different sections and related attachments. Always remember to read the details of your policy, outlined in your Product Disclosure Statement and the policy schedule. So you are sure it covers the risks you want to cover.

 

Premium

This is the amount of money you have to pay for your policy, in return for insurance cover. It is often paid yearly or on a monthly basis. Premiums vary depending on how much risk you have and how long the coverage will last.

 

Quote

A quote is an estimate of what your rate could be with a potential insurance company. The rates aren’t constant because it depends on how much information you provide at the time of the quote. The more information you provide, the more accurate your insurance quote.

 

Renewal

This is when you agree to continue your existing policy for a further period. Usually, your insurance company sends you a renewal notice, when the policy is about expiring. It is very important you review your renewal notice and check if anything has changed, as well as consider if you need to alter anything.

 

 

Third Party

This is an insurance policy that helps protect other people, vehicles and property in the event of an accident that was believed to be your fault.

 

Underinsurance

This is when something is insured for less than its true value, meaning that you have inadequate insurance coverage. In other words, your policy does not cover the full value of a potential claim.  In the event of a claim. You may suffer some financial loss as the damages could exceed the amount your insurance company would pay out.

 

It is true that these insurance industry jargons can be intimidating at first glance, but as one of the most transparent and reliable insurance companies in Nigeria, Law Union & Rock would like to guide business owners and individuals through the mumbo-jumbo. We have the expertise to help you and your business cut through the confusion, so you can make informed decisions that will protect you and your business from the risks it faces.