Understanding Insurance

What is Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

Types of Insurance:

– Life Insurance
– Non Life or General Insurance

What is General Insurance?

General insurance includes insurance policies that protect your property and your financial risk, including motor vehicle, home building and contents and travel insurance. It excludes life insurance and health insurance products.

Types of General Insurance:

  • Motor Insurance Health Insurance
  • Travel Insurance
  • Home Insurance
  • Marine Insurance
  • Commercial Insurance

About Life Insurance

What is Life Insurance?

Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured.The purpose of life insurance is to provide financial protection to surviving dependents after the death of an insured.

Principles of Insurance:

1. Utmost Good Faith – a common law principle (sometimes called Uberrimae Fidei). The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance.

2. Insurable Interest – exists when an insured person derives a financial or other kind of benefit from the continuous existence, without impairment or damage, of the insured object (or in the case of a person, their continued survival).

3. Principle of Indemnity – the purpose of this principle is that the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damage occurred. In other words, the insured cannot recover more than his or her actual loss from the insurer.

4. Principle of Contribution – is a rule that specifies what happens when a person buys insurance from multiple companies to cover the same event, and that event occurs.

5. Principle of Subrogation – provides that if an insurer pays a loss to its insured due to the wrongful act of another, the insurer is subrogated to the rights of the insured and may prosecute a suit against the wrongdoer for recovery of its outlay.

6. Principle of Loss Minimization – it emphasises that the insured must take all necessary steps to curtail the loss of insured property, in the case of events like fire, blast, etc. … It is the main responsibility of the insured to act diligently and take all steps to cut losses to the insured property.

7. Principle of Causa Proxima – is a key principle of insurance and is concerned with how the loss or damage actually occurred and whether iat is indeed as a result of an insured peril.

What are Excess or Deductibles?

Many policies include an excess. This is the amount you have to pay if you decide to make a claim on your policy. It’s a way of you accepting a small portion of the risk yourself.

What is Life Insurance?

Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured.The purpose of life insurance is to provide financial protection to surviving dependents after the death of an insured.

Principles of Insurance:

1. Utmost Good Faith – a common law principle (sometimes called Uberrimae Fidei). The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance.

2. Insurable Interest – exists when an insured person derives a financial or other kind of benefit from the continuous existence, without impairment or damage, of the insured object (or in the case of a person, their continued survival).

3. Principle of Indemnity – the purpose of this principle is that the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damage occurred. In other words, the insured cannot recover more than his or her actual loss from the insurer.

4. Principle of Contribution – is a rule that specifies what happens when a person buys insurance from multiple companies to cover the same event, and that event occurs.

5. Principle of Subrogation – provides that if an insurer pays a loss to its insured due to the wrongful act of another, the insurer is subrogated to the rights of the insured and may prosecute a suit against the wrongdoer for recovery of its outlay.

6. Principle of Loss Minimization – it emphasises that the insured must take all necessary steps to curtail the loss of insured property, in the case of events like fire, blast, etc. … It is the main responsibility of the insured to act diligently and take all steps to cut losses to the insured property.

7. Principle of Causa Proxima – is a key principle of insurance and is concerned with how the loss or damage actually occurred and whether iat is indeed as a result of an insured peril.

What are Excess or Deductibles?

Many policies include an excess. This is the amount you have to pay if you decide to make a claim on your policy. It’s a way of you accepting a small portion of the risk yourself.

Car Insurance

What is Car Insurance?

Car insurance (also known as auto or motor insurance ) is done to protect your vehicle from unforeseen risks. It basically provides protection against the losses incurred as a result of unavoidable instances. It helps cover against theft, financial loss caused by accidents and any subsequent liabilities.

Types of Car Insurance:

  • Compulsory Third Party (CTP)/mandatory motor vehicle accident personal injuries insurance – required by each state and territory. It protects any person that you might injure while you are driving. It is not an alternative to taking out a motor policy to cover your financial liabilities, such as damage to another vehicle or property, or your own vehicle

    Comprehensive – covers damage to your own vehicle and other people’s property, as well as theft and some other risks, plus legal costs

    Third Party Property – covers damage to other people’s property and legal costs, but not damage to your own vehicle

    Third Party Fire and Theft – Third Party Property with some add-on features that cover your vehicle Factors

Factors for calculating Car Insurance :

Many factors are considered including, but not limited to:

  • The type of cover and excess you have chosen, including any options you have added
  • The location where the car is stored overnight or during the day
  • The age of the driver
  • The driving record and insurance history of the drivers
  • The type of vehicle being insured (make, model, year)
  • The intended use of the vehicle (such as private or commercial use)
  • Whether you have nominated a market or agreed value for your vehicle
  • Modifications to the vehicle

Claims

What is a No Claims Discount (Bonus)?

A no-claims discount is given to drivers following a period when no claims are made on your insurance policy