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Insurance in a Nutshell
An insurance is a contract between you (the insured) and the insurance company (the insurer). The insured tells the insurer what and how much they want to insure (in a Proposal). They also need to tell the insurer everything that may affect the insurer’s decision to accept the risk (full Disclosure).
The Insurer will give the Insured a contract (The Policy Wording) describing how the risk is covered and any limitations and exclusions which apply to all those who purchase this insurance; plus a supplementary document (The Schedule) outlining the sum insured, limits and exclusions, etc in particular to your cover.
In exchange for this protection from a devastating loss, the Insured gives the Insurer a premium (which is in fact a much smaller and pre-determined ‘loss’ that the insurance buyer can prepare for).
When the insureds suffer a loss, they launch a claim. The insurer will pay the insured according to the terms and conditions in the Policy, the Schedule and the Proposal.
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