Frequently Asked Questions FAQs
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The price an insurance company charges for coverage, based on the frequency and cost of potential accidents, theft and other losses. Prices vary from company to company, as with any product or service. Premiums also vary depending on the amount and type of coverage purchased.
An insurance policy is a contract between you and an insurance company, in which the company promises to take over the financial costs of certain risks. The policy describes the item(s) covered, the risks you are covered against and specifies your rights and responsibilities, along with the terms and limits of the cover.
Indemnity is the legal principle that the policyholder should be restored to the same financial position that they enjoyed prior to a loss occurring. There are a number of options opened to an insurer which will provide the policyholder with the necessary indemnity and these are:-
- Cash Payment
An excess is the first part of each and every claim or loss which is excluded or the amount of the claim which is deducted from each claim. That amount of the loss is born by the insured. Either a specified dollar amount or a percentage of the claim amount.
Deductibles on the other hand is a very large excess and it is common to see the word deductible rather than excess in commercial policies and home owners polices, whereas a number of you who have vehicle insurance would see the word excess. Nowadays, however, it is common to find the terms being used interchangeably.
Proximate cause is the initial act or occurrence which sets off a natural, uninterrupted and continuous sequence of events that produces damage. In the absence of the initial occurrence which produces damage, no loss or damage would have resulted. Therefore when an insurance company asks you what was the proximate cause of house being burnt, they are not necessarily referring to the fire but what caused the fire.
For an event to be insurable its happening must be accidental and not deliberate on the part of the insured. An example of a non-fortuitous event or loss is an insured intentionally setting his or her home on fire. The event must be fortuitous as far as the insured is concerned.
Information that would affect an insurance company's willingness to accept a policy, or the premium it would charge. Failing to disclose a material fact could invalidate a policy. Typical examples include previous driving convictions or a history of subsidence in a house.
The right of the insurer to take over the insured’s rights following payment of a claim, to recover the payment from a third party responsible for the loss.
It simply means that the person seeking coverage must stand to suffer financial loss as a result of the property being damaged. A homeowner will obviously suffer financial loss if his or her home burns down. You cannot, however, purchase insurance on your neighbor’s house and collect in the event the house burns as you do not have an insurable interest.