Insurance Terms

Adjuster

An Adjuster or Loss Adjuster is a person appointed by an insurer or insured to assess and quantify the extent of the damages to claims. Adjusters are licensed by the Central Bank of Trinidad and Tobago.

 

Agent

An Agent is a person who acts on behalf of an insurance company and usually accepts proposals for insurance for a commission. Agents are licensed by the Central Bank of Trinidad and Tobago.

 

Asset

Any item or possession of monetary value that is legally owned by a person. Assets can include real or personal property. An insured asset is one for which an insurance company must compensate the owner if the asset is damaged or destroyed.

 

Broker

A Broker is an independent licensed insurance adviser who acts on behalf of a client when placing insurance cover with an insurer. Unlike an agent, a broker may obtain quotations from different insurers. Brokers are licensed by the Central Bank of Trinidad and Tobago.

 

Casualty Insurance

Casualty Insurance refers to liability or loss resulting from an accident. It is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others such as workmen’s compensation.

 

Constructive Total Loss

Constructive Total Loss is when the cost of repairs is more than the sum insured or market value minus the value of the salvage.

 

Contribution

Contribution can be applied in two ways. It can be referred to as: (a) the way two or more insurance policies covering the same risk will share loss OR (b) the amount an insured will pay towards the cost of a new replacement part in motor claims.

 

Deductible

Deductible also referred to as “policy excess” is an amount that the insured must bear before the insurer is liable to pay. In other words, it is the amount paid out of pocket by the policy holder before an insurance provider will pay any expenses. However, if the claim is below the deductible, no amount is payable by the insurer. For example, if a car insurance policy has a deductible of $500, and the vehicle takes $7,000 worth of damage, the owner would bear the first $500 and the insurer would cover the other $6,500. For damages worth $500 or less, the insurer would not contribute to the repair costs. Deductibles can vary between policies and insurers.

 

Depreciation

Depreciation is the decrease in the value of an asset over time. Depreciation often impacts the value of the Sum Insured which reduces over time to reflect the depreciated value of the asset.

 

Discharge form

A discharge form is a form which a claimant is required to sign on acceptance of the settlement of a claim, which states that the insurer’s liability has been settled and no further claim arising out of the same event can be presented.

 

Exclusion

Exclusion refers to the terms specified in the insurance contract of the policy under which the insurer will not cover the cost of the loss if loss sustained is caused by an event or peril that is not covered.

 

Exposure

Exposure is the measurement of risk or the risk of possible loss.

 

Fraudulent Misrepresentation

Fraudulent Misrepresentation is the deliberate provision of wrong and/or misleading information to an insurer when completing an application for insurance. An insurer can deny a claim if the information provided is material and fraudulent.

 

Group Life

Group Life is a type of life insurance in which a single contract covers an entire group of people. Typically the policy owner is an employer or an entity such as a labour organization and the policy covers the employers or members of the group.

 

Indemnity

Indemnity is a key insurance principle which states that the policyholders should be returned to the same position that he/she was in immediately prior to the loss – there must be neither gain no loss. Insurance is not meant for a policyholder to profit from a loss.

 

Liability

Liability is the legal obligation on a policyholder to pay damages arising out of an event. Therefore, a liability insurance policy is one that protects an individual or business from the risk that they may be sued and held liable for, such as bodily injury, property damage or consequential loss. Liability insurance covers both the damages and the legal costs incurred. Intentional damage and most contractual liabilities are not insurable in these types of policies.

 

Loss of Use

Loss of Use refers to an uninsured loss, usually for motor claims, whereby the vehicle owner is compensated for the time he is unable to use the vehicle. The insurer will compensate the claimant for “Loss of Use” using a per-day monetary value. Payment is calculated by multiplying the daily rate by the number of days that the adjuster estimates it will take to repair the vehicle.

 

Market Value

Market Value is the current price of an asset that the average buyer will pay and the average seller is willing to accept.

 

Material Fact

Material Fact is information that if disclosed, will influence the decision of an underwriter and therefore must be made known to the insurance company at the time of application, renewal or notification of loss.

 

Misrepresentation

Misrepresentation can be innocent or fraudulent. If fraudulent, it is deemed deliberate and intended to mislead the insurer and can render the policy void and of no effect.

 

No Claims Discount

A No Claims Discount (NCD) is a reward, in the form of a discount, given to the policyholder who maintains a claims free experience. A discount is given each ear when there is no claim on the policy.

 

Occurrence

Occurrence is an event (a loss) which triggers a claim.

 

Peril

A peril is your exposure to risk or something that causes loss or destruction.

 

Perils of Nature

Perils of nature refer to injury and damage caused by natural elements such as flood, typhoon, hurricane, volcanic eruption, earthquake or other convulsion of nature.

 

Policy Schedule

A policy schedule is an outline of the cover provided under the policy. It will show details of the policyholder, the subject matter, the cover given, the relevant limits, the sums insured, and excesses.
It is important to note that is policy schedule is not standalone document and forms the policy contract only in conjunction with the entire policy document detailing the terms and conditions of the insurance policy.

 

Premium or Insurance Premium

Premium or Insurance premium refers to the periodic payment made on an insurance policy for the cover given. A common example of insurance premium comes from auto insurance. A vehicle owner can insure the value of his or her vehicle against loss resulting from accident, theft and other perils. The owner usually pays a fixed premium amount in exchange for insurance company’s guarantee to cover losses incurred under the scope of the agreement. The premium is based on a calculation considering the sum insured, risk involved, coverage to be provided and the appropriate rates applied to the specific policy type.

 

Salvage

Salvage is the value of an asset in its damaged condition or the disposable value of the wreck which can be sold for its parts.

 

Subrogation

Subrogation also referred to as “recovery”, is the right of the insurer, after settling a claim, to pursue recovery against the party that is responsible for the loss, usually against the insurer of the liable party.

 

Sum Insured

The sum insured is the amount stated in the policy. It represents the limit value that the insurer will pay in the event of a total loss.

 

Term

A term is an insured period.

 

Third Party

The Third Party is the person who may have been injured or who property was damaged, other than the insured or the insurer.

 

Utmost Good Faith

Utmost good faith is a principle of insurance that states that all parties must act on the basis trust.

However, the applicant for insurance has a duty to provide all information that will assist the underwriter in assessing the risk in order to arrive at an appropriate premium. Generally, in the commercial sector, the principle is known as “let the buyer beware”.