Agent
A person or a group of people selling insurance on behalf of an insurance company.
Insurance Glossary
Key terms in insurance defined for your convenience and understanding
A
Accident
An unforeseen, unintended event.
B
Broker
An independent insurance professional licensed under the Insurance Act who advises customers on insurance. In Kenya, most brokers are members of the Association of Insurance Brokers of Kenya (AIBK).
Beneficiary
The person, people, or entity who will receive benefits from an insurance policy or an annuity contract.
C
Claim
A request for payment when the insured event occurs as per the terms of the insurance policy.
Cancellation Notice
Termination of an insurance policy by either the Insurance Company or the insured before the renewal date.
Co-pay
The percentage of each health care bill people must pay out of their own pocket. This is under the medical health insurance.
E
Exclusions or limitations
Provisions that exclude or limit coverage of a policy
Excess
The amount the insured pays when making a claim. The amount is specified in the policy.
Endorsement
A written agreement expanding or limiting the terms and conditions of a policy.
F
First/ Second / Third Party
The first party is the insured, the second is insurance company and the third party is any other person(s) who may be affected by the insured actions.
G
Grace period
The time – usually 31 days – during which a policy remains in force after the premium is due but not paid. The policy lapses after 31 days if premium is not paid.
I
Insurance
A contract in which an insurance company promises to compensate an insured.
Insurer
The company that accepts risks after receiving premiums and pays claims.
Insured
The person who has taken insurance and pays premium
Insurable interest
Any financial interest a person has in the property, person or liability.
L
Liability
The effects of your actions or lack of actions on others while undertaking your responsibilities.
Lapse
The termination of an insurance policy because premium has not been paid.
Loss history
The number of insurance claims previously made by an insured. An insurance company will consider loss history when underwriting a new policy or considering renewal of an existing policy.
M
Material misrepresentation
A significant untruth on an application form which, if a company had access to, they might have rejected the application.
Market value
The current value of the asset you are insuring such as your home, motor vehicle etc.
P
Policy
A formal contract /document issued by an insurance company to the insured setting out terms on which the insurance cover has been provided.
Policy period
The period a policy is in force, from the beginning or effective date to the expiry or end date.
Premium
The amount the insured pays an insurance company. It could be a one off payment or regular installments or as per the agreement with the insurer.
Pre-existing condition
A medical problem or illness you had before applying for health care coverage.
R
Renewal
Continuation of a policy after expiry date and payment of premium.
Refund
An amount of money returned to the insured for overpayment of premium or when a policy is cancelled.
Rider
An additional benefit on a policy.
Risk/Peril
An occurrence that can cause loss to an individual or a business for example fire, theft, death, accidents and others. A named-peril/ risk policy covers the insured only for the risks identified in the policy. An all- risk policy covers all causes of loss except those specifically excluded.
S
Sum insured
It relates to the value of the insurance and this is the basis upon which premium is calculated and claim paid.
T
Third-party claim
A claim filed by a third party against the first party’s insurance policy.
Towing coverage
The motor insurance benefit that pays for towing charges when a car cannot be driven. It also pays labour charges, such as changing a flat tyre at the place where the car broke down.
U
Underwriter
The person who calculates how much premium to charge for various insurance products and accepts or rejects risks on behalf of insurance companies.
Underwriting
The process an insurance company uses to decide whether to accept or reject an application for an insurance cover. Proposal Form – An application form completed by a potential client for an insurance cover.
