You are here:: Faq's Common Insurance Terms
 
 

Common Insurance Terms

E-mail Print PDF
1. Insurer
This is an insurance company licenced by the Insurance Regulatory Authority to transact insurance business in Kenya.
2. Proposer
A person who is applying for an insurance policy.
3. Insured/ policy holder
This is the customer of an insurance company. A person or company who has insured his property with an insurance company.
4. Premium
This is the cost of an insurance cover or the price. It may be payable once or in installments.
5. Sum Insured
This is the insurers’ maximum liability under the policy. It could also be closely regarded as the value of the property being insured.
6. Limit of Liability
This is the maximum amount that the insurance company will pay in the event of occurrence of the insured event.
7. Period of Insurance
This is the period within which the policy is in force. General insurance policies normally run for a period of one year. The same can be renewed at the existing terms or with changes as agreed by the two parties. The policy can also be extended for a period, say six months to suit the requirements of the insured e.g. a customer may want their policies to expire at the end of the year or in a particular month.
8. Proposal form
This can also be referred to as an application form. It is the form that one completes giving details of the proposer, description of the property to be insured and a declaration that the proposer has given accurate details to the insurer. It is necessary to make the insurer understand the risk better and also be able to determine the premium to be charged.
9. Insurance Policy
This is the document issued by the insurer as a proof of a contract between the insurer and the insured. It contains the terms and conditions of the contract.
10. Policy Conditions
These are provisions, rules of conduct, duties and obligations required for cover to be operational. If policy conditions are not met, the insurer can refuse to pay a claim.
11. Warranties
These are conditions in the policy that must be strictly complied with. They can be described as conditions that the insured has solemnly sworn to comply with.
12. Insurance Agent
This is a person or a group of people who sell insurance products
on behalf of an insurance company. They must be licenced by the
Insurance Regulatory Authority.
13. Policy Schedule
The policy schedule forms part of your insurance and clearly identifies the terms of the insurance, the items covered and the premium charged.
14. Insurance Broker
This is a registered firm of professionals who acts as an intermediary between the insurer and the insured. The broker operates as your agent and not that of the insurance company. It is important to confirm that the broker is duly licenced by the Insurance Regulatory Authority.
15. Policy Excess
This is the amount of any claim which the insured has to bear. It is not a penalty but an encouragement to the insured to take due care to prevent losses. It is normally a percentage of the sum insured or a fixed amount. The premium charged for the policy takes in to account the policy excess and a discount is allowed accordingly.
16. Third Party Only Insurance
This type of policy covers third party bodily injury and property damage.
17. Comprehensive Insurance
This type of insurance covers third party bodily, injury, damaged to third party property, accidental damage to the vehicle and theft.
18. Average
This is a clause in insurance policies that gives a provision that in the event of under insurance, the amount payable by the insurer is restricted to the same proportion of loss as the sum insured under the policy bears to the total value of the insured item. 19. Exclusion
A provision in the policy that excludes the insurer’s liability under certain specified circumstances or specified event.
20. Discharge Voucher

* This is a document that is issued by the insurance company stating:
* The amount of money to be paid to the insured
* That the insured has discharged the insurance company from its obligations under the policy
* That the insured has accepted the payment.

This document is normally signed and returned to the insurance company. It serves like an invoice to the accounts department to issue a claim settlement cheque.

21. Loss Assessor/Loss Adjuster
These are independent service providers who are professionals in establishing the amount of loss suffered. They are licenced by the Insurance Regulatory Authority. If the insured is not satisfied with their assessment/adjustment report, they can request that a different loss assessor be appointed. The parties must agree in advance who is responsible for the second opinion charges.