St. Martin News Network - Insurance Corner - General Insurance Information.
Insurance Corner - General Insurance Information.
1. What is an application form?
1. It is a form you fill out which provides information the insurance company will use to decide whether to issue you a policy and how much to charge. The application form is a part of your contract with the insurer thus it is therefore important that it is filled out as completely and accurately as possible.
2. What is an endorsement? 2. This is a written amendment to an existing insurance policy that changes the terms/ conditions or scope of the original policy issued. An endorsement can either expand or limit the benefits payable under the policy.
3. What is the deductible / excess? 3. The deductible, also referred to as excess, is the amount of money that you are responsible for paying toward each insured loss (e.g. a car accident, hurricane, fire etc.). The deductible applies each time you file a claim.
Insurers usually subtract the deductible/ excess from your claim payment although you can opt to pay your deductible and receive the full claim settlement thereafter.
A deductible can be a percentage of the sum insured or a specific dollar value. Ensure that you are aware of the deductible on your policy.
4. What is an exclusion? 4. An exclusion is a provision in an insurance policy that denies coverage for certain perils, people, property, or locations. It is important for you to understand what are the exclusions in your policy. Ensure that you discuss this with your insurance representative.
5. What is underinsurance? 5. Underinsurance arises when the amount for which you have insured your property, also referred to as the sum insured, is less than the actual cost of reconstruction / rebuilding that property to its pre-loss state.
6. How can clients avoid under-insurance? 6. You can avoid underinsurance by reviewing the adequacy of your sum insured with your insurance representative (agent, broker or insurer) annually. To assist with this discussion, you should consider having a professional appraiser (individual or company) assess your property on a periodic basis (e.g. every 2-3 years) and outline the reconstruction cost of your property in his/their report.
In addition, should you plan on doing any renovation work and once the renovation work has been completed you should discuss with/ apprise your insurance representative.
7. What is a property appraisal report? 7. A property appraisal report is a document that provides the opinion of a professional appraiser on the value of the property being assessed. Appraisals can be done to assist with making varying decisions, for example, to determine the sale price of the property or for determining the property’s insurable value. It is important that you advise your appraiser of the intended use of his/their report so that the appropriate valuation methodology is applied. The reconstruction cost is the value relevant for insurance purposes.
8. What is the role of an insurance adjuster? 8. Claim adjusters, as they are commonly referred to, are trained professionals who investigate a loss (be it a fire, hurricane, motor accident etc.), assess the extent of coverage held by the insured and make recommendations on claim settlement. Adjusters are also sometimes directly involved in the negotiation of settlements with insureds on the behalf of the insurer. These claim adjusters are qualified and experienced professionals usually in varying fields: insurance, claims, construction, engineering, architecture, finance etc. Adjusters may be employees of the insurer (staff adjusters) or of independent adjusting firms (independent adjusters).
9. What is NCD and how does it operate or benefit you? 9. NCD is the acronym for No Claim Discount. As the name suggests, it is a discount that is granted to the customer for not having incurred a loss (i.e. for being claims free). This type of discount is usually associated with vehicle policies. The level of NCD granted varies from insurer to insurer but, the principle is the same; the greater the claims free period the greater the discount an insured can gain, although there is usually a maximum discount that can be obtained.
10. What is a reinsurer? 10. A reinsurer is a company that provides insurance to insurance companies. Reinsurance is purchased by insurers, as part of their risk management strategy, to transfer portions of the financial exposure they assume when they provide protection to individuals for their cars, homes, businesses, boats, health, life etc.