Insurance Glossary
What is insurance?
Insurance is a way of managing risk, primarily aimed at reducing and limiting potential financial losses. Insurance is actually the transfer of risk from the insured to the insurance company, with the payment of a premium.
Property and personal insurance is a relationship that arises on the basis of an insurance contract in which one party, the insurance company (the insurer), undertakes to compensate the other party (the insured) or a third party for whose benefit the insurance is contracted (the insurance beneficiary) for damage in case of property insurance, or to pay immediately or over a certain period of time a certain amount of money in case of personal insurance, if a foreseen event (insured event) occurs, provided that the insured pays certain amounts of money within the stipulated deadlines (insurance premium).
The insured event, i.e. the event in relation to which the insurance is concluded, must be future, uncertain and independent of the sole will of the policyholder.
Why is insurance important?
Insurance is required to provide economic security for any damage that may or may not occur.
You can insure yourself against various unforeseen events: natural disasters, fires, floods, earthquakes, accidents, inability to repay loans and numerous other non-life insurance risks, as well as conclude various life insurance programs and thus provide security and protection for the time to come.
Life insurance
Depending on which risk is covered, we distinguish between risk life insurance and savings life insurance. In the case of risk life insurance, the risk is the death of the insured, while savings life insurance is paid upon the expiration of the term of the insurance contract. The most common is mixed insurance, which covers both cases.
In the case of mixed insurance, the Insurer shall pay the sum insured if the Insured dies during the insurance period, but also if the Insured sees the end of the insurance period. In addition to risk, this insurance also contains an element of savings, and its main features are:
- Term of insurance is for a fixed period of time
- In the event of death, the sum insured is paid to the insurance beneficiary
- If the Policyholder sees the agreed deadline, he/she will be paid the sum insured
- The terms of insurance may change during the term of insurance.
Non-life insurance
Non-life insurance covers a number of different types of insurance:
- accident insurance,
- voluntary health insurance,
- motor vehicle insurance,
- property insurance,
- insurance against the inability to repay the loan,
- travel insurance and other types of non-life insurance.
Insurance contract
The Insurance Contract is a document by which the policyholder undertakes to pay the premium to the insurer, and the insurer undertakes to pay the beneficiary the sum insured or part thereof if the insured event occurs.
An integral part of the insurance contract is the offer, policy and terms of insurance.
Insurance policy
An insurance policy is a document on concluded insurance, it is evidence or confirmation that an insurance contract has been concluded. It states the following:
• what risks are covered;
• the sum insured or coverage limit;
• the amount of the premium;
• under what conditions the insurer will pay out the insurance indemnity.
Insurance conditions
These terms and conditions are an integral part of the insurance contract and govern the rights and obligations between the insured and the insurer.
Insurer
A legal entity that undertakes to indemnify under the insurance contract, i.e. to pay the agreed amount of money to the insurance beneficiary or the insured, when the contracted risk is realized.
Policyholder
A person who concludes an insurance contract with an insurance company, signs an insurance policy and pays the insurance premium. The policyholder may not always be entitled to insurance indemnity.
One person – the insured, in most cases appears in the capacity of policyholder and insurance beneficiary.
Insured
A natural or legal person concluding an Insurance Contract in his/her/its own name and for his/her/its own account, thus insuring himself/herself/itself against the adverse effect of the covered risks.
Insurance beneficiary
A natural or legal person to whom insurance indemnity is reimbursed.
Subject of insurance
What is insured – insured persons, things or title. The subject must be clearly indicated in the insurance policy.
Insurance coverage period
The period of time during which the insurer provides coverage against insured risks.
When it comes to the period of insurance, there is short-term insurance with a term of up to one year, multiannual insurance with a term longer than one year and indefinite insurance with which the term is not specified, but only the beginning of the insurance.
Sum insured
The amount to be paid if the insured event occurs. It is an important element of the insurance contract and is used to calculate the amount of the premium.
Insured event
It represents a possible, uncertain and future event, which does not depend on the exclusive will of the insured, which causes damage, and the occurrence of which creates the obligation of the insurer to reimburse the damage.
All risks are covered in detail in the conditions and terms of insurance, which include the list of risks with the precisely determined scope of each individual hazard or where the insurance against all risks, except those listed and explicitly excluded, is concluded.
Insurance premium
The amount of money to be paid by the policyholder to the Insurer for insurance, in the agreed amount and according to the agreed schedule.
Insurance indemnity
The insurance indemnity is the amount paid by the insurer if the insured event that is covered by insurance occurs.
Waiting period
In some types of insurance, the insurance does not become effective immediately after the signing of the contract, i.e. a period is foreseen when the insurer is not obliged to pay the insurance indemnity if the insured event occurs. For example, if you arrange a policy against the inability to repay the loan, only after two months you will be able to use the contracted risk of unemployment and sick leave. The reason for this is to prevent possible abuses.
Vinculation
The transfer of the right of first claim of insurance indemnity from the beneficiary to a third party, mainly to banks, is a (policy) vinculation.
Excluded risk
The risks excluded from insurance coverage are excluded risks.
It's important to read your insurance policy to make sure you understand what risks are covered and which are excluded. An additional premium is paid for insurance against additional risks not covered by the basic policy.
