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FAQs

All that you need to know...

FAQs

faqs

Frequently Asked Questions

Who is the Insurer and Insured?

Two of the basic terms of the legal contract of insurance are ‘insurer and insured’. Any insurance policy is a legal contract between insurer and insured. However, in life insurance policies there can also be beneficiaries or nominees.

Who is the Insurer?

The insurer is the company that provides you with financial coverage in case of specific, unfortunate events listed in your insurance policy. An insurer can be an insurance company as well as an underwriter.

What do an Insurer do?

Here are some tasks that an insurer performs:

a) Assesses the risk of your proposed cover

An insurance contract covers your financial losses due to a specified risk. However, the risk varies for different proposers. The assessment of the possibility of the loss due to the covered risk is the job of the insurer. This is also called underwriting in insurance.

b) Background checks your information

It is the insurer’s responsibility to ensure that the accepted risk cover proposals meet all the required insurance principles. For example, you can buy insurance only on a car you own permanently or temporarily. Thus, the insurer is expected to verify all claims of ownership and title before accepting the insurance proposal.

c) Provides a quote based on the information

The insurer is expected to pool funds from a large number of proposers who might be exposed to the risk. The insurer is also responsible for distributing the funds to those contributors who incur the loss in the future.

Thus, the insurer must be fair and equitable when it comes to distributing the fund pool and charge a higher premium to those more likely to claim the funds. Thus, the insurer offers a quote as per the risk assessment of your proposal.

d) Gives detailed information about the policy

Insurance is a contract based on the principle of ‘utmost good faith.’ This means that both the insurer and the insured must provide truthful and relevant information to each other about each other.

While the proposer provides all relevant information about the risk and material at risk in the proposal form, the insurer publishes the detailed contract to the insured. The insured can also have a grace period for rejecting the contract.

e) Takes care of coverage and claims after you purchase the policy

A claim is the moment of truth for the insured and the responsibility of the insurer. The insurer must verify all the documents related to the claim and assess the extent of the loss. Once the loss value has been ascertained, the insurer must process the claim fast so as to relieve the grieving party of the financial burden.

Also Read - What is Insurance?

Who Insures the Insurers?

Reinsurance companies or reinsurers insure the insurance companies. Reinsurers participate in protecting insurers from the risks which are too large for them to cover individually. Insurers can underwrite more and bigger proposals with the help of reinsurers than otherwise possible for them.

Who is an Insured?

Insured refers to a person or entity who is financially covered and entitled to receive benefits of an insurance policy. Insured receives payments from insurers after they experience a covered event that is specified under the policy’s term

Example of Insured

If you buy an insurance to cover you against accidents, you are insured of the policy. The insurance policy will only pay the benefits if you are hurt in an accident, and not for anyone else.

Steps you Need to Follow to Get Insured

Here are some steps you need to follow to get insured:

a) Research about various types of insurance
b) Contact an insurance provider
c) Fill an application form regarding your basic details
d) Undergo medical tests

The premium of your policy is determined based on the details you enter and your medical exam results. You have to pay premiums to stay insured.

Note that an insured doesn't need to be a policyholder. Thus, you can buy an insurance policy for others as well. For example, when you buy a life insurance policy for your wife, you will be the policyholder and your wife will be the insured.