Category: 3. Facts

Insurance policies often have exclusions—specific conditions or events that are not covered. Common exclusions include damage from natural disasters (if not specifically included), wear and tear, and intentional damage.

If a policyholder suffers a loss, they can file a claim with their insurance provider. The insurance company will then evaluate the claim to determine if the loss is covered by the policy and how much compensation is due.

Insurance companies use underwriting to assess the risk of insuring someone. This process involves evaluating the applicant’s risk profile, including factors such as health, occupation, lifestyle, or driving history, depending on the type of insurance.

The person or entity that holds the insurance policy is called the policyholder. Policyholders can be individuals or businesses, and they are entitled to file claims if they experience a covered loss.

The cost of insurance, known as the premium, is typically paid on a regular basis (monthly, quarterly, or annually). Premium amounts are influenced by factors like the type of coverage, the insured value, the risk profile of the insured (age, health, driving record, etc.), and the deductible.

Insurance is essentially a way to manage risk. It involves transferring the financial risk of a loss from an individual or business to an insurance company in exchange for regular premium payments.

Insurance companies assess the risk of insuring an individual or entity through a process called underwriting. Underwriters evaluate factors like age, health, lifestyle, or business history to determine the premium and whether or not to offer coverage.

When you purchase insurance, you pay a premium to the insurance company. In return, the company agrees to cover certain types of financial loss, damage, or liability that may occur during the policy term, as outlined in the policy.