In the Insurance Essentials article series, Axco defines key insurance terms to clarify understanding of the global insurance market and to aid the professional development of those wishing to join or learn more about the industry.
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Here are some key insurance terms and their definitions:
See average, general
An arrangement that is based on trust rather than binding under law.
A term used to group together natural hazards that occur due to geological causes, such as tectonic plate shifts. Geological hazards include earthquakes, volcanic eruptions, landslides, avalanches and rockfalls.
A document that provides evidence of motor insurance cover for drivers driving outside their country of domicile within and around Europe. Green cards are not a form of insurance cover but provide proof that the driver has sufficient insurance cover. Green cards form part of the Green Card system, which is intended to facilitate border-crossing. A Green Card is not necessary for border-crossing within the European Union and certain other European countries. See also: blue card, brown card.
See class action
An indemnity policy is an insurance policy that pays out in the event of a claim in accordance with the principle of indemnity. An insured may have one or more indemnity policies in force for the same risk but the principle of indemnity (and related principle of contribution) precludes the possibility that the insured can gain financially from a loss by claiming for the same loss under one or more insurance policies. Related terms: principle of indemnity. Compare to: benefit policy, valued policy.
Indemnity, principle of
The principle by which the insured is restored to the financial position that he or she enjoyed immediately before an insured loss. Most non-life insurance contracts operate on this principle. Insurers may indemnify the insured through financial compensation or through the repair, replacement or reinstatement of the damaged property for which the insured seeks indemnity under his or her insurance policy. Related terms: contribution, principle of. Related terms: subrogation, principle of.
See agent, independent
Indirect marketing is a method of marketing that involves insurance intermediaries. These intermediaries may be tied, ie work for only one insurance company and therefore sell only that company's products, or may be independent, and therefore able to offer a wide variety of products from a number of different insurers. The responsibilities of the insurer and the intermediary towards consumers in indirect marketing arrangements can vary significantly depending on the arrangement in place. Compare to: direct marketing.
See named perils
A banking service that allows customers to conduct banking transactions through the internet, or 'online', through their bank's website. Such transactions can include opening a bank account, moving money, paying bills and setting up payments.
See motor casco
This article covers some of the terms you need to know to better understand the insurance industry. If you are interested in learning more, take a look at the various educational insurance courses we have on offer at the Axco Academy.