Insurance concepts letter І | Insurance company "Prestige"

INSURABLE VALUE - the value determined by the policyholder when assessing the subject of insurance. The insurable value should not exceed the true value of the property on the day of entering into the insurance contract.

IMPACT - damage to the engine of an insured vehicle resulting from the entry of water or other fluids (excluding engine oil supplied to the cylinders during normal operation) into the engine cylinders through its air filter or engine cooling system, and subsequent compression of this water or fluid during engine operation.

INSURANCE CONTRACT - the extension of the term of an insurance contract. In practice, insurance renewal is carried out by entering into a new contract or by issuing a special addendum to the existing contract. Insurers often provide benefits, such as premium discounts, to policyholders who renew their policies. 

INSURABLE VALUE - the value established by the policyholder when assessing the insured object, which should not exceed the actual value of the property on the day of the insurance contract.

INSURABLE VALUE OF VEHICLE - the market value of the vehicle at the time of the insurance contract. The market value of the vehicle (its components) is the price at which the vehicle (its components) can be sold on the market of similar vehicles (components) on the date of the valuation under the contract concluded between the buyer and the seller, after conducting the corresponding market research of similar vehicles (components), provided that each party acted knowingly, reasonably, and without coercion. The market value can be determined based on the following documents: expert examination report, sales contract, invoice, official dealer catalog or other official catalogs and documents containing the value of this and/or similar vehicle in the region.

INSURANCE CONTRACT - an agreement between the insurer and the policyholder, which stipulates the insurer's obligation to make insurance payments to the policyholder or another beneficiary in the event of an insured event, while the policyholder undertakes to pay the insurance premium within specified periods. The insurance contract is concluded based on the policyholder's application. The fact of concluding the contract is confirmed by an insurance policy or certificate. The contract specifies the type of insurance, insurance amount, insurance premium, details of the parties, and the dates of the contract's commencement and expiration.

INSURANCE CLASSIFICATION - a system of dividing insurance into areas of activity, industries, sub-industries, types, and forms. The classification of insurance aims to promote the formation of the insurance market, streamline reporting and state regulation of insurance activities, and develop international integration in insurance.

INSURANCE COMMISSION - a reward paid by the insurer to intermediaries (brokers and agents) for attracting objects for insurance, documentation processing, collection of insurance premiums, and in some cases, for handling insurance claims. The commission is calculated as a percentage of insurance premiums (contributions). The percentage rate depends on the type of insurance and some other factors.

INSURANCE CLASSIFICATION - a system of dividing insurance into branches of activity, industries, sub-industries, types, and forms. The classification of insurance aims to promote the formation of the insurance market, streamline reporting and state regulation of insurance activities, as well as promote international integration in insurance.

INSURANT'S FAMILY MEMBERS - the spouse or partner of the insured, children (including adopted children), parents, grandparents, siblings, grandchildren of both the insured and their spouse or partner, as well as other dependents of the insured.

INTERMEDIARY - an insurance broker or agent through whom an insurance contract is concluded and specific issues regarding claims settlement are resolved.

INSURANCE LAW - the body of generally accepted rules (norms) of conduct for policyholders, insurers, and their intermediaries, determined by the state and enshrined in laws and regulations pertaining to insurance activities.

INSURANCE AGENT - a trusted individual or legal entity authorized by the insurer, who makes insurance proposals to the policyholder and performs certain operations related to the servicing of insurance contracts. Insurance agents may engage in this activity on a full-time basis or work as part-timers. Sometimes, an insurance agent may act as an intermediary for multiple insurers.

INSURANCE ACT - a document prepared as a result of the inspection of the insured object that has suffered from an insured event.

ACCIDENT INSURANCE - a type of personal insurance that provides assistance to insured individuals in the event of temporary or permanent disability. Death of the insured person is also considered an insurance event. In such cases, the insurance payout is made to the beneficiary specified in the policy, or in the absence of a designated beneficiary, to the legal heirs.

INSURANCE BROKER - a legal or natural person licensed to act as an intermediary between policyholders and insurers. An insurance broker acts on behalf of and on the instructions of the policyholders. Their tasks include searching for insurance companies where risks can be placed on optimal terms in terms of insurer reliability and insurance premiums. In the event of an insurance claim, an insurance broker assists the policyholder in obtaining compensation and may also be involved in placing risks that are transferred to reinsurance. The insurance broker is paid by the insurer for their services.

INSURED EVENT - an event specified in the insurance contract, which occurred during the term of the insurance contract, does not fall under the exclusions or limitations of insurance provided by the rules and/or the insurance contract, and upon the occurrence of which the insurer is obligated to make an insurance indemnity payment to the policyholder (beneficiary).

INSURANCE PROTECTION - the obligations of an insurer defined in the insurance contract regarding the payment of insurance indemnity in the event of an insured event that occurs within a specified period of time as stipulated in the insurance contract.

INSURANCE LOSS - the damage suffered by the policyholder as a result of an insured event.

INSURANCE SUPERVISION - the control over the activities of insurance entities carried out by specially authorized state bodies.

INSURANCE PORTFOLIO - a) the actual number of insured objects or the number of insurance contracts; b) the total liability of the insurer (reinsurer) under all existing policies.

INSURANCE PRODUCT - a complex of civil-law relations aimed at protecting the property interests of individuals and legal entities in the event of certain events (insured events) defined by the insurance contract or applicable legislation. An insurance product has the following specific features: unity, opposition, and interdependence of interests between the contracting parties "insurer-insured"; the factor of the probability of the occurrence of an insured event; the policyholder does not know the qualitative characteristics of the insurance product at the time of purchase and may participate directly in its creation; the insurance product has a certain time frame, meaning the insurance coverage is effective for a specific period of time; the preliminary uncertainty of insurance indemnification in terms of amount, timing, or even the fact of occurrence; the specificity of the parties' relationship - financial, legal, moral-ethical, guided by the principle of utmost good faith, etc.

INSURANCE POOL - a voluntary association of insurance companies for joint insurance of certain risks on the principles of co-insurance. An insurance pool is not a legal entity. It is created based on an agreement between the participating companies with the aim of ensuring the financial stability of insurance operations on the basis of joint liability for fulfilling obligations under insurance contracts. Several insurance pools have been established in Ukraine, with the Nuclear Insurance Pool of Ukraine being the largest.

INSURANCE RISK - an unexpected and unintentional event that is subject to insurance and has a certain probability of occurrence during the term of the insurance contract, exhibiting characteristics of probability and randomness.

INSURANCE TARIFF - the rate of insurance premiums per unit of insured amount for a specific period. An insurance tariff consists of a net rate and a loading. The sum of these two components equals the gross rate.

INSURANCE FUND - the total reserves, both physical and financial, of an insurance company that are intended to prevent, localize, and compensate for losses caused by natural disasters, accidents, and other extraordinary events.

INSURER - an organization that, for a certain fee, assumes the obligation to compensate the policyholder or the designated individuals for the damages caused by an insured event.

INSURANCE OPERATIONS - the set of activities performed by an insurer directly related to the implementation of mandatory and voluntary insurance for legal entities and individuals. Insurance operations include property evaluation, calculation of insurance premiums, contract negotiation, collection of contributions, electronic payments, account management for policyholders, preparation of insurance documents, and more.

INSURANCE RESERVES - a system of funds established by an insurer depending on the type of insurance to ensure future insurance indemnities and payments of insured sums. Insurance reserves are formed differently for risk-based insurance and life insurance. Risk-based insurance involves the formation of unearned premium reserves and loss reserves, while life insurance involves mathematical reserves. Temporarily free funds from insurance reserves are invested in securities, real estate, deposited in bank accounts, etc., to generate additional income for insurance companies.

INSURED - a legal or capable natural person who has entered into an insurance contract, paid the required contributions, and has the right to receive compensation within the insured liability or insured sum specified in the insurance contract in the event of an insurance event.

INSURANCE - an economic relationship where the policyholder, through payment of a monetary contribution, secures for themselves or a third party the amount of compensation to be paid by the insurer in the event of an insured event specified in the insurance contract or by law. The insurer retains a certain amount of liability and replenishes and efficiently places reserves to ensure this liability, takes preventive measures to reduce risks, and, if necessary, reinsures a portion of the risk.

INSURANCE GUARANTEE - a written undertaking by an insurer on behalf of its client regarding their creditworthiness. This means that the insurance company takes on the obligation to pay the non-payment amount on their own behalf in the event of specified events.

INSURANCE DECLARATION - a statement by the policyholder regarding the insured object and the nature of the risk. The insurance declaration contains information about the composition, location, value, storage and use conditions, and other information regarding the objects to be insured.

INSURANCE COMPANY - a legally established business entity in the form of a joint-stock company, partnership, limited partnership, or limited liability company, which is licensed to assume the obligations of an insurer. In Ukraine, the majority of insurance companies take the form of joint-stock companies.

INSURANCE EVENT - an event specified in the insurance contract or current legislation, the occurrence of which gives rise to the insurer's obligation to compensate for the losses incurred by this event or pay the insurance coverage to the policyholder (insured person, beneficiary).

INSURANCE PREMIUM - a) the payment for insurance that the policyholder is obliged to pay to the insurer according to the insurance contract; b) the payment made by the policyholder to the insurer for the latter's commitment to compensate for the material losses incurred to the insured property or pay the insurance coverage in the event of certain events. The insurance premium is paid either as a lump sum before the insurance contract takes effect or periodically within the specified terms. The amount of the insurance premium depends on the insurance tariff (gross rates), insurance coverage, insurance period, and sometimes other factors.

INSURANCE CLAIM - a demand by the policyholder (beneficiary, other third party) for compensation of the loss caused by an event covered by the insurance policy.

INSURANCE TERM - the period of validity of an insurance contract. It usually starts from the date specified in the insurance contract, but no earlier than the due date of the first premium payment, and ends with the occurrence of the insured event, the payment of the full insurance sum, the termination of the contract due to non-payment of regular premiums or other reasons, or after the expiration of the specified insurance term.

INTERMEDIARY - an insurance broker or agent through whom an insurance contract is concluded and individual issues regarding claims settlement are resolved.

INSURANCE INDEMNITY - a) the monetary amount within the established insurance coverage limit that the insurer is obligated, according to the terms of the insurance contract, to pay to the policyholder (beneficiary) in the event of an insured risk; b) the amount paid by the insurer as compensation for the loss caused by the insurance event on the insured property and liability. If the sum insured is less than the loss, the insurance indemnity is paid proportionally to the ratio of the sum insured to the insurable value of the object. In the case of double insurance, the actual loss is compensated by all insurers within the insurable value of the insured object, proportionally to each insurer's share in the total insurance coverage. The insurance contract terms may provide for the replacement of insurance indemnity with compensation for the loss in kind.

INSURED PERSON - an individual whose property interests related to life, health, and ability to work are the subject of an insurance contract concluded with the insurer for their benefit, and who can acquire the rights and obligations of the policyholder according to the insurance contract.

INSURED'S FAULT - the subjective attitude of a legal or natural person towards their wrongful behavior and its possible consequences, which may cause harm. Fault can be categorized into intentional actions and negligence. Negligence, in turn, can be classified as ordinary negligence and gross negligence. The presence of intentional actions or gross negligence can be grounds for the insurer to be relieved of its obligation to pay insurance compensation.

INSURANCE OF ELECTRONIC EQUIPMENT - of interest to banks, telecommunications companies, and other organizations that have "electronic risks," and it covers the destruction, damage, or loss of equipment, databases, etc.