Insurance is a fact of life for everyone – and getting the most cost-effective and comprehensive policy for you has never been easier, thanks to the internet. However, there are still a few specialist terms that can be confusing if you’re looking to make a claim, get a new insurer or fancy applying for one of the great insurance jobs out there:
Underwriting: The job title ‘underwriter’ comes from the old Italian practice of signing the bottom of an insurance contract. It happens before you’re insured: you’ll be evaluated, the levels of risk in your life assessed and any contingencies explored.
Utmost Good Faith: The insurer trusts what you tell them when you open a policy – it’s written into the contract that if you’ve knowingly lied about something that would affect your premium, your insurance could be invalid.
Example: Jeannette is sick: she is having to take a long time off work and is being privately treated. If her illness is due to a pre-existing medical condition that she was aware of but didn’t tell her insurance company about, they won’t have to pay her any compensation.
Premium: This is what you pay your insurer to keep you covered. How much you’re charged can depend on how dangerous your job is and a number or other factors.
Indemnity: The compensation meted out to you by your insurer if an accident occurs – whether it takes the form of healthcare bills, repairing damage or paying your wages: it’s fulfilling the contract that you both entered into. Basically, ‘indemnifying’ is the process your insurers go through to bring your life as close as possible to what it was like before your accident.
Causa proxima: Loosely translated from Latin as ‘The Closest Cause’, or ‘The Most Immediate Cause’. If you have an accident it’s the thing directly affected you: your fall, the fire, etc – the remote cause is you being pushed or the faulty wiring. When lots of factors have contributed to you losing something then the ‘Causa Proxima’ must be established so your insurers can reimburse you properly.
Example: Some burglars attempt to enter a warehouse – they fail but in their efforts cut a wire which sparks and causes a fire. The owner of the warehouse isn’t insured against burglary but he is insured against fire damage; it’d have to be decided what the immediate cause of his warehouse’s destruction was.
Subrogation: This is a situation which occurs when you’ve made a claim on your insurance because you’ve been in an accident – specifically, an accident in which the blame lies anywhere except with you. Your insurance company might try to make the person or company whose fault it was to pay for at least some of the damage caused to recoup the money they’ve paid out to you (in this situation, the person being sued is known as the ‘tortfeasor ‘).
Example: Jim has been injured by a faulty machine at work and have received pay out from his insurance company – his insurers might now try to sue his employer for the money if, by their negligence, they caused the accident. They are ‘subrogating’ – they’re taking the place of Jim, the injured party, so they can get their pay-out back.
If you’re only partially insured and get a limited pay out in the case of an accident, you yourself can still sue for damages. This is known as a ‘tort claim’.
