6 Things Need to Know Before Apply an Insurance Policy

You must have had a lot of questions when you started thinking of acquiring an insurance policy. Today we are going to help you out by answering some of the most common questions so that you can proceed with your insurance policy acquisition. 

1- Insurance policy parties:

Party A: the beneficiary/owner of the insurance policy (i.e.: the insured). This is also the person who submits the insurance policy application to the insurance company of their choice, whether they be a natural person (human being) or a legal person (a non-living entity such as a company).

Party B: the insurance company itself (i.e.: the insurer). The insurance company is usually a public shareholder company licensed to insure, re-insure, or both.

Insurance broker: the person legally authorized to negotiate with more than insurance company on behalf of their client (the insured).

Insurance broker: It is the legal person who negotiates with more than one insurance company

2- Insurance broker vs. insurance agent:

Insurance broker: is the person legally authorized to negotiate with multiple insurance companies. Their role is to get the best available offer for their client be they a normal or legal person in exchange for a commission. 

Insurance agent: the person the insurance company does its own marketing and sales through.

3- What must be included in the insurance policy application by the applicant?

Once the insurance coverage and the insurance policy limitations are decided the insurance company requests some additional information from the insurance policy applicant such as:

• In cases of car insurance policies: the number of car accidents the insured party has been in prior to signing the insurance policy.
• In cases of medical insurance policies: a complete medical history of the policy beneficiary (insured party).
• In cases of property insurance policies: detailed description of the insured building’s contents.

All these questions are included in the insurance policy request/application form. The applicant must be completely honest when filling out the application. If the applicant is untruthful at any point the policy may be declared void by the insurance company or the insurance company my decline to pay out the insurance compensation if the damage was proven to have occurred as a result of the misleading information given by the applicant.

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4- Insurance coverage limits: 

Simply put it is the maximum an insurer (the insurance company) will pay out to the insured (policy owner) as per the agreed upon conditions stated in the insurance policy. This is calculated before any deductions/endurance ratios are taken out.

5- Endurance ratio: 

a specified amount paid by the insured and deducted from the insurance coverage paid by the insurance company in case an accident/damage covered under the insurance policy occurs. The endurance ratio must be specified in the insurance policy terms. Some clients choose to buy an insurance policy with an endurance ratio as it means they will pay a smaller insurance premium. On the other hand an insurance company may stipulate that an endurance ratio is included as it means the insurance coverage will also be less (especially in cases of high-risk insurance). 

6- Depreciation percentage

: a pre-agreed upon stated in the insurance policy terms that is deducted from the insurance coverage. This percentage tales into account the daily wear and tear that occurs over time to your possessions. The insurance covers only the damage caused by an accident not daily use. 

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