Merritt Personal Lines Manual: The Importance of Jargon
The study of insurance is full of jargon that is unique to the industry. It is important to know these basic concepts since you will encounter them throughout your study of insurance.
- Claim. A demand made by the insured or the insured's beneficiary, for payment of the benefits provided by the contract.
- Indemnify. To restore the victim of a loss to the same position as before the loss occurred.
- Insurance. A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the insured
- Insured. Any person organization or company or a member of these specifically designated by name as the one(s) protected by the insurance policy.
- Insurer. The party to an insurance arrangement who undertakes to indemnify for losses, provide pecuniary benefits or render services. The word "insurer" is often used instead of "carrier" or "company" since it is applicable without ambiguity to all types of individuals or organizations performing the insurance function. The word insurer is generally used in statutory law.
- Loss. Generally refers to (1) the amount of reduction in the value of an insured's property caused by an insured peril, (2) the amount sought through an insured's claim or (3) the amount paid on behalf of an insured under an insurance contract
- Proximate Cause. The effective cause of loss or damage. It is an unbroken chain of cause and effect between the occurrence of an insured peril or a negligent act and resulting injury or damage
- Risk. (1) Uncertainty as to the outcome of an event when two or more possibilities exist. (2) A person or thing insured.
