Insurance: notes

Key terms

• Premium: the payment made to the insurer.
• Policy: the written contract.
• Claim: a request for payment after a loss.
• Risk: the chance of loss.

Principles

• Insurable interest: you must stand to lose if the item is lost.
• Utmost good faith: tell the truth about the risk.
• Indemnity: you are put back where you were, not made richer.

Types

Fire, motor, life, theft, crop and funeral cover.

Common mistake

Life assurance covers an event that will happen; other insurance covers a loss that may happen.