Define Insurance?

What Is Insurance? Aside from being mandatory for me to discuss its meaning because this is the subject of this blog, this is deemed necessary and of utmost importance because most people doesn't know its meaning and concept.  Most people get it because it is a requirement by the bank when they take a loan or that it is needed for the registration of their vehicle. Most people also assume that if they have an Insurance policy, the Value Insured is going to be paid to them in full in case they encountered a loss. Actually, there is more to it than what is written in that fancy piece of paper in your hand and it requires a deeper understanding to be fully aware of what you are buying. So the first step is to discuss its meaning to understand what that piece of paper is worth.

According to the Insurance Code of the Philippines , a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. I consulted Merriam-Websters Dictionary to provide a simpler meaning and according to it, Insurance is a coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.

I will list the main factors that constitutes an insurance contract based on the definitions given above

1. Contract - In its simplest meaning means an agreement between two parties. As I recall back in college, It is a written obligation to do or not to do. Therefore In an Insurance Policy, the Contract will state what the Insurance Company will do for you (Coverage of Insurance) or what it will not do for you (Exclusions)

2. Consideration - simply means the payment for the Insurance Policy.

3. Indemnity - To indemnify means to put one in the same or nearly the same financial position he was before the loss occurred. This means that we will either repair or replace the property based on its condition or value before the loss or accident. I will not explain it any further for now because I plan to make a separate blog for this topic.

4. Unknown or contingent event or Peril - This is the cause of the Loss. In your Insurance Policy, this is the Coverage of your Insurance like in Fire Insurance Policy, try to look at the Coverage and you may see Fire/Lightning, Earthquake Fire/Shock, Flood, etc. These are the Perils under your Insurance Policy.

After defining the main factors of Insurance, I hope you have the idea now on what is an Insurance Policy and what it promises you. But we don't have to rely on its definition alone, because there's more to it and these will be discussed in my future entries.

For questions and inquiries, please don't hesitate to contact me through the following and I will get back to you as quickly as I can.

Mobile no. - +639062122483 (Roaming number, just text me and I'll just call you)

Email Address - stargazer02_81@yahoo.com