An insurance policy is a formal contract between the insured and the
insurer. It specifies the terms, conditions, coverage limits, exclusions,
and obligations of both parties. The policy outlines the types of risks
covered and details the circumstances under which the insurer will pay
for a loss
In insurance, risk refers to the possibility of loss or damage that an
insurance policy is designed to protect against. It is the uncertainty
regarding a potential negative outcome, such as financial loss, injury, or
damage to property. Insurers assess and manage risk to determine
appropriate premiums and coverage
The insured is the individual, business, or entity covered under an
insurance policy. The insured pays a premium to the insurer in exchange
for protection against specific risks, such as damage, loss, or liability, as
defined in the policy
The policy effective date is the date on which an insurance policy
becomes active and begins providing coverage. From this date, the
insured is protected against the risks outlined in the policy, and the
insurer is obligated to cover any valid claims that arise during the policy
period.
An admitted carrier is an insurance company that is licensed and
regulated by the state insurance department in the state where it
operates. Admitted carriers must comply with state regulations,
including financial solvency requirements and participation in state
guaranty funds, which protect policyholders if the insurer becomes
insolvent
Premiums are the payments made by the insured to the insurer in
exchange for coverage under an insurance policy. The amount of the
premium is determined based on factors such as the level of risk,
coverage limits, and the insured's claims history. Premiums can be paid
periodically (e.g., monthly, quarterly, annually) and are necessary to
keep the policy in force
A line of business in insurance refers to a specific category or type of
insurance coverage, such as auto insurance, health insurance, life
insurance, or commercial property insurance. Each line of business
focuses on different types of risks and coverage needs.