Assam ASSEB HS Class 11-12 Insurance key terms

A legal and financial relationship in which the policyholder benefits from the continued existence of the insured subject and suffers measurable loss if it is damaged or destroyed. It must exist when the contract begins in life insurance and at the time of loss in general insurance.

The principle that a general insurance claim restores the insured to the same financial position held immediately before the loss, neither better nor worse. It prevents profit from misfortune and underpins the valuation of most non-life claims.

The mutual duty on proposer and insurer to disclose every material fact that would influence the other's decision to accept the risk or fix its terms. Breach may allow the insurer to avoid the contract.

Any information that would affect a prudent insurer's judgment on accepting a risk, setting the premium, or imposing conditions. Examples include prior claims, hazardous occupation, existing illnesses, and previous refusals of cover.

Failure by the proposer to reveal a material fact, whether deliberate or through oversight. It differs from misrepresentation, which is a positive false statement, though both may permit the insurer to repudiate liability.

The insurer's right, after paying a claim, to step into the insured's legal position and recover the loss from the party responsible. It applies to indemnity insurance and cannot be used to profit the insurer.

The right of an insurer that has paid a claim to recover a proportionate share from other insurers covering the same interest against the same peril. It ensures each policy bears its rateable portion and no double recovery occurs.

The dominant, effective cause of a loss, the one that sets the chain of events in motion without an intervening break. Indian courts follow the proximate cause rule rather than the last event in the sequence.

The specific event or contingency that causes loss, such as fire, collision, theft, or death. Policies list covered perils, and a loss is payable only when its proximate cause falls within that list.

A policy condition that the insured promises to fulfil exactly, such as maintaining a fire extinguisher or not storing hazardous goods. Breach generally entitles the insurer to avoid liability, though Indian law permits relief for minor breaches.

A specified risk, property, or circumstance that the policy does not cover, such as war, nuclear risk, or intentional self-injury. Exclusions define the boundary of cover and are read strictly against the insurer if ambiguous.

The written application a proposer submits, containing answers about the risk and a declaration of their truth. It forms the basis of the contract and any false answer may affect the validity of the policy.

A written amendment attached to a policy that changes its terms, such as adding a vehicle, revising the sum insured, or altering a nominee. It must be signed by the authorised insurer representative to take effect.

A window, generally fifteen days from receipt of a life or health policy document, during which the policyholder may cancel for reasons of incompatibility and receive a refund less proportionate risk charges and expenses.

The policyholder's right to name a person who will receive the policy money on the death of the life assured. The nominee is a receiver of proceeds and does not automatically become the beneficial owner unless also the heir.

The transfer of a life policy's rights from one person to another, by endorsement on the policy or a separate instrument. It may be conditional or absolute and must be notified to the insurer to be recorded.

The amount payable by an insurer when a policyholder voluntarily terminates a policy before maturity or death, after the policy has acquired a surrender value, usually after two or three years of premium payment.

A reduced-sum-assured policy that continues after the policyholder stops paying premiums, provided sufficient premiums have been paid. No further premiums are due and the policy remains in force for the reduced amount.

The state of a policy when premiums remain unpaid beyond the grace period and the policy has not acquired surrender value, so cover stops. Revival may be possible within a stipulated period on payment of arrears and interest.

A share of surplus declared by a life insurer and added to the sum assured of participating policies, typically as reversionary bonus declared annually. It is paid at maturity or on death along with the basic sum assured.

The basic amount stated in a life or health policy that the insurer agrees to pay on the insured event, before bonuses or deductions. It is the benchmark for calculating premiums and most claim entitlements.

Payment made by a life insurer when a policy completes its full term with all premiums paid. It includes the sum assured plus accrued bonuses and is paid to the policyholder or as directed by nomination or assignment.

A claim lodged by the nominee or claimant when the life assured dies during the policy term. The insurer verifies the cause and date of death, premium status, and disclosure history before settling or repudiating.

A motor policy's cover for the insured's legal liability to compensate other persons for death, bodily injury, or property damage caused by the insured vehicle. It is compulsory under the Motor Vehicles Act.

The optional section of a motor policy that pays for loss or damage to the insured vehicle itself from accidents, fire, theft, or natural calamities, subject to the sum insured or insured declared value.

Cover protecting goods in transit by sea, air, rail, or road against perils such as sinking, fire, collision, and general average. Institute Cargo Clauses define the scope and duration of cover.

A maritime principle under which losses deliberately incurred to save a ship and cargo from a common danger, such as jettisoning goods, are shared proportionately by all parties whose property is saved.

The basic property policy covering fire, lightning, explosion, aircraft damage, riot, storm, flood, and similar perils for buildings, plant, machinery, and stocks, subject to declared sums insured and policy conditions.

Insurance products designed for low-income households, offering small sums insured and low premiums, often distributed through self-help groups or micro-finance institutions. IRDAI regulations prescribe simplified terms and minimum benefits.

Cover for persons living in rural areas, including crop, livestock, hut, and personal accident products, supported by obligations on insurers to serve rural and social sectors under the Insurance Act and IRDAI rules.

The distribution of insurance products through bank branches, using the bank's customer base and staff as a channel. It requires a corporate agency or referral arrangement permitted under IRDAI regulations.

A licensed intermediary who acts on behalf of the client, not the insurer, in placing and servicing insurance. A broker may advise on risk, compare products, and assist with claims, and is remunerated by brokerage.

An individual licensed by IRDAI to solicit and service insurance business for one or more insurers, remunerated by commission. The agent represents the insurer and must meet training and examination requirements.

A firm, bank, or other institution licensed by IRDAI to solicit insurance business for insurers with which it has an agreement, subject to specified limits on the number of insurer tie-ups.

The process by which an insurer evaluates a proposal, classifies the risk, and decides whether to accept it, at what premium, and on what terms. It protects the insurer's solvency and ensures fair pricing across policyholders.

The risk that the existence of insurance changes the insured's behaviour, encouraging carelessness or even deliberate loss. Underwriters assess it through occupation, claims history, and character indicators.

The tendency for persons at higher-than-average risk to seek insurance more actively than low-risk persons, which can distort the premium pool. Insurers counter it through underwriting, waiting periods, and exclusions.

A licensed professional appointed by an insurer to assess and report on the cause and quantum of a loss, particularly in fire and motor claims above prescribed limits. Their report guides claim settlement.

An authority established under IRDAI rules to hear policyholder complaints against insurers up to a prescribed monetary limit, free of cost. Its awards are binding on the insurer if accepted by the complainant.

An official appointed by each insurer to receive and resolve policyholder complaints within a fixed timeline. A complainant must normally approach this officer before escalating to the Insurance Ombudsman.

The Insurance Regulatory and Development Authority of India, established under the Insurance Regulatory and Development Authority Act, 1999. It licenses insurers and intermediaries, frames regulations, and protects policyholders.

The principal statute governing Indian insurance, amended in 2015, covering registration of insurers, capital requirements, deposits, policyholder protection, and the duties of insurers and intermediaries. It operates alongside the IRDA Act, 1999.

The excess of an insurer's assets over its liabilities, maintained at a level prescribed by IRDAI as a buffer against unexpected losses. Failure to maintain the required margin invites regulatory action.