What are we talking about when we talk about insurance?
When people talk to you about insurance, you often think of boredom, complexity and technicality...
At MPH we are here to explain what it is and help you understand.
. What is insurance?
Insurance is a way for a person called the 'insured' to manage risks and receive relief from the insurer if an event, called a loss, occurs. By taking out insurance, you transfer the cost of a potential loss to an insurance company in return for a sum of money called a 'premium' or 'contribution', which you must pay according to the terms and conditions of the contract.
. In all insurance contracts, there are terms that come up often and that may seem barbaric... it is not necessary to know them all but some are essential. We decipher them for you.
The hazard :
Hazard is the basis of the insurance contract. Without risk, there can be no insurance contract.
A hazard is an uncertain event, which may occur but for which we do not know when it will happen and which does not depend on the goodwill of the person or company that is insured. We insure ourselves for the future, to protect ourselves from an uncertain event, to guard against it.
Example: you want to protect your business from a claim related to professional misconduct that you might commit or from the misconduct of an employee towards a client.
In an insurance contract, the notion of hazard appears when it is written that: the event must be future, uncertain and independent of the insured's will.
From now on, when you see these terms you will know that it refers to the notion of hazard.
The subscriber :
The policyholder is the one who signs the contract and undertakes to pay the premium.
The policyholder is also known as a "contracting party" in life insurance or a "policy holder" in EU law.
It is the party to the contract who signs the contractual documents and undertakes to pay the premiums.
The policyholder may be different from the insured person.
Thus, when a company takes out an insurance policy for its employees, the policyholder is the company and the beneficiaries of the policy are its employees.
Guarantees :
These are the commitments your insurer makes to you.
The guarantees must be specified and explained in your insurance contract (= insurance policy) as well as theirexclusion cases.
The guarantees detail in advance the event covered, the benefits to which the insurer is committed and their conditions of application.
In other words:
The guarantee is an obligation to reimburse or provide benefits that the contract imposes on the insurer in the event of the realisation of the risk envisaged. Example: a customer's claim.
This obligation translates into a "right to compensation" for the insured and/or the victim.
The insurer will provide you with reimbursement in the event of an accident (called a claim) linked to a hazard (called a risk) pre-defined in the contract.
Exclusions:
These are the events or situations that will not be covered by your policy. If the circumstances listed in the exclusions occur, the insurer will not be obliged to pay you compensation.
It is very important to be aware of them and to understand them well to be sure that the contract corresponds to your expectations.
Example: if you are looking for a policy to cover your professional liability and you work internationally, you should not have a policy that excludes activities outside mainland France.
Exclusions must always be specified in the contract and comply with a certain formalism to be valid.
. What you need to know :
In order to be valid, cover exclusions must meet a number of conditions defined by Articles L113-1 and L112-4 of the Insurance Code. If these conditions are not met, the guarantee exclusion clause is void.
1. Exclusions must be explicit: the contract must contain a detailed description of the situations not covered so that the insured is able to understand them.
2. Exclusions must be limited: the number of exclusions from coverage must be limited and cover clearly defined situations.
3. Exclusions must be apparent: the contract must mention them in a sufficiently precise and legible manner so that the insured can easily become aware of them.
Finally, it is up to the insurer to prove that the conditions under which the loss occurred correspond to an exclusion of cover.
. What are the main exclusions from coverage?
Situations in which the insurer will not cover the claim are most often claims that are too likely to occur or cases in which certain legal provisions prohibit compensation by the insurer.
Compensation may still be excluded if the insured person deliberately created the loss, was negligent or did not carry out certain required formalities.
Among the most classic exclusions are: the use of drugs or alcohol, intentional fault, the absence of a hazard or the insured's knowledge of the existence of damage before taking out the policy, etc. Depending on the policy and the activities covered, certain exclusions can be "bought out", i.e. your broker can negotiate with the insurer to cover a risk that is usually excluded: this is the case in particular for extreme sports or activities taking place in so-called high-risk or war-torn countries.
