Who is the Insurer and Insured? You Need to Know

The insurer is the entity that promises to cover your financial losses due to specified events. The insurer can be a company, a cooperative society, or a government agency. In India, many insurers offer various types of insurance policies, such as life, health, motor, and property insurance.

The insurer has several functions and responsibilities in an insurance contract. Some of them are:

Risk Assessment

The insurer evaluates the probability and severity of the loss that may occur due to the event. They then decide whether to accept or reject the proposal and what premium to charge.

Background Checks

The insurer verifies the accuracy and completeness of the information given by the insured in the proposal form. The insurer may also conduct medical examinations, inspections, or surveys to ascertain the risk.

Providing Quotation

The insurer gives the insured a quote containing the policy details, such as the coverage, the premium, the term, the exclusions, the conditions, etc. The insured can accept or reject the quote.

Outlining Terms and Conditions

The insurer provides the insured with a policy document, which is the legal evidence of the contract. It contains all the information about the policy, such as the rights and duties of the insurer and the insured, the claim procedure, the dispute resolution mechanism, etc. The insurer also explains the policy features and benefits to the insured and answers any queries or doubts that the insured may have.

Taking Care of Coverage

The insurer is responsible for providing the coverage and paying the claims per the policy terms and conditions. They also have an obligation to operate in good faith and work honestly with the insured.

The insurer has certain rights and powers in an insurance contract. Some of them are:

Rejecting Proposal

The insurer can reject the proposal or cancel the policy if the insured has provided false or incomplete information, has violated the policy terms and conditions, or has committed fraud or misrepresentation.

Imposing Penalties

The insurer can also impose penalties or interest for late payment, non-payment of the premium, or breach of the policy terms and conditions.

Subrogation

The insurer can recover the claim amount from the third-party responsible for the loss after paying the claim to the insured. This is called subrogation, which means the insurer steps into the insured's shoes and exercises the insured's rights against the third party.

Contribution

The insurer can share the claim amount with other insurers who have issued similar policies to the same insured if the insured has taken multiple policies for the same risk. This is called contribution, meaning the insurers contribute proportionately to the claim to their respective liabilities.

The insured is the person or entity whose loss the insurance policy covers. The insured can be an individual, a business, a group, or any other legal entity.

Some examples of insured in India are you, your family, your employees, your car, and your house.

The insured has certain obligations and duties in an insurance contract. Some of them are:

Providing Relevant Information

The insured has to provide the insurer with all the necessary and material information in the proposal form. They have to disclose everything that may affect the risk or the premium. They must also avoid any false or misleading statements or concealment of facts.

Paying Premium

The insured has to pay the premium within the due date or the grace period. The insured has to pay the premium by the agreed-upon mode and method.

Notifying Insurer

The insured has to notify the insurer of any alterations, additions, or improvements made to the property insured. For example, if there is a change in the insured's address, occupation, health, or lifestyle.

Following Guidelines

The insured has to follow the policy guidelines and requirements specified by the insurer. They must comply with the policy's warranties, conditions, and clauses. They must take reasonable precautions to prevent or minimise the loss. The insured has to cooperate with the insurer and the surveyor in case of a loss.

Making Claim

The insured has to claim in case of a loss per the policy terms and conditions. They have to notify the insurer as soon as possible. They must submit the claim form, supporting documents, and evidence.

The insured has certain rights and benefits in an insurance contract. Some of them are:

Availing Tax Benefits

The insured has the benefit of availing tax benefits and incentives for taking certain types of insurance policies. They benefit from getting deductions or exemptions from the income tax for paying the premium or receiving the claim.

For example, under Section 80D, health insurance premiums are tax deductible; under Section 80C, tax perks are available on life insurance premiums.

Achieving Long-term Goals

The insured can achieve long-term goals and objectives by taking specific insurance policies. For example, the insured can secure the dependents' future with term life insurance.

They can also enjoy the benefit of saving for retirement or education by taking endowment or pension plans. With ULIP or money-back plans, they can create wealth or enjoy a steady income.

Peace of Mind

The covered person can transfer the risk of loss to the insurer, which reduces the uncertainty and anxiety of the future. The insured can have peace of mind and confidence that the insurer will take care of the loss. They can also plan and budget for the future more effectively and efficiently.

Whether you have SME insurance or individual insurance, understanding the roles and responsibilities of both the insured and the insurer is crucial. Knowing what is expected of you as the insured can help ensure a smooth claims settlement process and prevent your proposal form from being rejected.

The insurer and the insured have to act honestly and fairly towards each other and disclose all the material facts that may affect the contract. The principle of utmost good faith applies throughout the duration of the contract, from the proposal stage to the claim settlement stage.

At Tata AIG, we offer a variety of insurance solutions like fire insurance, health insurance, motor insurance, travel insurance and more at affordable premium rates.

Who is the insured and insurer?

The insured and the insurer are two parties involved in an insurance contract. The insurer is the company that provides financial coverage to the insured in case of a covered loss. The insured is the person or entity that pays the insurer a premium and receives the policy's benefits.

How does the insurer determine the premium?

The premium is the sum the insured pays the insurer for the insurance policy. The insurer determines the premium based on various factors, such as the type and amount of coverage, the insured's risk profile, the policy's duration, and the market conditions.

What is a covered loss?  A covered loss is an event or occurrence that causes damage or injury to the insured or their property and that is included in the insurance policy. For example, a fire, a theft, a car accident, or a natural disaster can be covered losses, depending on the policy.

How does the insured file a claim?

A claim is an application by the insured to the insurer for compensation or reimbursement for a covered loss. To file a claim, the insured usually needs to provide proof of the loss, such as receipts, photos, police reports, or medical records, and follow the insurer’s instructions and deadlines.

What are the types of insurance policies?

There are many types of policies, such as life, health, property, liability, auto, travel, and fire insurance policies. Each policy provides different benefits and protections to the insured, depending on their needs and preferences.