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  1. #1
    kiranlegend is offline Member
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    Default Insurance policy

    The Insurer (i.e. insurance company) and Insured (i.e. an individual) enter into a legal contract. The Insured pay a premium to the Insurer and in return the Insurer assures the Insured to compensate him against the losses or hazards mentioned in the contract.The Insured has an insurable interest in the subject matter (i.e. some property or life of certain individual). This means that the Insured stands to gain if the subject matter is protected against the hazards and will stand to lose if any damage is caused to the subject matter.


    I didn't understand the above bold-ed part. Could you please make me understand? How come the Insured looses if there is a damage to the subject matter? I thought it would be the other way around.

    Thanks,
    Kira

  2. #2
    RonBee's Avatar
    RonBee is offline Moderator
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    Default Re: Insurance policy

    Insurance is supposed to protect against loss. That is the whole point of it.






  3. #3
    RonBee's Avatar
    RonBee is offline Moderator
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    Default Re: Insurance policy

    Say:
    The Insured pays a premium to the Insurer and in return the Insurer insures the Insured against the losses mentioned in the contract.

  4. #4
    kiranlegend is offline Member
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    Default Re: Insurance policy

    thanks Ron.

    I would like to properly ask my question again. Sorry, for not putting forward the precise question of mine.

    This means that the Insured stands to gain if the subject matter is protected against the hazards and will stand to lose if any damage is caused to the subject matter.


    The above sentence says that the Insured person will gain if the subject matter against which the insurance coverage was undertaken is protected against the hazards. Here, 'protected against the hazards' means that the subject matter, say a building, didn't catch fire. So the insured person will not get any insurance coverage amount against which the insured has been paying the premiums. Perhaps, once the redemption period reaches, he might get some amount with some interest. In this case he is not earning much from the insurance policy... just his principle along with the relevant interest amount.

    The later part of the sentence says that insurer will loose if there is a damage to the subject matter.

    For say, a building ( subject matter of the policy), caught with fire. Since the insurance coverage exists for that building, the insured would get the total amount to get the building fixed. So the insured is gaining more than that of the gain that the insurer would get. Then, how is this termed to be a loss?

    Please let me know if i need to be more clear.

    Thanks,
    Kiran

  5. #5
    Searching for language is offline Senior Member
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    Default Re: Insurance policy

    Quote Originally Posted by kiranlegend View Post
    The Insurer (i.e. insurance company) and Insured (i.e. an individual) enter into a legal contract. The Insured pay a premium to the Insurer and in return the Insurer assures the Insured to compensate him against the losses or hazards mentioned in the contract.The Insured has an insurable interest in the subject matter (i.e. some property or life of certain individual). This means that the Insured stands to gain if the subject matter is protected against the hazards and will stand to lose if any damage is caused to the subject matter.


    I didn't understand the above bold-ed part. Could you please make me understand? How come the Insured looses if there is a damage to the subject matter? I thought it would be the other way around.

    Thanks,
    Kira

    I keep forgetting, I'm supposed to tell you all that I am not a teacher. (Maybe in my next life I will be)

    My question is this: is the paragraph something that is written in an existing policy, or is this a student writing who is doing an exercise related to learning about insurance matters?

    If this is an exercise by a student, then I think the last part of the paragraph should read "This means that the Insured stands to gain if the subject matter is protected against the hazards and will stand to lose if any damage is caused by the subject matter.


    For example: A few years ago we had a problem in our house. A water-pipe broke, the hot water escaped, and all the furniture in a small guesthouse had to be replaced. We were insured against the hazard of escaping water, but not for the pipe which broke and caused the damage.

    So, we received money for the furniture, but repairing the pipe was our problem.
    Last edited by Searching for language; 18-Jan-2009 at 17:12. Reason: more information

  6. #6
    RonBee's Avatar
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    Default Re: Insurance policy

    Quote Originally Posted by kiranlegend View Post
    thanks Ron.

    I would like to properly ask my question again. Sorry, for not putting forward the precise question of mine.

    This means that the Insured stands to gain if the subject matter is protected against the hazards and will stand to lose if any damage is caused to the subject matter.

    I hope this doesn't mean that you are writing an insurance policy.

    The whole point of insurance is to protect against loss. I don't see how you can gain anything. Unless you have a whole life policy you can't ever expect to get any money back. Suppose you own a house. You want to make sure that if something bad happens (fire, storm damage, flood, earthquake) that your loss is limited to a certain amount. That is what insurance does. You don't gain anything from insurance. (The insurance company does, but you don't.) You avoid sustaining any substantial losses.


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