30 Jan 2017

INSURANCE: What is Insurance?

INSURANCE: What is Insurance?

Insurance happens when a person (insured) pays a certain amount of money (called premium) to an insurance company (insurer). This money is paid to cover loss against a certain event. For example; a person insures his house against fire, if fire breaks out, then the person can go to the insurance company and ask for payment (indemnity) for the loss.

However, if a person insures for fire, but the house is destroyed by rain, then the person cannot claim the insurance money. Therefore it is very important to know what the risk being indemnified against is when entering into an insurance contract.
What happens if Opio wants to get insured?
The first step to getting insurance is to identify the insurance company. Once Opio has identified an insurance company, then he will go there and agree on the terms and conditions of the agreement.

The amount of money he is supposed to pay to get covered is called PREMIUM which will be used to “cover” the risk. An agreement called the POLICY (contract of insurance) is then signed between the Insurance Company and Mr Opio. In the contract of Insurance are the terms that shall bind Mr Opio and the company in the event that the risk being insured against occurs.

After signing the Policy, Opio becomes the insured and the Insurance Company becomes the insurer.
In the event that the thing insured against (for example fire) happens and causes the anticipated damage, the insured can bring a claim to the insurer for indemnity. For an insured to claim from the insurer, the loss that occurred must have been unforeseen or accidental. This means that if the insured is negligent or could have avoided the loss but did not, he will not be able to claim successfully from the insurer. A certain degree of care is required on the part of the insured lest he become reckless and bring about the event which would be disadvantageous to the insurer.

Why even bother to get insurance?
There are many reasons why one would require insurance but it all zeroes down to one thing; securing against future uncertainties. This is because no one wakes up and plans to fall sick, get an accident, die or burn down their house. We may not know the time or place when these things will happen but they are likely to in the due course of our lives.
We therefore need insurance as a form of security. In the event that any loss, we need to be covered and you can rest assured when you know that the insurer is taking care of it.

What happens if there is a dispute between a person and the insurance company?
If there’s a dispute between a person and the insurance company, it is recommended that the person lodges a complaint to the Insurance Regulatory Authority (IRA) which will try and resolve this dispute before the matter goes to Court.

If a person is not satisfied with the decision of the IRA, then such a person can take the matter to Court.

****
Do you have any questions or comments relating to this topic? We would love to hear from you. You can reach us through email at ask@barefootlaw.org, call 0414660539, on Twitter @BarefootlawUg. You can also send a message through our Facebook inbox or post your queries on our wall.

Leave a Reply

Your email address will not be published. Required fields are marked *