THE MYSTERY OF INSURANCE EXPLAINED
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.
A person insures his house against fire, if fire breaks out, then the person can go to the insurance company and ask for payment (usually called 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 risk is being indemnified when entering into an insurance agreement with your insurer.
How does one get insurance?
The first step to getting insurance is to identify the insurance company. You can find a list of insurance companies in Uganda here. Once you have identified an insurance company, then you can travel to their offices and agree on the terms and conditions of the contract. Typically, an insurance company will explain exactly how everything works, so you don’t need to know everything about insurance before you approach a company.
The amount of money you pay to an insurance company in order to obtain cover or protection is called a PREMIUM. Your premium will be used to “cover” the risk. An agreement between yourself and the insurance company is called the POLICY (contract of insurance). Once signed, both you and the Insurance Company will be bound to perform under the contract. The contract will contain all the terms of conditions for your insurance agreement, so it is important that you read and understand what you are signing. If you need help interpreting a policy, contact us through any of our platforms.
After signing the Policy, you become the insured and the Insurance Company becomes the insurer.
In the event that the risk 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 (the exact details will be outlined in the policy). 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. Importantly, many insurance matters that end up in court hinge on a dispute negligence.
Why does Insurance matter?
There are many reasons why you should get insurance for your business but it all zeroes down to one thing: security against future uncertainties. No one wakes up and plans to fall sick, get into an accident, die or burn down their house but these events happen on a regular basis and often, they will affect your assets in one way or another.
Everybody needs insurance as a form of security. When you suffer loss due to an unforeseen event or accident, finding capital to cover the costs of damage can be very difficult. Insurance companies cover your costs so that you can focus your time, energy and resources towards operating your business.
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. Complaints to the IRA can be sent via email or telephone.
If you are not satisfied with the decision of the IRA, then you can take the matter to Court. But remember: before you can enforce your insurer to act upon the contract, you must have fulfilled all your obligations under the policy. If you default on premium payments, you cannot force your insurer to cover you when a risk materializes.
Contact us to find out about the different types of insurance options available to your business. Make smart choices now to avoid paying for your mistakes later.