What are the insurance terms I need to understand?

Policy: A formal contract issued by an insurance company to the insured, serving as legal evidence of the insurance agreement. It guarantees and specifies indemnity, details the exact terms of the agreement, and specifies associated information, including the specific risks and perils covered, the duration of coverage, the premium amount, and the deductibles.

Premium: The price of a policy. Determined by the insurance company on the basis of the risk profile of the insured or their property, the premium is paid in monthly installations.

Claim: A formal request from the insured to the insurance company for compensation for losses on the basis of the terms agreed upon in the insurance policy.

Deductible: Whenever a claim is made, the insured is required to fulfill a minimum out-of-pocket expense, otherwise known as a deductible. This expense shall be paid before the insurance company compensates the insured for their losses. Deductibles can be applied per-policy or per-claim depending on the insurance company and type of policy.

Indemnity: An agreement to compensate the insured in the event of a loss.

Policy Exclusion: The risks, perils, or properties excluded by an insurance policy.

Negligence: Failure to exercise the degree of care expected to be exercised in any given circumstance by a sensible and cautious person.

Market Value: The value of an asset based on a current market valuation or the amount for which an item is sold on the open market.