The Insurance Jargon Buster: 40 Terms Every Kenyan Should Know
You're reading your insurance policy document.
Page 3. You see the words "excess," "indemnity," "subrogation," and "co-payment" in the same paragraph.
Your brain checks out.
You close the PDF. You tell yourself you'll read it later. You never do.
Sound familiar?
Insurance companies have a language problem. They write for lawyers, not for humans. And in Kenya, where insurance penetration is already low, jargon is one more barrier between people and protection.
This article fixes that.
Here are 40 insurance terms, explained like a friend is telling you over chai. No legalese. No waffle. Just straight answers.
Table of Contents
- A-D
- E-H
- I-L
- M-P
- R-S
- T-W
- Bonus: 5 Phrases That Should Raise Red Flags
- Final Word: Knowledge Is Your Best Policy
A-D
1. Actuary
The maths person behind the scenes. Actuaries calculate how much your insurance should cost based on risk data. They're the reason a 25-year-old pays less than a 60-year-old.
2. Adjuster (Claims Adjuster)
The person who investigates your claim. They check what happened, review your policy, and decide how much the insurer should pay.
3. Agent
A licensed person who sells insurance on behalf of one or more companies. In Kenya, agents are regulated by the IRA (Insurance Regulatory Authority).
4. Beneficiary
The person who gets the payout. If you have life insurance and name your spouse as beneficiary, they receive the money when you pass.
5. Broker
Like an agent, but works independently. A broker represents you (the buyer), not the insurance company. They compare options across multiple insurers.
6. Claim
Your formal request to the insurer: "Hey, the thing you insured me against happened. Please pay up." Claims can be approved, partially approved, or denied.
7. Co-insurance
You and the insurer share costs at an agreed ratio. Example: 80/20 co-insurance means the insurer pays 80%, you pay 20%.
8. Co-payment (Co-pay)
A fixed amount you pay every time you use a service. Example: KSh 200 co-pay per outpatient visit means you pay KSh 200, insurer covers the rest.
9. Comprehensive Cover
Insurance that covers a wide range of risks. In motor insurance, comprehensive covers theft, accident damage, fire, AND third-party liability. It's the "full package."
10. Deductible
The amount you pay first before insurance kicks in. If your deductible is KSh 10,000 and your claim is KSh 50,000, you pay the first KSh 10,000. Insurer pays KSh 40,000.
Deductible and excess are often used interchangeably in Kenya. They mean the same thing.
E-H
11. Endorsement
A change to your existing policy. Maybe you bought a new car and need to add it. That amendment is an endorsement.
12. Excess
Same as deductible. The amount you contribute before the insurer pays. Higher excess = lower premiums. Lower excess = higher premiums.
13. Exclusion
What your policy does NOT cover. Every policy has exclusions. Read them. Common exclusions: pre-existing conditions, self-inflicted injuries, war, nuclear events.
14. First Loss
A policy where the insured amount is deliberately set below the full value. Used when a total loss is unlikely. Example: insuring KSh 2M of stock in a KSh 10M warehouse because you'd never lose everything at once.
15. Grace Period
Extra time to pay your premium after the due date before your policy lapses. Usually 15-30 days in Kenya.
16. Group Insurance
Insurance bought by an employer or organisation for a group of people. Usually cheaper than individual cover. Your employer's medical scheme is group insurance.
17. Hazard
A condition that increases the chance of a loss. A leaking gas pipe is a hazard. A driver who texts while driving is a hazard.
I-L
18. Indemnity
The principle that insurance should restore you to the same financial position you were in before the loss. Not better. Not worse. Just the same.
Insurance is not meant to make you richer. It's meant to make you whole.
19. Insurable Interest
You can only insure something if you'd suffer a financial loss from its damage or destruction. You can insure your own car. You can't insure your neighbour's car (unless you have a financial interest in it).
20. IRA (Insurance Regulatory Authority)
Kenya's insurance watchdog. They license insurers, agents, and brokers. They also handle complaints. If your insurer is misbehaving, IRA is where you go.
For a deeper dive into how insurance regulation works in Kenya, check our insurance terminology guide.
21. Lapse
When your policy dies because you stopped paying premiums. A lapsed policy provides zero cover. Don't let this happen by accident.
22. Liability
Your legal responsibility to pay for damage or injury you cause to someone else. Third-party motor insurance covers your liability to other road users.
23. Loading
An extra charge added to your premium because of higher risk. Smoker? Loading. Previous claims? Loading. Dangerous occupation? Loading.
24. Loss Ratio
The percentage of premiums an insurer pays out in claims. If they collect KSh 100M in premiums and pay KSh 70M in claims, the loss ratio is 70%.
M-P
25. Maturity
When a policy reaches its end date. For investment-linked policies (like endowment plans), maturity is when you get your payout.
26. Moral Hazard
When having insurance makes you behave more recklessly. "I have comprehensive cover, so I'll park anywhere." That's moral hazard.
27. No-Claim Discount (NCD)
A discount for not making claims. In Kenya motor insurance, you can earn up to 50% NCD after several claim-free years. It's your reward for not crashing.
28. Peril
The specific cause of a loss. Fire is a peril. Theft is a peril. Flood is a peril. Your policy lists which perils are covered.
29. Policy
The contract between you and the insurer. It spells out what's covered, what's excluded, how much you pay, and how claims work. Read it.
30. Premium
What you pay for insurance. Monthly, quarterly, or annually. This is the cost of your cover.
31. Pro-rata
Calculated proportionally. If you cancel a policy halfway through the year, a pro-rata refund gives you back half of what you paid.
R-S
32. Reinsurance
Insurance for insurance companies. Your insurer buys reinsurance to protect themselves against catastrophic losses. This is why global events affect local premiums.
33. Rider
An add-on to your main policy. Example: adding a critical illness rider to your life insurance means you get paid if you're diagnosed with cancer, not just if you die.
34. Risk
The chance of something bad happening. Insurance is the business of managing risk. Higher risk = higher premiums.
35. Subrogation
After your insurer pays your claim, they can pursue the person who caused the loss to recover their money. If someone crashes into your car and your insurer pays, the insurer can then go after the other driver.
36. Sum Insured (Sum Assured)
The maximum amount your insurer will pay. If your sum insured is KSh 5M, that's the ceiling. Even if your loss is KSh 8M, you get KSh 5M.
37. Surrender Value
The cash you get if you cancel a life/investment policy before maturity. Usually much less than what you've paid in, especially in the early years.
T-W
38. Third Party
Someone other than you and your insurer. In motor insurance, the "third party" is the other driver, pedestrian, or property you might damage.
39. Underwriting
The process where the insurer evaluates your risk and decides whether to cover you (and at what price). Medical history, age, occupation -- all part of underwriting.
40. Waiting Period
Time after buying a policy before certain benefits activate. Example: 30-day waiting period for outpatient, 12-month waiting period for maternity. You're covered, but the clock hasn't started yet.
For a broader introduction to how insurance works, visit our what is insurance really guide.
Bonus: 5 Phrases That Should Raise Red Flags
Watch out for these in any insurance conversation:
- "Full cover" -- There's no such thing. Every policy has limits and exclusions
- "You don't need to read the fine print" -- You absolutely do
- "This policy covers everything" -- It doesn't
- "You can claim for anything" -- You can't
- "Just sign here" -- Never sign without reading
Final Word: Knowledge Is Your Best Policy
Insurance jargon exists for legal precision. But that doesn't mean you should be left in the dark.
Understanding these 40 terms puts you ahead of 90% of Kenyans when it comes to insurance literacy.
You'll read policy documents without panicking. You'll ask better questions. You'll spot when something doesn't add up.
And that confidence? It's free.
🟢 What to Do Next
Bookmark this page. Next time you're staring at a policy document and a word trips you up, come back here.
And if there's a term we missed, let us know. This list will keep growing.
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