Complete guide to insurance terminology and definitions. Understand premiums, deductibles, exclusions, and other key insurance concepts.
Understanding insurance terminology helps you make informed decisions about your coverage. Learn the key terms and concepts that every policyholder should know.
The amount you pay for your insurance policy, typically monthly, quarterly, or annually. Example: KES 5,000 per month for comprehensive motor insurance.
The amount you pay out-of-pocket before your insurance coverage kicks in. In Kenya, this is often called "excess." Example: KES 25,000 excess on motor insurance claims.
A fixed amount you pay for covered services, with insurance covering the rest. Example: KES 1,000 copay per doctor visit on health insurance.
The percentage of costs you share with your insurer after meeting your deductible. Example: 80/20 coinsurance means your insurer pays 80%, you pay 20%.
The person or entity designated to receive insurance benefits. Example: Your spouse as beneficiary on a life insurance policy worth KES 5 million.
Specific conditions, circumstances, or services not covered by your policy. Example: Pre-existing conditions, drunk driving accidents, or acts of war.
Additional coverage options you can add to your base policy for extra protection. Example: Adding windscreen cover (KES 3,000 annually) to motor insurance.
A formal request to your insurance company for payment based on your policy terms. Example: Filing a claim after a car accident to cover KES 200,000 in repairs.
The written contract between you and the insurance company that outlines coverage, terms, exclusions, and conditions.
The maximum amount your insurer will pay for a covered loss. Example: KES 10 million sum assured on a life insurance policy.
The process of evaluating risk and determining policy pricing. Underwriters assess your age, health, driving record, or property condition to calculate premiums.
A professional who calculates insurance risks and premiums using statistical models. They determine pricing based on probability and risk factors.
Compensation for loss or damage, restoring you to your financial position before the loss. Most insurance policies are contracts of indemnity.
The insurer's right to pursue third parties who caused your loss after paying your claim. Example: Your insurer suing the at-fault driver after covering your accident.
Extra time (usually 30 days) to pay your premium after the due date without losing coverage. Your policy remains active during this period.
Kenya's public health insurance program. Contributions range from KES 150 to KES 1,700 monthly based on income. Provides basic healthcare coverage at public facilities.
The government body that regulates Kenya's insurance industry, licenses insurers, and protects consumers. Report complaints to IRA if insurers deny valid claims.
Mandatory minimum motor insurance in Kenya covering damage/injury to others. Annual premium typically KES 3,000-5,000 depending on vehicle type and engine capacity.
Mandatory insurance for employers covering work-related injuries and occupational diseases. Premium based on employee salaries and risk classification.
One of Kenya's largest insurers. Term used generically like "Xerox" for photocopying. Always verify which specific insurer you're dealing with.
Insurance policies can be overwhelming, but understanding key sections helps you know exactly what you're paying for.
Lists all covered services and their limits. Example: "Inpatient limit: KES 1,000,000 per year, Outpatient: KES 150,000 per year"
Your obligations as policyholder - paying premiums on time, notifying insurers of changes, providing accurate information during claims.
Step-by-step process for filing claims, required documents (police report, medical records), and timelines (e.g., report accidents within 24 hours).
Explains how your policy uses specific terms. Example: "Accident" may exclude intentional acts or racing.
Situation: You have comprehensive motor insurance with KES 50,000 premium annually and KES 20,000 excess. Your car is damaged in an accident requiring KES 150,000 repairs.
Outcome: You pay KES 20,000 (excess), insurer pays KES 130,000. Your NCB may be affected, potentially increasing next year's premium by 20-30%.
Situation: Your health policy has KES 1,500 copay per outpatient visit. You see a specialist who charges KES 8,000 for consultation.
Outcome: You pay KES 1,500 copay, insurance covers remaining KES 6,500. This applies per visit, so 10 visits = KES 15,000 out-of-pocket.
Situation: You pay KES 4,000 monthly (KES 48,000/year) for KES 5 million life insurance. You pass away after 3 years, having paid KES 144,000 total.
Outcome: Your beneficiary receives full KES 5 million (minus any outstanding premiums or loans against the policy). This is the power of life insurance.
A deductible (excess) is a one-time amount you pay per claim before coverage applies. A copay is a fixed fee per service. In Kenya, motor insurance uses excess (KES 10,000-50,000), while health insurance often uses copays (KES 500-2,000 per visit).
Yes, especially for motor and commercial insurance. Factors affecting your premium: your claims history, security features (tracking device, alarm), age, and profession. Shop around - premiums can vary by 30-50% between insurers for same coverage.
Most policies have a 30-day grace period. After that, your policy lapses (becomes inactive). You won't be covered for claims during lapse. To reinstate, you must pay all overdue premiums plus possible penalties, and may need new underwriting.
Proportional calculation based on time used. Example: You cancel your KES 12,000 annual motor policy after 3 months. Pro-rata refund = KES 9,000 (75% of year remaining), minus possible cancellation fee.
Common exclusions across policies: war/terrorism, nuclear risks, intentional acts, drunk driving (motor), pre-existing conditions (health for first 12 months), cosmetic procedures, and losses from breaking the law.
Maximum payout over policy period
Regular payments from investment
Licensed agent selling multiple insurers' products
Savings component in whole life policy
Written change to policy terms
Policy termination due to non-payment
Legal responsibility for damages to others
Risk of carelessness due to insurance
Cause of loss (fire, theft, accident)
Application for insurance coverage
Insurance for insurance companies
Extending policy for another term
Damaged property with residual value
Promise to meet certain conditions
Every policy defines key terms differently. Understanding how YOUR policy defines "accident," "illness," or "damage" prevents claim disputes.
When agents explain coverage, ask for Kenya-specific examples with actual shilling amounts. "How much would I pay if my car needs KES 100,000 in repairs?"
Verbal promises don't count. Get all coverage details, exclusions, and special terms in writing via email or policy endorsements.
Create a simple spreadsheet comparing premiums, excess/copays, limits, and exclusions across 3-5 insurers. Terms matter more than brand names.
The IRA mandates 90-day maximum claim processing. If your insurer delays unfairly, you can file a complaint at www.ira.go.ke or call their hotline 0800 720 721.
Insurance terminology and your needs change. Review your policies yearly, especially when your premium increases or your life circumstances change (marriage, new car, etc).
Don't be intimidated by jargon. If an agent can't explain a term in simple Swahili or English, they may not understand it themselves. Find someone who communicates clearly.
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