Definition of insurance
In general, the definition or definition of insurance is a way to move risk by paying a sum of money or premiums to the insurance company.
Insurance is different from social activities and generally the amount of premium (risk transfer costs) is much smaller than the amount of compensation / compensation to be provided by the insurance company. In running its business, the insurance company does follow the principle of the law of large number (law of large numbers). This means that insurance companies can operate because they collect similar risks. The greater the amount of similar risks taken over, the transfer fee will be cheaper.
Basic Principles of Insurance
In addition there are some other basic principles of insurance, namely:
Insurable interest means that a person can insure because he has a legal right to the object to be insured. The person pays the premium, because it has an interest in the event of a loss.
Utmost good faith requires the disclosure of material facts to objects that will be insured either by the Insurer or the Insured. There must be a principle of confidence from both parties before, during, and in the event of a claim.
Proxima Causa means the insurance will only give compensation / compensation, if the cause of the loss is guaranteed by the insurance.
Indemnitas means insurance will provide compensation for losses suffered. The principle of indemnity is not applied specifically to life-related insurance. There are several explanations for this indemnity principle:
The contribution of the insurance program can be guaranteed by some insurers and when there is a loss, then that guarantee will pay compensation proportionally.
Subrogation of the obligations of the insurance company to pay compensation, making the insurance company also entitled to sue the other party causing the loss.
To understand more about insurance, there are some terms that must be known, namely:
Insurers are insurance companies that have insurance products
Insured is the name for the buyer or user insurance
Policy is a document that contains insurance contracts where in the policy there is some information on how much premium, claims, coverage period agreed between the insurer and the insured on the stamp duty. In micro insurance the policy is called a voucher / certificate
Premium is the amount of fees or dues that must be paid by insurance buyers or insurance users. In micro insurance contributions
Claim is the amount of compensation / loss or compensation as a result of the risk guaranteed by the insurance company. In micro insurance compensation
The period of coverage is an agreed period of time over the life of the insurance
Terms and conditions in insurance are the various provisions that must be obeyed by both parties (both the insured and the insurer) during the period of valid insurance
The claim / compensation document consists of several documents which must be submitted at the time of claim filed for a change of compensation / loss or compensation
The competent authorities shall be parties to the legalization of a directive
This type of insurance is the kind of coverage that is sold in the community
Type of Insurance
The type of insurance that we generally get in practice is divided into 2
Life Insurance is an insurance concerning the human soul which can generally be in the form of: Personal accident insurance, health insurance, life insurance (terms assurance, Endowment Assurance, Whole life assurance) and funeral insurance
General or Non-life Insurance, generally in the form of insurance amount of money to compensate the losses suffered by the Insured Personself (personal accident and health insurance) and funeral insurance in case of accidental death) and insurance related to property and business such as fire insurance , Vehicles, shipping, aviation, transportation, development, money, agriculture, livestock and fishing
In addition to the two groups of insurance, it can also be distinguished about the system used by insurance companies both the soul and the public, that is with conventional system or pattern or sharia pattern, where the sharia system insurance companies become a fund management and after the period will be the pattern of profit sharing In accordance with the agreement (akad) used.
Insurance programs for various activities eg:
- Plant construction insurance is known as the insurance contractor All risks Insurance
- Insurance installation of the machine in the factory known as the insurance Erection All Risks insurance
- Insurance for computers and other electronic devices known as "Electrical Equipment Insurance"
- Insurance for engine damage known insurance "Machinery breakdown"
- Insurance for the risk of demolition (not loss) because there must be a violent unsus called insurance "Burglary"
- Cargo insurance is called "Cargo insurance", land, sea and air transport
- Insurance related to cash in safe, cash in cashier box and cash in transit insurance,
- Special insurance for buildings in the market or building market itself, in Indonesia known special risk consortium insurance (KARK)
- Heavy equipment insurance and heavy equipment or heavy equipment are called Contractor Plant and Machinery insurance.
- Insurance for ships and aircraft is called Hull insurance and Aviation insurance.
- Other conventional insurance can be made specifically according to the interests of the insured (tailor made).