DISCLAIMER

This is a general guide booklet developed by the Securities and Exchange Commission of Pakistan, mainly focusing on the most common insurance products available in the market. Nothing in this booklet is intended to be, or should be construed as an invitation, offer or inducementtoanypersontoenterintoaninsurancecontractoranadviceonthemeritsofora recommendationinrelationto,anyparticularproductorserviceprovider. Thepurposeofthisguidebookistohelppolicyholdersandtheendusersidentifyandaddress basicinsuranceissueswithabetterunderstandingofthesubject.Theguidebookcomplements theSECP'sMethodologytoolsforpolicyholderseducationandfinancialliteracy. Thisguidebookisnotintendedasacomprehensivereferenceworkonthesubjectofinsurance. Nor is it a substitute for theindividualizedadvicethatmaybeprovidedbyqualifiedbusiness and legal professionals. Rather, we intend it to be a concise and practical description of essential Insurance components together with suggested approaches to understanding the products. Furtherdetailsonthetopicscoveredbythisguidebookcanbefoundintheextensiveliterature thatexistsonthissubject. Anyquestionsorcommentsonthecontentofthisguidebookshouldbeaddressedto: InsuranceDivision SecuritiesandExchangeCommissionofPakistan 4thFloor,StateLifeBuildingNo.2 WallaceRoad,I.I.ChundrigarRoad Karachi74000,PAKISTAN.

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TABLEOFCONTENTS

INTRODUCTION............................................................................................................................................. 5 INDUSTRYOUTLOOK ..................................................................................................................................... 6 THEROLEOFSECP ........................................................................................................................................ 7 1. UNDERSTANDINGINSURANCE.............................................................................................................. 8 1.1 1.2 2. HOWINSURANCEWORKS............................................................................................................. 8 INSURANCEBASICS ..................................................................................................................... 10

INSURANCEINTERMEDIARIES............................................................................................................. 13 2.1 TYPESOFINSURANCEINTERMEDIARIES..................................................................................... 13

3. 4.

INSURANCESURVEYORS ..................................................................................................................... 13 REINSURANCE ..................................................................................................................................... 14 4.1 4.2 4.3 METHODSOFREINSURANCE ...................................................................................................... 14 BENEFITSOFREINSURANCE........................................................................................................ 14 REGULATIONOFREINSURANCE.................................................................................................. 15

5.

REGULATIONOFTHEINSURANCESECTOR ......................................................................................... 16 5.1 COMPLAINTSANDGRIEVANCES ................................................................................................. 16

6.

FEDERALINSURANCEOMBUDSMAN .................................................................................................. 18 6.1 6.2 JURISDICTION,FUNCTIONSANDPOWER ................................................................................... 18 PROCEDUREFORMAKINGCOMPLAINTS.................................................................................... 19

7.

INSURANCETRIBUNALS ...................................................................................................................... 20 7.1 7.2 7.3 INSURANCETRIBUNALSINPAKISTAN......................................................................................... 20 POWERSOFTHEINSURANCETRIBUNAL .................................................................................... 20 APPEALAGAINSTTHEINSURANCETRIBUNAL ............................................................................ 21

8.

GUIDETOTHECOMMONINSURANCEPRODUCTS............................................................................. 22 8.1 AUTOINSURANCE ....................................................................................................................... 22

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8.2 8.3 8.4 8.5 8.6 9. 10.

FIREINSURANCE.......................................................................................................................... 24 MARINEINSRURANCE ................................................................................................................. 25 MISCELLANEOUSINSURANCE ..................................................................................................... 26 HEALTHINSURANCE.................................................................................................................... 26 LIFEINSURANCE .......................................................................................................................... 28

LISTOFACTIVEINSURANCE/REINSURANCECOMPANIES................................................................... 32 GLOSSORYOFINSURANCETERMS.................................................................................................. 36

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INTRODUCTION
TheinsurancesectorinPakistan,untilendofyear2000,wasundertheregulatorypurviewof theFederalMinistryofCommerce,GovernmentofPakistan.Empiricalresultsshowthatduring that period, the private sector insurance industry was fragmented and suffered operational inefficiencies due to lower Paidup Capital and Equity requirements, while the public sector insurancecompaniesenjoyedtheirprivilegedstatusduetocaptivebusiness. Duringtheregulatoryregimeoftheformerlaw,thearchaicInsuranceAct,1938,theinsurance industrywasinfestedwithvariousissues.Capitaladequacyrequirementsforgeneralinsurance companies were grossly inadequate, registration and supervision fees for insurers were modest,andthestatutorysolvencymarginswerebasedonoutmodedprinciples. Anewinsurancelawwasintroducedin2000whentheInsuranceAct,1938wasrepealedand replaced with the Insurance Ordinance, 2000. The new law primarily aimed to ensure the protection of insurance policyholders interest and to promote sound development of the insurance industry. In the year 2001, the regulatory and supervisory responsibilities of the insurancesectorwereshiftedfromtheMinistryofCommercetotheSecuritiesandExchange CommissionofPakistan(SECP).

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INDUSTRYOUTLOOK
As of October 20, 2010 forty nine (49) insurance and takaful companies are transacting insurancebusinessinPakistanalongwithonegovernmentownedreinsurancecompanyPRCL. Nonlife(general)InsuranceCompanies Out of the total, Thirtyseven (37) companies are transacting nonlife (general) insurance business, including the government owned National Insurance Company Limited and the government owned reinsurance company, Pakistan Reinsurance CompanyLimited(PRCL). LifeInsuranceCompanies Six (6) insurance companies are transacting life insurance business, including the governmentownedStateLifeInsuranceCorporationofPakistan. HealthInsuranceCompanies Two (2) Insurance companies (one life and one nonlife insurance company) are dedicatedlyprovidinghealthinsuranceservices. TakafulOperators Five (5) Takaful operators are currently providing Islamic Insurance to the masses of which 2 operators are transacting family (life) takaful business and 3 are transacting nonlife(general)takafulbusiness. ReinsuranceCompany There is one reinsurance company operating in Pakistan, the government owned PakistanReinsuranceCompanyLimited(PRCL). Thetotalpremiumunderwrittenbytheinsuranceindustryin2009,amountstoRs.87billion. Nonlife (general), life and Health insurance companies contributed Rs. 42.5 billion, Rs. 41.8 billionandRs.1.2billionrespectively.Thepremiumunderwrittenbytakafuloperators(family andGeneral)amountedtoRs.1.4billion. The statistics shows that the countrys total insurance premium remains at 0.7% of total economic output (Insurance Penetration), with per head expenditure on insurance at US$6

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(Insurance Density) since the year 2001, one of the lowest intheworld,mainlyduetolesser awarenessabouttheinsuranceinthemasses.

THEROLEOFSECP
The SECP, being the apex regulator of the insurance industry, has a strategic priority and commitment to strengthen and maintain an effective regulatory environment in which insurance and takaful business can flourish and prosper. To strengthen SECPs role as an effectivefacilitatorforsounddevelopmentoftheinsuranceandtakafulindustryandtoachieve theunderlyingobjectiveofraisingtheinsurancepenetrationlevel,thefollowingkeyareashave beeninfocusofSECPsefforts: The SECP is cognizant of its responsibilities for developing the insurance industry and is now making efforts to make the general public understand the importance and mechanics of insurance. This "Insurance Guide" booklet is one of the steps that it is taking to educate the general public about Insurance and various products available in the market in a simplified manner. Enhancedpublicimageoftheinsuranceindustry. InsuranceAwarenessPrograms; Availability of insurance protection to less privileged segment of the society (Microinsurance); EnhancementofregulatoryframeworkforTakafulInsurance; Protectionoftheinterestofinsurancepolicyholders; Amendments in the regulatory framework to strengthen SECPs role as an apex insuranceregulator;

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1.

UNDERSTANDINGINSURANCE

Insurance can be defined in many different ways, from many different points of view. For example, from an economic viewpoint, insurance is a system for reducing financial risk by transferringitfromapolicyownertoaninsurer. Thesocialaspectofinsuranceinvolvesthecollectivebearingoflossesthroughcontributionsby allmembersofagrouptopayforlossessufferedbyafewgroupmembers. From a business viewpoint, insurance achieves the sharing of risk by transferring risks from individualsandbusinessestofinancialinstitutionsspecializinginrisk.Theinsurerisnotinfact payingfortheloss.Theinsurerwritestheclaimcheck,butisactuallytransferringfundsfrom individualswhoaspartofapool,paidpremiumsthatcreatedthefundfromwhichtheclaims arepaid. Lastly, from a legal standpoint, an insurance contract or the policy, transfers a risk, for a premiumorconsideration,fromonepartytoanotherparty.Thepartybearingtheriskisknown as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'.

1.1 HOWINSURANCEWORKS
Insuranceisbasedonamechanismcalledriskpooling,oragroupsharingoflosses.People exposedtoariskagreetosharelossesonanequitablebasis.Theytransfertheeconomicriskof losstoaninsurancecompany. Insurance collects and pools the premiums of thousands of people, spreading the risk of losses across the entire pool. By carefully calculating the probability of losses that will be sustained by the members of the pool, insurance companies can equitably spread the costofthelossestoallthemembers. QUICK FACTS Theriskoflossistransferredfromonetomanyandsharedbyall The law of large numbers people who are insured in the pool. Each person pays a states that as the size of premiumthatismeasuredtobefairtothemandtoallbasedon the sample (insured therisktheyimposeonthecompanyandthepool. population) increases, the actual loss experience will more and more closely Letstakesomeexamplestounderstandhowinsuranceactually approximate the true works: underlying probability.

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Example 1 SUPPOSE
a. b. c. d. e. Houses in a village = 1000 Value of 1 House = Rs. 40,000/Houses burning in a year = 5 Total annual loss due to fire = Rs. 200,000/Contribution of each house owner = Rs. 300/a. b. c. d. e. f.

Example 2

Number of Persons = 5000 Age and Physical condition = 50 years & Healthy Number of persons dying in a year = 50 Economic value of loss suffered by family of each dying person = Rs. 100,000/Total annual loss due to deaths = Rs. 5,000,000/Contribution per person = Rs. 1,200/-

UNDERLYING ASSUMPTION
All 1000 house owners are exposed to a common risk, i.e. fire All 5000 persons are exposed to common risk, i.e. death

PROCEDURE

All owners contribute Rs. 300/- each as premium to the pool of funds

Everybody contributes Rs. 1200/- each as premium to the pool of funds

Total value of the fund = Rs. 3,00,000 (i.e. 1000 houses x Rs. 300)

Total value of the fund = Rs. 60,00,000 (i.e. 5000 persons x Rs. 1,200)

5 houses get burnt during the year

50 persons die in a year on an average

Insurance company pays Rs. 40,000/- per head out of the pool to all 5 house owners whose house got burnt

Insurance company pays Rs. 100,000/- out of the pool to each family of all 50 persons dying in a year

EFFECT OF INSURANCE
Risk of 5 house owners is spread over 1000 house owners in the village, thus reducing the burden on any one of the owners. Risk of 50 persons is spread over 5000 people, thus reducing the burden on any one person.

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1.2 INSURANCEBASICS
Following are the basic essentials or requirements of insurance, irrespective of the type of insuranceinvolved. PrincipleofUtmostgoodfaith It is the name of a legal doctrine which governs insurance QUICK ADVICE contracts. This means that all parties to an insurance To avoid repudiation of contractmustdealingoodfaith,makingafulldeclarationof your claim, cooperate with your insurer by allmaterialfactsintheinsuranceproposal.Amaterialfactis disclosing all the a fact which would influence the mind of a prudent material facts associated underwriter in deciding whether to accept a risk for with the risk to be insured, as and when insuranceandonwhatterms. required by the insurer. Thus, the insured must reveal the exact nature and type of therisksthathe/shepassesontotheinsurer,whileatthe same time the insurer must make sure that the underlying contractfitstheneedsof,andbenefitstheinsured. WhereeithertheInsurerortheInsuredfailstofollowtheprincipleofutmostgoodfaith, theinsurancecontractisdeemednullandvoid. PrincipleofInsurableInterest The law states that in order for an insurance policy tobevalid,thepolicyholdermust haveasufficientinterestinthesubjectmatteroftheinsurance.Broadlyspeaking,the doctrinerequiresthatapolicyholdermustgainabenefitfromthepreservationofthe subjectmatteroftheinsuranceorsufferadisadvantageshoulditbelost. People who are policyholders but not the owners of the insured substances, from deliberatelycausinglosstothesubstancesinordertoclaim compensationandderivingunduebenefitsfrominsurance QUICK FACT business.. With contracts of indemnity, a claim must not exceed the actual loss. PrincipleofIndemnity Even further to that, a claim cannot exceed the Indemnity is monetary compensation that aims to return extent of your insurable interest in the insured the insured to the same financial position he enjoyed asset. before the loss occurred. Life insurance and personal accident policy are therefore not contracts of indemnity. A monetaryvaluecannotbeeasilyplacedonlifeandlimb. However, the idea behind

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indemnityisusedforfinancial underwriting where life insurance is concerned. As such lifeinsurerslimittheamountofcoverageyoucanhave,basedonyourincome. Simplystated,therightofsubrogationistherighttopursuesomeoneelse'sclaim.Ifyou aresubrogatedtosomeone'sclaim,itsoundsasthoughyouaresomehowsubordinated toitbutthat'snotwhatitmeans.Itmeansthatyoumaypursueitasthoughitwere your own. It can arise by the express agreement of the parties, or automatically by operationoflaw. Proximate cause is an act from which an Injury or a property loss results as a natural, direct and uninterrupted consequence and withoutwhichtheinjuryorlosswouldnothaveoccurred.
QUICK FACT
Proximate Cause is also known as Legal Cause.

PrincipleofSubrogation

QUICK EXAMPLE
Suppose you own a building which burns down due to the negligence of a third party. Normally you could sue the negligent third party for causing your building to burn down. If your fire insurance company pays off your claim, however, the insurance company is then subrogated to your claim against the negligent third party. This means your claim against the negligent third party is treated as having been assigned to the insurance company, which may sue him to recover, the amount it paid you on account of the fire loss.

PrincipleofProximateCause

Proximate cause is the primary cause of an injury or loss. It is not necessarilytheclosestcauseintimeorspace,orthefirsteventthat sets in motion asequenceofeventsleadingtoaninjuryorloss. Proximate cause produces a particularconsequencewithoutthe interventionofanyindependentoroutsideforce. Principleofunforeseenevent Theinsuredeventscausingthelossesshouldnotbespeculative, predictedorexpected buttheymustbesudden,unanticipatedandoutoftheblue.
QUICK FACT
The principles of subrogation and contribution are not essential to bring in the knowledge of a common man.

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PrincipleofContribution Itisbasedonthepremisethatnooneshouldgainfromaloss,sinceaninsurableriskisa pure risk. Contribution is essentially "the right of an insurer to call upon others similarly, but not necessarily equally, liable to the QUICK FACT sameinsuredtosharethecostofanindemnitypayment."

Followingisthesimplewaytocalculatethecontributionamount. ContributionAmountforA=SumInsuredbyAxLossAmount TotalSumInsured ContributionAmountforB=SumInsuredbyBxLossAmount TotalSumInsured

According to the principle of indemnity, the loss should not exceed the replacement value.

QUICK EXAMPLE
Let's say a building is insured for Rs. 1,000,000. It is insured for the same amount with two different insurers. The entire sum insured is therefore Rs. 2,000,000. A loss occurs that is estimated at Rs. 600,000. According to the principle of contribution, each insurer is liable for half of the damage (1 million/ 2 million). This would amount to an indemnity payment of Rs. 300,000 by each insurer. If one insurer pays the full claim, that insurer can make a subsequent claim on the other insurer to address the imbalance. Contribution thus ensures that the principle of indemnity is enforced. The amount it paid you on account of the fire loss.

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2.

INSURANCEINTERMEDIARIES

Insurance intermediaries form the feeding line for the insurance companies.Theyareessentiallymatchmakerswhomatchtheinsurance QUICK FACT The working of all needs of policyholders with the insurers who have the capability of Insurance meeting those needs. Their services include record keeping and companies and modeling for insurers,providingadvicetoclientsonselectinginsurers, intermediaries is governed by the and assisting with claims settlement. They play a key role in providing Insurance underwritinginformationtoinsurers. Ordinance, 2000. Theintermediariesplayavitalroleinsolicitingquotationsforcomplex risks and in helping clients make comparisons on the basis of price, coverage,serviceandthefinancialstrengthoftheinsurer.Moreover,theintermediaryensures increasedpriceandqualitycompetitiveness,byprovidingtheinsuredaccesstoawiderrangeof possibleinsurers.

2.1

TYPESOFINSURANCEINTERMEDIARIES

QUICK ADVICE

Generally,therearethreetypesofinsuranceintermediaries; InsuranceBroker Insurance brokers facilitate prospective clients in placing insurance business with an insurance company. They assess thetermsandnegotiateonbehalfoftheirclients. InsuranceAgent Aninsuranceagentisarepresentativeofaninsurancecompanywhosolicits,negotiates oreffectscontractsofinsuranceandprovidesservicetothepolicyholders.

Always pay your insurance related payments to your Insurance Agents, through crossed checks, in favor of the Insurance Company.

3.

INSURANCESURVEYORS
QUICK FACT
Insurance surveyor is a qualified professional in one or more fields and is licensed by the Insurance Division of Securities and Exchange Commission of Pakistan.

Insurance surveyors are appointed specialists who assess loss, verify compliance of terms and conditions as mentioned in the policy and accordingly assess the claim. In case of an insured event the insurance companycannominateoneormoresurveyors(dependingonthesizeof aclaim),whoarerequiredtovisitthesiteoflossinordertoanalyzethe extent of damage, the compliance of terms and conditions and assess thequantumoflossaswellastoinspectthepropertyandreportonthe causesoftheaccident.

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4.

REINSURANCE

Reinsuranceisinsurancethatispurchasedbyaninsurancecompany(insurer)fromareinsurer asameansofrisktransfer,thatis,transferofriskfromtheinsurertothereinsurer. QUICK EXAMPLE Assume an insurer sells one thousand policies, each with a Rs. 1 million policy limit. Theoretically, the insurer could lose Rs. 1 million on each policy totaling to Rs. 1 billion. It may be better to pass some potential risk to a reinsurance company (reinsurer) as this will minimize the insurer's risk. Thereinsurerandtheinsurerenterintoareinsuranceagreementwhichdetailstheconditions upon which the reinsurer would pay the insurer's losses. The reinsurer is paid a reinsurance premiumbytheinsurerinreturnfortakingthestake.

4.1

METHODSOFREINSURANCE

Therearetwobasicmethodsofreinsurance: FacultativeReinsurance Thisisaspecificreinsurancecoveringasinglerisk.Thereinsurerisreinsuringonerisk insuredonaspecificreinsurancepolicy.Eachfacultativeriskissubmittedseparatelyby theinsurertothereinsurer. QUICK FACT Almost all TreatyReinsurance insurance This is a method of reinsurance requiring the insurer and the companies have a reinsurance reinsurer to formulate and execute a reinsurance contract. program. The reinsurer then covers all the insurance policies coming withinthescopeofthatcontract. Therearetwobasictypesoftreatyreinsurance: Proportional,and Nonproportional

4.2

BENEFITSOFREINSURANCE
Risktransfer With reinsurance, the insurer can issue policies with higher limits than it would otherwisebeallowed,therefore,beingpermittedtotakeonmoreriskbecausesomeof thatriskisnowtransferredtothereinsurer.
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 Incomesmoothing Reinsurance can help to make an insurance companys results more predictable by absorbinglargerlossesandreducingtheamountofcapitalneededtoprovidecoverage. Surplusrelief Aninsurancecompany'sunderwritingliabilitiesarelimitedbyitsbalancesheet(thistest isalsoknownasthesolvencymargin).Whensuchlimitisreached,aninsurercandoone ofthefollowing:stopunderwritingnewbusiness,orincreaseitscapital,orbuy"surplus relief"reinsurance.Buyingreinsuranceisanefficientwayofnothavingtoturnclients awayorraiseadditionalcapital. Reinsurer'sexpertise Theinsurancecompanymaywanttoavailoftheexpertiseofareinsurerinregardtoa specific(specialized)riskorwanttoavailoftheirratingabilityinsuchrisks. Creatingamanageableandprofitableportfolioofinsuredrisks By choosing a particular type of reinsurance method, the insurance company may be abletocreateamorebalancedandhomogenousportfolioofinsuredrisks.Thiswould lend greater predictability to the portfolio results on net basis (after reinsurance) and wouldbereflectedinincomesmoothing.

4.3

REGULATIONOFREINSURANCE

The reinsurance requirements chalked out by SECP for the sector are very stringent. A minimum of 80% treaty reinsurers must be A rated by internationally reputable rating agencies and only 20% can be BBB rated. In addition, nonlife Insurance Companies are requiredtoofferagovernmentownedreinsurer,PakistanReinsuranceCompanyLimited,upto 35%shareinthetreaties.

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5.

REGULATIONOFTHEINSURANCESECTOR

The Securities and Exchange Commission of Pakistan has been regulating the Insurance industry,sinceJanuary2001afterittookoverfromtheControllerofInsuranceoperatingunder Ministry of Commerce, Government of Pakistan. The SECP regulates and monitors the InsuranceSectorinthecountrythroughpowersvestedintheInsuranceOrdinance,2000and theCompaniesOrdinance,1984.

5.1

COMPLAINTSANDGRIEVANCES

TheSECPplaysafacilitatingrolebytakingupcomplaintswiththerespectiveinsurers.Following pointsshouldbetakenintoaccountbeforelodgingacomplaintwiththeSECP. Policyholders who have complaints against insurers are required to first approach the Grievance/Claims/ComplaintsCelloftheconcernedinsurer.Iftheydonotreceivearesponse from insurer within a reasonable period of time or are dissatisfied with the response of the company,theymaythenapproachtheSECPfortheresolution. Thecomplaintsneedtobeforwardedtotheaddressgivenbelow: TheExecutiveDirector, InsuranceDivision, Securities&ExchangeCommissionofPakistan 4thFloor,StateLifeBuildingNo.2, WallaceRoad,offI.I.ChundrigarRoad, Karachi,Pakistan. Oralternatively,theymaybeemailedtocomplaints@secp.gov.pk Onlycasesofdelay/nonresponseregardingmattersrelatingtopoliciesandclaimsaretakenup bytheSECPwiththeinsurersforspeedydisposal. Asclaims/policycontractsindisputerequireadjudicationandtheSECPdoesnotcarryoutany adjudication,theinsurancepolicyholdersareadvisedtoapproachtheavailablequasijudicialor judicialchannelsi.e.theInsuranceOmbudsman,ConsumerProtectionForumortheCivilcourts forsuchcomplaints.ThedetailsregardingInsuranceOmbudsmenareprovidedinthefollowing sectionofthisguidebooklet. Onlycomplaintsfromtheinsurancepolicyholdersthemselvesareentertained.TheSECPdoes notentertaincomplaintswrittenonbehalfofpolicyholdersbyadvocatesoragentsoranythird parties.

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Where complaints are being sent through email, complainants are requested to submit complete details of the complaint with history of correspondences with theinsurerandtheir outcome, withoutwhichtheSECPwillnotbeinapositiontotakeupthecomplaintwiththe insurer.

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6.

FEDERALINSURANCEOMBUDSMAN

TheappointmentoftheInsuranceOmbudsmanbytheFederalGovernmentisrequiredunder section 125 of the Insurance Ordinance, 2000 with the purpose of quick disposal of the grievancesoftheinsured.Thisofficeisofgreatimportanceandrelevancefortheprotectionof interestsofpolicyholdersandalsoinbuildingtheirconfidenceinthesystem.Theofficeofthe Insurance Ombudsman is an autonomous national dispute resolution body which independently and impartially resolves insurance disputes, between insurance policyholders andparticipatingcompanies,absolutelyfreeofcost.TheofficeoftheInsuranceOmbudsmanis fullyoperationalsinceMay2006.

6.1

JURISDICTION,FUNCTIONSANDPOWER

The Section 127, of the Insurance Ordinance, 2000 formulates operational parameters of the Office of the Insurance Ombudsman. The jurisdiction, functions and powers of the Insurance Ombudsmanaresummarizedasunder: Onrequest/complaintoftheaggrievedperson,theInsuranceOmbudsmanmayundertakeany investigation into any allegation of maladministration, on part of any insurance company, provided that the matter is not with the Wafaqi Mohtasib (Federal Ombudsman), court of competent jurisdiction, tribunal or board in Pakistan. Maladministration is defined by the Insurance Ordinance, 2000 as corruption, nepotism, neglect, inattention, inordinate delay, incompetence, inefficiency and ineptitude in the administration or discharge of duties and responsibilities. The complaints brought in by the Insurance Companies, which relates to the contract of reinsurance or such sort, are not accepted by the Insurance Ombudsman office for investigation. The Insurance Ombudsman office does not accept for investigation, any complaint by or on behalf of an employee of an insurance company, concerning any matter relating to the insurance company in respect of any personal grievance relating to his service with the company. QUICK FACT The Insurance For ascertaining the root causes of corrupt practices and Ombudsman may injustice, the Insurance Ombudsman is empowered to arrange condone the delay and studies/ research and may recommend appropriate steps for entertain the complaint, if theireradication. the ombudsman is convinced that there were reasonable grounds for the delay.

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6.2

PROCEDUREFORMAKINGCOMPLAINTS

The procedure as laid down under Section 129 of the Insurance Ordinance, 2000 and is summarizedasfollows: Before making a complaint the complainant is required to intimate in writing to the concernedinsurancecompanyhisintentionoffilingacomplaint. If the insurance company either fails to respond, or makes a reply which is unsatisfactorytothecomplaint,withinaperiodofonemonth,thecomplainantmayfile acomplaintatanytimeafterthatwithinafurtherperiodofthreemonths. Acomplaintshouldbemadeonsolemnaffirmationoroathinwritingaddressedtothe InsuranceOmbudsman.Thecomplaintshallsetoutthefullparticularsofthecomplaint matterandthenameandaddressofthecomplainant. Copyofthenoticesenttotheinsurancecompanyalongwithpostal/ QUICK FACT courier receipt should also be attached with your complaint. In all The Insurance cases,three(03)completesetsofcomplaintarerequiredtobefiled Ombudsman may reject a complaint with the Ombudsman, the address and phone numbers are summarily or he may mentionedasunder: accept the same or pass any other order he deems fit. FederalInsuranceOmbudsmansSecretariat 6thFloor,StateLifeBuildingNo.2, WallaceRoad,OffI.I.ChundrigarRoad Karachi,PAKISTAN. Phone:02199211674,99211698 Fax:02199211945

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7.

INSURANCETRIBUNALS

InsuranceTribunalinthegeneralsenseisabody,constitutedundertheInsuranceOrdinanceby the Federal Government, with the authority to judge, adjudicate on, or determine claims or disputes.Inessenceitisaspecializedcourtformedforthedisposalofcasespertainingtothe Insurancebusiness. According to the Insurance Ordinance, 2000 the Tribunal consists of a Chairperson who is a serving or retired judge of the High Court, with two or more members having ability and integritytoenablethemtodischargethedutiesandfunctionsoftheTribunal.

7.1

INSURANCETRIBUNALSINPAKISTAN

InOctober,2006,theFederalGovernment,inconsultationwiththeChiefJusticesofSindhHigh Court,LahoreHighCourt,PeshawarHighCourtandBalauchistanHighCourt,conferredpowers ineachprovinceontheDistrictandSessionCourtstoexerciseterritorialjurisdictionspecified: S.No. NameofSessionsCourt TerritorialLimit 1. District&SessionJudgeLahore WholeProvinceofPunjab 2. District&SessionJudgeKarachi(Central) WholeProvinceofSindh 3. District&SessionJudgePeshawar WholeProvinceofKhyberPakhtunkhwa 4. District&SessionJudgeQuetta WholeProvinceofBalauchistan

7.2

POWERSOFTHEINSURANCETRIBUNAL

TheInsuranceOrdinance,2000confersfollowingpowerstotheTribunal: TheTribunalhasallthepowersvestedinacivilCourtundertheCodeofCivilProcedure, 1908. Initscriminaljurisdiction,theTribunalhasthesamepowersasarevestedintheCourt ofSessionsundertheCodeofCriminalProcedure,1898. The jurisdiction of a Tribunal shall not extend to appeals to the Appellate Bench and Courts,asmentionedinthesection33and34oftheSECPAct1997.

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7.3

APPEALAGAINSTTHEINSURANCETRIBUNAL

ThedecisionoftheTribunalonanyapplicationisfinalandcannotbequestionedinanyCourt orbeforeanyotherauthority. Iftheamountoftheclaimisnotlessthanonehundredthousandrupees,theaggrievedmayfile anappealtotheHighCourt,withinaperiodofthirtydaysfromthedateofsuchdecision. An appeal is heard by a Bench of more than two judges of the High Court, having territorial jurisdictionovertherelevantTribunal.

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8.

GUIDETOTHECOMMONINSURANCEPRODUCTS
AUTOINSURANCE
NeedandImportance Ifyouownacar,youprobablyalreadyknowalittleaboutcar QUICK FACT insurance.Thereisalegalrequirementthatyoumusthaveat leastsomekindofthirdpartyliabilityinsurancetobelegalon roads.Thescopeofthiscoveristopaycompensationfordeath of or bodily injuries to third parties, while the Insured is It may be fun to treated as the first party and the Insurance Company second drive but that sports party,allotherswouldbethirdparties.Beforepurchasingauto car will raise your premiums. insurance, you must consider a variety of factors including whatkindofcaryouhave,yourdrivingrecordandtheamount ofmoneyyouarewillingtopay.Understandingthesimplebasicsofautoinsurancewill make you confident that the car insurance policy you choose will take care of your needsintheeventofanaccident. TypesofInsurance Therearethreebasictypesofcover; o ComprehensiveInsurance This is the widest form of cover; the policyholder is protected against financial lossesofallkinds,accidentallosstovehicle,theftofcarandthirdpartyliability claims.

8.1

o ThirdPartyMotorVehicleInsurance This cover protects the policyholder from all financial losses arising due to accidental damage liability of all formstothirdparty,propertydamageorbodilyinjury, deathorboth. o ActonlyLiabilityInsurance This cover meets the minimum legal insurance requirement. In this cover the policyholder is protected against financial losses due to liability of accidentalbodilyinjuryordeathtothirdparty.

QUICK FACT
Act Only Policy Insurance is the most basic and cheapest form of cover which you need to have to be legal on the roads.

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 Listofcoverageforeachtypeofpolicy
Coverage Third Party Personal Injury & Death Third Party Property Damage Theft / Own Damage, Constructive Total Loss Act Only Liability Policy Third Party Motor Policy Comprehensive Policy

TipsonBuyingRight:WhattolookforbeforepurchasingaCarInsurancePolicy Firstlyassoonasacarispurchased,theownermustbuyan insurancecover.Ifausedcarispurchased,thenewowner QUICK FACT needstoknowthatthecoverofthepreviousownerisnull As a rule of thumb, anytime any of your and void, as it is nontransferable. The insured value or employees are sum insured depends on the market value of the vehicle. performing their Underinsuranceoroverinsuranceoccurswhenthisvalueis daily duties and they get injured, you will notcorrectlymentioned. Overinsuranceoccurswhensuminsuredishigherthanthe marketvalue,maximumcompensationisthemarketvalue of the vehicle. Under insurance occurs if sum insured is less than the market values, you are as selfinsuring the difference. In the event of a loss, youwillonlybepartiallycompensated. Average clause is applied when you suffer damage to your vehicle which is under insured.Yourclaimwillbereducedproportionatelybytheuninsuredportion,e.g.ifyou have insured your vehicle up to 70% of the market value, the insurance company will onlypay70%oftotalrepaircost. ComprehensiveInsurance Comprehensiveinsurance,besidescoveringaccidentaldamage&collisionitalsocovers overturning, fire, theft and natural disaster including earthquake & hail. If you have specialconcernsaboutthesafetyofyourvehicleinthefaceofMotherNatureswrath, contactyourinsurerforinformationoncatastrophiccoverage. ReportinganAccident After an accident, you should inform your insurer as quickly as possible, to help you completeaclaimform,determinewhatexactlyhappenedandevaluateanydamagesor injuries.Yourinsurerthenwillcontactandappointinsurancesurveyor,whosejobisto workwithyoutofixtheproblem.Whilecompensatingyouforautorepairsormedical expensesiseasyandimmediate,determiningliabilityismorecomplicated.Thesurveyor willbeginthesettlementprocess,thelengthofwhichwilldependonthecooperationof theotherparty.
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be responsible as the employer.

 Theamountofcompensationforyourlosscanvaryaccordingtothesurveyorsanalysis ofthedamage.Youdonothavetoacceptthefirstamountofmoneyyouareoffered,if it is lower than the cost of your repair or recovery. While you may have to do some homework to prove your reported loss is valid, it's worth it to be certain your insurer livesuptotheprovisionsofyourpolicy.

8.2

FIREINSURANCE

Fireinsuranceisaformofpropertyinsurancewhichprotectspeoplefromthecostsincurredby fires. When a structure is covered by fire insurance, the insurance policy will pay out in the event that the structure is damaged or destroyed by fire. Some standard property insurance policiesincludefireinsuranceintheircoverage,whileinothercases,fireinsurancemayneedto bepurchasedseparately.Propertyownersshouldcheckwiththeirinsurancecompaniesifthey arenotsurewhetherornotfireinsuranceispartoftheirpolicies,andiffireinsuranceisnot included,itshouldbepurchased. Depending on the terms of the policy, fire insurance may pay out the actual value of the propertyafterthefire,oritmaypayoutthereplacementvalue.Inareplacementvaluepolicy, thestructurewillbereplacedintheeventofafire,whetherithasdepreciatedorappreciated: in other words, if homeowners purchase a home and the value increases, as long as it is covered by a replacement value policy, the insurance company willreplaceit.Anactualcash valuepolicycoversthestructure,lessdepreciation.Mostaccountscomewithcoveragelimits whichmayneedtobeadjustedaspropertyvaluesriseandfall. Dependingonthetermsofthepolicy,thecontentsofthehomeaswellasthestructuremaybe covered in theeventofafire.Somepoliciesalsoprovidealivingallowancewhichallowsthe victimsofafiretorenttemporaryhousingwhiletheirhomesarerepaired.Theseclausesinan insurancepolicytypicallycausethepolicytobecomemoreexpensive,sincetheywillrepresent additional costs to the insurance company in the event of a fire. However, they can be extremelyusefulifafireoccurs. The cost of fire insurance varies widely. The use of fire alarms, sprinkler systems, and other safety measures can decrease the cost of the policy, and may even be required for some policies.Theexistenceofapropertyinaregion/areapronetothisriskwillincreasethecostof theinsurance,astheriskofapayoutisgreatlyincreased. Whenpurchasingfireinsurance,peopleshouldbeawarethatsometypesoffiresmaynotbe covered.Forexample,afirecausedbyanearthquakemightbeexcludedfromafireinsurance policy,asmightafirecausedbyanactofGod.Itisimportanttoreadthetermsofthepolicy carefully, and to ask for clarification from the insurance representative if the terms are not clear. If a policy does not appear to meet the need, it should be renegotiated until it is satisfactory.
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8.3

MARINEINSRURANCE

Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport by which property is transferred, acquired, or held between the points of origin and final destination. Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms,pipelines);Hull;MarineCasualty;andMarineLiability. CommonProducts Followingproductsarecommonlyavailablefromtheinsurers: o MarineHullCoverage This policy covers losses / damages to the shell and machinery of the vessel causedbymaritimeperils.Thisinsurancepolicymaycoverthefollowingperils, Perilsoftheseas,rivers,lakesorothernavigablewaters, Fireandexplosion, Violenttheftbyoutsidepersons:JettisonorPiracy, Contactwithlandconveyance,dockorharborequipmentorinstallation, Earthquake,Volcaniceruptionorlightning, Accidentsinloading,dischargingorshiftingcargoorfuel, Bursting of boilers, breakage of shafts or any latent defect in the machineryorhull, NegligenceofMasterOfficers,CreworPilots, Negligenceofrepairersorcharterers, BarratryofMasterOfficersorCrewContactwithaircrafts,helicoptersor similarobjects,orobjectsfallingtherefrom, Salvagechargeswhengeneralaverageisdeclared. o MarineCargoCoverage MarineCargocoverageprovidesprotectionagainstlossesordamagespertaining tocargo/freightduringtransitbysea,air,roadandrail.Thepolicymayprovide allriskscoverageaswellascoverageforlimitedrisksdependingupontheneeds ofthecustomers. o MarineUmbrellaCoverage MarineUmbrellaLiabilityisabroadspectrumcoverofferingprotectionagainst liabilitiestoshipping/logisticsandtransportrelatedcompanies.Thisinsurance couldbeofsubstantialbenefittoShiporvesselOperators,FreightForwarders, Road Transport Operators, NVOC, Railway Operators, Carriers by Air, Ware house Depot operators, Ship agents, Brokers and the services associated with

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shippingtransportation,TerminalOperators,StevedoresOperators,Operatorsof Container/Trailer,StorageandRepairers,PortHarborsorPortAuthorities.

8.4

MISCELLANEOUSINSURANCE

Thisclassofinsurancebusinessencompassesvarioustypesofinsurancecoverageincludingbut notlimitedtothefollowing: CashInsurance ThecashpolicyisdesignedtocoverCashinSafe,CashinTransitandCashinCounter. FidelityGuaranteeInsurance This policy covers misappropriation or embezzlement committed by a permanent employeeoftheorganizationduringthecourseofhisemployment. Householder'sComprehensive This insurance policy is available to provide cover to building of a bungalow or an apartment.Itcoverstheentirefurniture,fixture,electronicitems,carpets,etc. NeonSign The advertisement neon sign can be covered under insurance against perils like fire, accidentaldamageandothers. PlateGlass The expensive plate glass may be covered under insurance against perils like fire, accidentaldamage,burglary,riotandstrikeandothers. TravelInsurance Travel Insurance covers medical expenses and financial (such as money invested in nonrefundable prepayments) and other losses incurred while traveling, either within one'sowncountry,orinternationally. Others OthersmayincludeWorkmanCompensation,GeneralPublicLiability,ProductLiability, AviationInsuranceandBaggageInsuranceetc.

8.5

HEALTHINSURANCE
QUICK ADVICE
Don't grudge your time and shop around properly in order to find an appropriate health insurance plan and health insurance coverage which will meet your health care needs and your budget.
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Healthinsuranceisaninevitablepartofmodernlifedueto extremely expensive medical care. However health insurance costs rise day by day and the majority of the population still have neither health insurance nor any othertypeofinsurance.Thisisactuallythereasonwhyall

reputable and reliable health insurance companies do their best to provide various health insurance plans and programs which will make health insurance more available to various peoplewithvariedincomes. It is advisable that everyone who can afford health insurance should have it. In many cases healthinsurancecanbeavitalsourceoffundswhilewaitingforapersonalinjuryclaimtobe processed.Undoubtedlyit'snotaneasytasktofindaffordablehealthinsuranceandlowcost health insurance but still this is the aim which can be reached. TypesofHealthInsurance Therearethreebasictypesofhealthinsurance: o Individualhealthinsurance, o Familyhealthinsuranceand o Grouphealthinsurance. Higherhealthinsurancepremiumswhichyouhavetopay every month and the process of purchasing individual health insurance are the main differences between this typeofinsuranceandfamilyandgrouphealthinsurance. While purchasing individual health insurance you will have to pass medical examinations and answer certain set of questions concerning your state of health whereas the rest of health insurancetypesdon'trequireanythinglikethis. Familyhealthinsuranceisdesignedinordertoprovidemedicalcare QUICK FACT formarriedcouplesandtheirchildren. All advantages of health insurance are Grouphealthinsuranceisconsideredtobethemostaffordable.This obvious but still the main disadvantage is type of health insurance is usually provided by employers to their high rates which can staff in order to enable employees to avoid paying out extremely easily damage your highpremiumseverymonthandtoreceivemedicalhelpandhealth budget. So shop around! care they need immediately. In case you have group health insurance coverage, you can add to your spouse and your children anditwillhelpyoutosaveconsiderableamountofmoney. ChoosingaHealthPlan Followingstepswouldbehelpfulinbuyingahealthplan. o It is very important to choose a reputable and experienced health insurance company as farasyouhavetobesureby100%thatyou'llbeprovidedwillall necessaryhealthcareserviceswhenyouneedthem. o You have to search for appropriate health insurance quotes, compare them in ordertoseewhatismoreavailabletoyou.

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o Before purchasing any health insurance plan you also take into proper considerationtofactorssuchashealthinsurancecoverage.Therearetwotypes ofcoverage:basicandcomprehensive. o Basic health insurance coverage covers only hospitalization and surgery care costs. o Comprehensive health insurance coverage is much more expensive in comparison with basic coverage and covers preventive care, regular checkups andprescriptiondrugs. o Beforeyousignanyagreementsandhealthinsurancepolicy,youhavetomake surethatboththehealthinsurancecompanyanditsagentsarelicensed. o Dont hesitate to ask all questions you can have concerning your health insurancepolicy,planorcoverage. o Signyourpolicyonlyifyouunderstandeverywordwritteninit.

8.6

LIFEINSURANCE

LifeinsuranceorlifeassuranceisacontractbetweenthePolicyholderandtheinsurer,where commonly the insurer agrees to pay to the nominated beneficiary a sum of money upon the occurrenceoftheassuredperson(s)deathoranyotherdefinedeventsuchasterminalillness orcriticalillness,inreturnthepolicyholderagreestoperiodicallypaytoinsureranappropriate premium. ThefundamentalpurposeofLifeAssuranceistoprovidemoneytomeetfinanciallossescaused bydeath,disabilityandillnesses.However,LifeAssurancepoliciesmayalsoprovideinvestment benefitsthatis,moneypayableonsurvivalofthelifeassuredratherthanonlyondeath. In some circumstances you can also have policies that pay out benefits if the policyholder suffersacriticalillness.TherearetwomainelementsofLifeAssurance.Theseare: ProtectionFinancialsupporttothedependentsofassuredafterhisdeath. InvestmentReturnonthepremiumsinvestedwiththeinsurer. A life assurance product can be made up of either first or both of these two elements. Life Assurancepoliciesarepaidforbypremiums.Apremiumismadeupoffiveelements. 1. BasicPremium 2. ExtraRatings:Theamountsleviedforthesubstandardriskprofile 3. Contingencies:Cushionamountfortheworstlossscenario. 4. Expenses:ManagementofInsuranceOrganization. 5. Profits:Thisistheultimateshareleftfortheinsurerasafruitforputtinginorderthe wholeventure.

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The Proportion of each element mentioned above, varies according to the type of policy of whichtherearemanydifferentforms. BuyingLifeInsurance Whenyoubuylifeinsurance,youwantcoveragethatfitsyourneeds.First,decidehow muchyouneedandforhowlongandhowmuchyoucanaffordtopay.Keepinmind themajorreasonyoubuylifeinsuranceistocoverthefinancialeffectsofunexpectedor untimelydeath.Lifeinsurancecanalsobeoneofmanywaysyouplanforthefuture. Next,learnwhatkindsofpolicieswillmeetyourneedsandpicktheonethatbestsuits you,yourfamilysizeandeconomicconditions. Then, choose the combination of policy premium and benefits and match up to protection in case of early death, or benefits in case of long life, or a combination of both. It makes good sense to ask an Insurance Companys representative to help you. An agent can help you review your insurance needs and give you information about the availablepolicies.Ifonekindofpolicydoesnotseemtofityourneeds,askaboutothers. TypesofLifeInsurance Allpoliciesarenotthesame.Somegivecoverageforyourlifetimeandotherscoveryou or a specific number of years. Some build up cash values and others do not. Some policiescombinedifferentkindsofinsurance,andothersletyouchangefromonekind ofinsurancetoanother.Somepoliciesmayofferotherbenefitswhileyouarestillliving. Yourchoiceshouldbebasedonyourneedsandwhatyoucanafford. o TermAssurance Term Insurance covers you for a term of one or more years. It pays a death benefitonlyifyoudieinthatterm.Terminsurancegenerallyoffersthelargest insuranceprotectionforyourpremium.Itdoesnotbuildupacashvalueandthe premiumsarefullyconsumeduptothecompletionofterm. Youcanrenewmostterminsurancepoliciesforoneormoretermsevenifyour healthhaschanged.Eachtimeyourenewthepolicyforanewterm,premiums may be higher. Ask what the premiums will be if you continue to renew the policy.Alsoaskifyouwilllosetherighttorenewthepolicyatsomeage.Fora higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiumsmayincrease.

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You may be able to convert a term insurance policy into a cash value during a conversion period even if you are not in good health. Premiums for the new policywillbehigherthanyouhavebeenpayingfortheterminsurance. o CashValueLifeInsurance CashValueLifeInsuranceisatypeofinsurancewherethepremiumschargedare higher at the beginning than they would be for the same amount of term insurance.Thepartofthepremiumthatisnotusedforthecostofinsuranceis invested by the company and builds up a cash value that may be used in a varietyofways.Youmayborrowagainstapolicyscashvaluebytakingapolicy loan.Ifyoudontpaybacktheloanandtheinterestonit,theamountyouowe willbesubtractedfromthebenefitswhenyoudie,orfromthecashvalue.You canalsouseyourcashvaluetokeepinsuranceprotectionforalimitedtimeorto buyareducedamountwithouthavingtopaymorepremiums.Youalsocanuse the cash value to increase your income in retirement or to help pay for needs such as a childs tuition without canceling the policy. Cash value life insurance may be one of several types; whole life, universal life and variable life are all typesofcashvalueinsurance. WholeLifeInsurance WholeLifeInsurancecoversyouforaslongasyouliveifyourpremiums arepaid.Yougenerallypaythesameamountinpremiumsforaslongas youlive.Whenyoufirsttakeoutthepolicy,premiumscanbehigherthan youwouldpayinitiallyforthesameamountofterminsurance.Butthey aresmallerthanthepremiumsyouwouldeventuallypayifyouwereto keeprenewingatermpolicyuntilyourlateryears. UniversalLifeInsurance UniversalLifeInsuranceisakindofflexiblepolicythatletsyouvaryyour premium payments. You can also adjust the face amount of your coverage.Increasesmayrequireproofthatyouqualifyforthenewdeath benefit. The premiums you pay (less expense charges) go into a policy accountthatearnsprofit.Chargesaredeductedfromtheaccount.Ifyour yearlypremiumpaymentplustheprofityouraccountearnsislessthan thecharges,youraccountvaluewillbecomelower.Ifitkeepsdropping, eventuallyyourcoveragewillend.Topreventthat,youmayneedtostart making premium payments, or increase your premium payments, or loweryourdeathbenefits.Evenifthereisenoughinyouraccounttopay thepremiums,continuingtopaypremiumsyourselfmeansthatyoubuild upmorecashvalue. VariableLifeInsurance Variable Life Insurance is a kind of insurance where the death benefits andcashvaluesdependontheinvestmentperformanceofoneormore
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separate accounts, which may be invested in mutual funds or other investmentsallowedunderthepolicy.Besuretogettheprospectusfrom thecompanywhenbuyingthiskindofpolicyandstudyitcarefully.You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower ormay disappeariftheinvestmentsyouchosedidntdoaswellasyouexpected. Youmaypayanextrapremiumforaguaranteeddeathbenefit. ImportantThingstoConsider o Reviewyourowninsuranceneedsandcircumstances. o Choosethekindofpolicythathasbenefitsthatmostcloselyfityourneeds.Ask anagentofacompanytohelpyou. o Be sure that you can handle premium payments. Can you afford the initial premium?Ifthepremiumincreaseslaterandyoustillneedinsurance,canyou stillaffordit? o Dontsignaninsuranceapplicationuntilyoureviewitcarefullytobesureallthe answersarecompleteandaccurate. o Dontbuylifeinsuranceunlessyouintendtostickwithyourplan.Itmaybevery costlyifyouquitduringtheearlyyearsofthepolicy. o Dont drop one policy and buy another without a thorough study of the new policyandtheoneyouhavenow.Replacingyourinsurancemaybecostly. o Read your policy clauses carefully. Ask your insurer about anything that is not cleartoyou. o Reviewyourlifeinsuranceprogramwithyourinsurereveryfewyearstokeepup withchangesinyourincomeandyourneeds. LifeInsuranceIllustrations You may be thinkingofbuyingapolicywherecashvalues,deathbenefits,bonusesor premiums may vary based on events or situations the company does not guarantee (such as interest rates). If so, you may get an illustration from the agent or company thathelpsexplainhowthepolicyworks. The illustration will show how the benefits that are not guaranteed will change as interest rates and other factors change. The illustration will show you what the companyguarantees.Itwillalsoshowyouwhatcouldhappeninthefuture. Rememberthatnobodyknowswhatwillhappeninthefuture.Youshouldbereadyto adjustyourfinancialplansifthecashvaluedoesntincreaseasquicklyasshowninthe illustration. You will be asked to sign a statement that says you understand that the growthimpactgivenintheillustrationisassumedandmaydifferfromtheactual.

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9.

LISTOFACTIVEINSURANCE/REINSURANCECOMPANIES
ContactDetails Tel:111789789 Fax:+9202135683935 Web:www.acelimited.com Tel:+92021324126237 Fax:+9202132412627 Web:www.adamjeeinsurance.com Tel:111786234 Fax:+9204235844372 Web:www.alfalahinsurance.com Tel:+92021111432584 Fax:+920215864020 Web:www.allianzefu.com Tel:+9202132416045 Fax:+9202132419968,32422478 web:www.alphainsurance.com.pk Tel:+9204235916801,35176802 Fax:+9204235865579 Web: Tel:+9204236312721 Fax:+9204236315989 Web: Tel:+92051927242527 Fax:+920519272424 web:www.agico.com.pk Tel:+920423732054243 Fax:+9204237234742 Web:www.atlasinsurance.com.pk Tel:+9204235777527 Fax:+9204235777548 web:www.capitalinsurance.net Tel:+9202135684019 Fax:+9202135680218 Web:www.ceninsure.com Tel:+9202135698525,111111717 Fax:+9202135671665 Web:www.cicl.com.pk Tel:+92021356401157 Fax:+9202135640118 Web: Tel:+9204237352306 Fax:+9204237356537 Web:

S.No. InsuranceCompany NonLifeInsuranceCompanies 1 ACEInsuranceLtd 6thFloor,NICBuilding AbbasiShaheedRoad off:ShahraheFaisal Karachi 2 AdamjeeInsuranceCo.Ltd. 6thFloor,AdamjeeHouse I.I.ChundrigarRoad Karachi 3 AlfalahInsuranceCompanyLtd. 5,SaintMarry,MainBoulevard Gulberg Lahore 4 AllianzEFUHealthInsuranceLimited D74,Block5,KDAScheme5,Clifton, Karachi 5 AlphaInsuranceCo.Ltd. 2ndFloor,StateLifeBuildingNo.1B WallaceRoad,OffI.I.ChundrigarRoad Karachi 6 AsiaInsuranceCo.Ltd. 456K,ModelTown Lahore 7 AsianMutualInsuranceCompany (Guarantee)Ltd. 1PunjMahalRoad,off.68MozangRoad. Lahore 8 AskariGeneralInsuranceCo.Ltd. 4thFloor,AWTPlaza TheMall,Rawalpindi 9 AtlasInsuranceLimited 3.BankSquare ShahraheQuaideAzam Lahore 10 CapitalInsuranceCo.Ltd. Office#222,5thFloor,MEGATower63B MainMacdonald.GulbergII Lahore 11 CentralInsuranceCo.Ltd. 5thFloor,DawoodCentre MoulviTamizuddinKhanRoad P.O.BoxNo3988 Karachi 12 CenturyInsuranceCo.Ltd 11thFloor LaksonSquareBuildingNo.3 SarwarShahccdRoad,P.OBox4895 Karachi 13 ContinentalInsuranceCompanyLtd. 901,9thFloorKashifCentre,OppositeHotel Mehran,SharaeFaisal, Karachi 14 TheCooperativeInsuranceSocietyof PakistanLtd. CooperativeInsuranceBuilding

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15

16 17 18 19

20

21

22 23 24

25 26 27

28

29

30

23,SharaeQuaideAzam, Lahore. CrescentStarInsuranceCo.Ltd. 2ndFloor,NadirHousc l.l.ChundrigarRoad Karachi CreditInsuranceCo.Ltd. 2ndFloorAsmatChamber,68MozangRoad. Lahore EastWestInsuranceCo.Ltd. 410.E.FUHouse M.A.JinnahRoad,Karachi EFUGeneralInsuranceLtd. EFUHouse,M.A.JinnahRoad Karachi ExcelInsuranceCo.Ltd. 38Cl,Block6 P.E.C.H.SShahraheFaisal Karachi HabibInsuranceCo.Ltd 1stFloor,SiateLifeBuiktmg6 HabibSquare M.A.JinnahRoad Karachi IGIInsuranceLimited 7thFloor,TheForum,Suite701713, G20Block9,KhayabaneJami.Clifton Karachi NationalInsuranceCompanyLimited NICLBuilding. AbbasiShaheedRoad,Karachi NewHampshireInsuranceCo. 7thFloor,DawoodCentre M.T.KhanRoad,Karachi NewJubileeInsuranceCo.Ltd. 2ndFloor,JubileeInsuranceHouse I.I.ChundrigarRoad Karachi PakistanGen.Ins.Co.Ltd. 5BankSquare ShahraheQuaid.eAzamLahore PakistanMutualInsuranceCompany 29A,LyttonRoad, Lahore PICICInsuranceLimited 8thFloor.ShaheenComplex M.R.KiyaniRoad Karachi PremierInsuranceLimited 5thFloor,StateLifeBuildingNo2A WallaceRoad,P.OBoxNo4140 Karachi RelianceInsuranceCo.Ltd. RelianceInsuranceHouse 181ASindhiMuslimcooperative HousingSociety,P.OBoxNo13356 Karachi SaudiPakInsuranceCompanyLtd. 2ndFloor.StateLifeBuildingNo.2A WallaceRoad,Karachi

Tel:+92021324154713 Fax:+92021324154745 Web:www.cstar.com.pk Tel:+9204236316774 Fax:+9204236368868 Web: Tel:+92021323133041l Fax;+9202132310821,32200128 Web:www.eastwestinsurance.com.pk Tel:+9202l3231347190 Fax:+9202132310450 Web:www.efuinsurance.com Tel:111777666 Fax:+9202134548076 Web:www.globemanagements.com Tel:111030303 Fax:+9202135693676 Web:www.habibinsurance.net Tel:+92021353017268.111234234 Fax:+9202135301729,35301772 Web:www.igiinsurance.com.pk UAN:111642642 Email:info@nicl.com.pk Web:www.nicl.com.pk Tel:111111244 Fax:+9202135634022 Web:www.chartisinsurance.pk Tel:+9202132412628 Fax:+9202132416728 Web:www.nji.com.pk Tel:+9204237323569 Fax:+9204237230634 Web:www.pgi.com.pk Tel:+9204237124890 Fax: Web: Tel:+920213221955560 Fax:+9202132219561 webwww.picicinsurance.com Tel:+92021324163314 Fax:+9202132416572 web:www.pil.com.pk Tel:+9202l3453941517 Fax:+9202134539412 Web:www.relianceinsins.com Tel:+9202132418430 Fax:+9202132417885 web:www.saudipakinsurance.com.pk

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31

SecurityGen.InsuranceCo.Ltd. SGIHouse,18C/E1 GulbergIll Lahore 32 ShaheenInsuranceCo.Ltd. 10thFloor,ShaheenComplex M.R.KayaniRoad Karachi 33 SilverStarInsuranceCo.Ltd. SilverStarHouse,2ndFloor 5BankSquare,Lahore 34 TPLDirectInsuranceLimited 172B,2ndFloor,NajeebCentre Block2,P.E.C.H.S. Karachi 35 UBLInsurersLimited 2ndFloor,StateLifeBuildingNo.2 WallaceRoadOffI.I.ChundrigarRoad Karachi 36 UnitedIns.Co.ofPakLtd. NizamChambers,5thFloor ShahraheFatimaJinnah Lahore 37 UniversalIns.Co.Ltd. UniversalInsuranceHouse 63ShahraheQuaideAzam Lahore LifeInsuranceCompanies 1 AdamjeeLifeAssuranceCo.Ltd. TheForum,SuiteNo.301,3rdFloor, PlotG20,Block9,Clifton, Karachi 2 AsiaCareHealth&LifeIns.Co.Ltd. 15C,17C2ndFloor, CommercialLaneNo.5, ZamzamaPhase5DHA,Karachi 3 AmericanLifeInsuranceCo.(Pak.)Ltd. DolmenCity,13thFloor(level16) Block4,Scheme5,Clifton Karachi 4 EastWestLifeAssuranceCompanyLtd. 3rdFloor,310EFUHouse MA.JinnahRoad Karachi 5 EFULifeAssuranceLimited 37K,Block6,P.E.C.H.Society Karachi 6 NewJubileeLifeInsuranceCompanyLtd. 74/1A,Lalazar,M.T.KhanRoad Karachi 7 StateLifeInsuranceCorp.ofPakistan PrincipalOfficeStateLifeBuildingNo.9, Dr.ZiauddinAhmedRoad,Karachi75530 TakafulCompanies 1 DawoodFamilyTakaful 1701ASaimaTradeTowers, I.I.ChundrigarRoad,Karachi 2 PakKuwaitTakafulCompanyLimited 4thFloorBlockA,FTC,ShahraeFaisal, Karachi

Tel:+920423577502429 Fax:+9204235775030 Web: Tel:+920213263037075 Fax:+9202132626674 Web:www.shaheeninsurance.com Tel:+9204237324488 Fax:+9204237229966 Web:www.silverstarinsurance.com Tel:+9202134322555 Fax:+9202134322515 Web:www.tpldirect.com Tel:111845111 Fax:+9202132463117 Web:www.ublinsurers.com TeI:+9204236361471 Fax:+9204236375036 Web:www.theunitedinsurance.com Tel:+9204237353453 Fax:+9204237230326 Web:www.uic.com.pk Tel:+92021353626203 Fax:+920213562621 Web:www.adamjeelife.com Tel:+92021353020725 Fax:+9202135302076 Web:www.asiacare.net Tel:+9202111111711 Fax:+9202135290042 Web:www.alico.com.pk Tel:+92021323116625 Fax:+9202132311667 Web:www.eastwestlifeco.com Tel:+92021111338111 Fax:+9202134535079 Web:www.efulife.com Tel:+920213561180208 Fax:+9202135610959 Web:www.njilife.com PABXNo021992028009Lines UAN021111111888Web: http://www.statelife.com.pk Tel:+92021111338786 Fax:+9202132277188 Web:www.dawoodtakaful.com Tel:+920213563070716 Fax:+9202135630699 Web:www.pktcl.com

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PakQatarFamilyTakaful Suite#102105, BusinessArcade,Block6, PECHSSharaeFaisal, Karachi 4 PakQatarGeneralTakaulLimited Suite#402403, BusinessArcade,Block6, PECHSSharaeFaisal, Karachi 5 TakafulPakistanlimited 2nd&3rdFloors, DadexHouse, 34A/1,Block6,P.E.C.H.S. ShahraheFaisal,Karachi ReinsuranceCompany 1 PakistanReinsuranceCompanyLimited PRCTowers,32A,LalazarDrive,M.T.Khan Road,Karachi

Tel:+920213431174756 Fax:+9202134386451 Web:www.pakqatar.com.pk Tel:+920213438035761 Fax:+9202134386453 Web:www.pakqatar.com.pk Tel:+92021111875111 Fax:+92021343731956 Web:www.takaful.com.pk Tel:+920219920290814 Fax:+920219920292122 Email:prcl@pakre.org.pk Web:www.pakre.org.pk

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10. GLOSSORYOFINSURANCETERMS
The language of insurance, at times, can be quite complex and confusing. Below are some commonly used insurance terms and their meanings. This information is for educational purposesonlyandshouldnotbereliedupontoformprofessionalopinionsoncoverageissues.

A
Absolute liability The liability of a wrongdoer's automobile insurance company to pay someone harmed by the wrongdoer, even if the wrongdoer has violated the terms of the insurancepolicy,forexample,bydrivingwithanexpiredlicense. AccidentAneventthathappensbychanceandisnotexpectedinthenormalcourseofevents, which results in harm to people, damage to property or equipment, or a loss of process or productivity. Accident Benefits (AB) The part of auto insurance that provides medical care and income replacementbenefitstoinsuredpersonsinjuredinacarcollision,regardlessofwhocausedthe accident. Actual Cash Value The fair market value of property taking into account factors that might augmentorreducethevalueofthepropertyinquestion. Actuary A certified professional who specializes in mathematics of insurance and evaluates statisticalinformationtodetermineratesandrisks. AdditionalInsuredApersonotherthanthenamedinsuredwhoisprotectedbythetermsof thepolicy. Additional Premium An extra charge for an alteration, during the policy period, which increasesthehazardortheinsurancecompany'sliability. AppraisalAvaluationoranestimationofthevalueofpropertyusuallydonebyanexpertin thatfield,suchasasurveyor,whohasnopersonalinterestintheproperty. AppraisalClauseAclauseinaninsurancepolicythatgivestheinsurertherighttodemandan appraisal on the damaged property. It gives both the insurer and insured a means ofsettling disputesoverthevalueoflostordamagedproperty. Arbitration An alternative to litigation for resolving a dispute between an insurer and its customer or between insurers. An unbiased person or panel is appointed to review the case anddetermineresponsibilityforpayingforthelossortheamounttobepaid.

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ArbitrationClauseAclauseinaninsurancepolicy,reinsurancecontract,orothercontractthat providesarbitrationintheeventofadisagreement. Arrears The status of a policy on which the premiums are overdue and unpaid but are still consideredcollectible. ArsonThewillfulandmaliciousburningofproperty. AssuranceSameasInsurance. AssuredSameasInsured. AssurerSameasInsurer. AuthorizationThepowerorrighttoactonbehalfofanother. AutomaticReinstatementAfteraclaimhasbeenpaidorthepropertyrestored,mostpolicies automaticallyreturnthestatedlimitofinsurancetoitsoriginalamount. AutomobileInsuranceInsurancecoveragethatprovidesindemnityand/orcompensationfor injury or physical damage which ensues from the ownership, use or operation of an automobile. Avoidance of risk Taking steps to remove a hazard, engage in an alternative activity, or otherwiseendaspecificexposure.

B
BlanketPolicyAnindividualpolicycoveringseveralperilsonasingleamountratherthanon individuallimits. BodilyInjuryAterm,mostlyusedinautomobileinsurance,meaningphysicalinjuryasaresult ofacarcollision. Broad coverage This provides comprehensive insurance coverage for buildings and named perilscoverageforcontents. BreachFailuretoliveuptotheconditionsorwarrantiescontainedinapolicy. BrokerAninsurancebrokersellsinsuranceformorethanonecompany. Burglar Alarms Devices of various types which give warning of entry into premises by unauthorizedpersons.

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BurglaryUnlawfulremovalofpropertyfrompremisesinvolvingvisibleforcibleentry. BurglaryInsuranceInsuranceagainstlossofpropertycausedbyburglars. BuybackDeductibleAdeductiblewhichmayberemovedbypaymentofadditionalpremium whenfullcoverageisrequired. BusinessInterruptionInsuranceVarioustypesofinsuranceagainstbusinessexpensesandloss ofincomeresultingfromafireorotherinsuredperil.

C
Cancellation During the policy period, either the insurer or the customer may terminate coverageaccordingtoprovisionsinthecontract. Capacity The amount of capital available to an insurance company, or to the industry as a whole,forunderwritinginsurancecoverageorcoverageforspecificperils. CaptiveInsuranceCompanyAcompanythatisownedsolelyorinlargepartbyoneormore noninsuranceentitiesfortheprimarypurposeofprovidinginsurancecoveragetotheowneror owners. CertificateofInsuranceWrittendocumentstatingthatinsuranceisineffect,includesgeneral statementofpolicy'scoverage. CertifiedCopyReproductionofadocument,thatauthorityhavingcustodyoforiginalsignsand attestsasatrue,genuineandauthenticcopy. Civil Commotion Disturbance involving a large number of individuals. An uprising of people creatingaprolongeddisturbance. CivilLiabilityAnindividual'sliabilitytoothersforharmcausedtothembyhisorheractions. ClaimTheexercisingofapolicyholder'srightunderapolicytobepaidbyhisorherinsurance companyforcertainfinanciallossessuffered. ClaimantOnewhomakesaclaim. ClauseWordsinapolicywhichdescribecertainspecifications,limitationsormodifications. CoinsurerTwoormorepersonsorcompanieswhomaybesharingaloss.Acompanywhose policycoversthesameriskasthatofoneormoreothercompanies,isacoinsurerwhetherthe policiesarewrittenseparatelyortogether.

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CollusionAsecretagreementbetweenpersonstodefraudanother. Commercial lines Refers to insurance for businesses, organizations, institutions, volunteer groups,governmentalagencies,andothercommercialestablishments. CompulsoryInsuranceAnyformofinsurance(usuallyautoinsurance)thatisrequiredbylaw. Concealment As applied to insurance, the withholding from an insurance company of informationpertinenttoarisk. Conditions Conditions are terms of insurance contracts that impose obligations an insured personmustsatisfyinordertopreservecoverage.

D
DeathBenefitAnamountsetoutinthepolicyrepresentingtheamountthatwillbepaidinthe eventofdeath.Alsoreferredtoas"principalsum." Debris Removal A provision in an insurance policy most commonly found in fire insurance providingindemnificationforthecostofremovalofthedebrisafterafire. Declaration Statement, signed by the insured, warranting that information given by him is true. DeclarationsTheportionoftheinsurancecontractthatcontainsinformationsuchasthename and address of the insured, the property insured and its location and description, the policy period, the amount of insurance coverage, applicable premiums, and any other information providedbytheinsured. DeductibleAnagreedspecifiedsumtobedeductedfromtheamountoflossandassumedby theinsured. Deductible Clause A clause defining the amount of loss for which insured is liable; defines insurer'sandinsured'scontributionstocoverlosses. DeferredPremiumPaymentPlanPlanprovidingforthepaymentofthepremiumovertime. Depreciation Reduction in value of property through use, ageing, deterioration and obsolescence. DisclaimerAdenialofliabilityforcause. DisclosureActofmakingknownsomethingtobeknown.

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DismembermentLossofalimb,e.g.,leg,arm,fingeroreye.

E
Employer's Liability Insurance Protects an employer against injuries sustained by employees thatfallundercommonlawliability.Thisshouldnotbeconfusedwithworkers'compensation liability,whichisliabilityasdefinedbyworkers'compensationlaw. Endorsement An amendment added to a written document, particularly an agreement betweenparties,alteringitsprovisions. Exceptions Differences listed in a policy which amend the standard declarations so as to providetherequiredcoverage. ExclusionRisks,perilsorpropertiesdefinedinthepolicyasnotcovered.

F
Fire Insurance Coverage for losses from fire and lightning and also the resultant damage causedbysmokeandwater,usuallysupplementedbyExtendedCoverageInsurance. First Party The person who is insured on the insurance policy. He or she is also the "policyholder"or"insured."Theremaybeotherpeople,namedorunnamed,whoarecovered aswell. Flat Cancellation The cancellation of a policy as of the effective date with all paid premium refunded. FleetPolicyInautomobileinsurance,thisisapolicyinsuringanumberofcarsforoneowner. ForgeryIngeneral,anyfalsewritingwithintenttodefraud. Fraudulent Misrepresentation A false statement made knowing it to be false and intending anothertoactonittohisdetriment,ormadecarelesslyorrecklesslywithoutregardtowhether itistrueorfalse.

G
Good Faith Most ordinary contracts are good faith contracts. Insurance contracts are agreementsmadeintheutmostgoodfaith.Thisimpliesastandardofhonestygreaterthanthat usuallyrequiredinmostordinarycommercialcontracts.

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GraceperiodAperiodafterthepremiumduedateduringwhichanoverduepremiummaybe paidwithoutpenalty.Thepolicyremainsinforcethroughoutthisperiod. Gross Negligence The degree of negligence somewhat greater than ordinary negligence. It maybearecklesswantonandwilfulmisconductcausingbodilyinjuryand/orpropertydamage.

H
HazardAriskorprobabilitythattheeventinsuredagainstmightoccur. Hazard, Moral Hazard arising from character, interest, habits and lack of integrity of the insuredorpersonconcerned. Hazard,PhysicalHazardarisingfromphysicalconditionorcharacteristicsoftheobjectthatis insured,e.g.,usingandstoringvolatilematerialsandsubstancesonthepremises. Hit and Run Accident Collision between motor vehicle and/or a motor vehicle and another objectand/oramotorvehicleandapedestrianwhereadriverleavesthesceneoftheaccident withoutidentifyinghim/herself.ThisisanoffenceundertheHighwayTrafficAct. HomeownersinsuranceAnelectivecombinationofcoveragesfortherisksofowningahome. Itmayincludecoverageforfire,burglary,vandalism,earthquakeandotherperils. Hostile Fire A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplacebecomesuncontrollableandignitessomethingexternally.SeeFriendlyFire.

I
Indemnify To compensate the insured person for a loss, in whole or in part, by payment, repair,orreplacement. InlandMarineInsuranceCoverageformovablepropertyintransit,excludingoceancrossing; includesbridgesandtunnels,becausetheyareimplementsoftransportation. Inspection Independent checking of facts about an applicant or claimant, usually by a commercialinspectionagency. Insurable Interest An interest which the insured must have in the subject matter of the insurancehebuyssothatiftheeventinsuredagainstoccurs,theinsuredwillsufferapecuniary loss.

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InsuranceAcontractbetweenaninsurancecompanyanditscustomerforaspecificperiodof time. It protects the customer financially against a loss. Insurance is also a mechanism for dispersingrisk,becauseitsharesthelossesofthefewamongthemany. InsurancePolicyAwrittencontractofinsurance. InsuredTheentity(individualorotherwise)whoseriskoffinanciallossfromaninsuredperilis protectedbytheinsurancepolicy. InsurerThecompanyprovidingtheinsurancecoverage. InsuringClauseDescribestheintentofthepolicy,justwhatinsurancecoverageisprovidedby thepolicyandinwhatlimits.

J
JointandSeveralLiabilityClauseThisexistswhenthesituationissuchthatacreditorinthe casecansueanyoneofthedebtorsindividually,orany,severalorallofthem,atthecreditor's option. JudgmentAnordergivenbyaCourt.

L
LapseAninsurancepolicywhich,havingreacheditsexpirydate,isnotrenewedorextendedis saidtohavelapsed. Liability This is a legally enforceable obligation. Liability insurance pays for the damages or lossessufferedbyothersforwhichtheinsuredpersonislegallyresponsible. Liability Insurance Insurance which agrees to indemnify the insured for sums he may be requiredbylawtopaytothirdpartiesasdamagesforbodilyinjuryordamagetoproperty. LimitofLiabilityThemaximumamount,asstatedinthepolicy,whichaninsurerisboundto payincaseofaloss.

M
MaterialFactInformationaboutthesubjectofinsurance,insuredrisk,that,ifknown,would changetheunderwritingbasisoftheinsurance,andwhichcouldcausetheinsurertorefusethe applicationorchargeahigherrate.

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Material Misrepresentation When a policyholder or applicant makes a false statement of material (important) fact on the application, he or she has committed a material misrepresentation,whichmayresultinlossofcoverage. Moral Hazard A position taken by an insured that increases the chance of a loss or the seriousnessofaloss.

N
NamedInsuredThepersoninwhosenamethepolicyisissued(seeInsuredorPolicyholder). Technically, he or she would be the first party to the contract, the second party being the insurancecompanythatissuesthepolicy. NamedPerils(orBasic)InsurancePolicyCoversonlythoseperils,suchasfireandtheft,that arespecificallynamedintheinsurancepolicy. Natural Disaster A disaster caused by the elements such as flood, earthquake, tornado, lightning,etc. NegligenceTofailtodowhatareasonableandprudentpersonwoulddo(ortodowhatsucha personwouldnotdo);thiscanresultinpropertydamage,injuryordeath. NoFaultThistypeofautomobileinsuranceprovidessomecompensationforpersonalinjury and death arising out of a motor vehicle accident, with payments made regardless of who caused the loss. However, it does matter who caused the accident; if found to be at fault, a drivermayexperienceanincreaseinfuturepremiums. Nondisclosure A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/she is guilty of non disclosureandmayriskhavingcoveragevoidedfrominception. NonhazardousArisknotinvolvingtheordinaryoraveragehazardofitsclass,orariskfreeof theaveragehazardsofallclassesofrisk. NoninsurableRiskAriskforwhichnoinsurancecanbewritten.Thechanceoflossisveryhigh orcannotbeaccuratelymeasured. Notice of Loss Notice detailing the losses and the circumstances surrounding how they occurredrequiredbyinsurancecompaniesimmediatelyafteranaccidentorotherloss. Notice of Termination The conditions of insurance policies stipulate how a policy may be terminatedduringitsterm.

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P
PremiumAninsurancepremiumisthemoneythepolicyholderpaystotheinsurerforfinancial protectionagainstspecificrisksforaspecifictimespan. Product Liability Insurance Protects manufacturers' and distributors'exposuretoliabilityfor bodilyinjuryorpropertydamagecausedbythenegligentmanufacturingoftheproduct. Property Insurance Covers an insured's property against damage, destruction or loss by a coveredperil. ProximateCauseCauseoflossordamage.Unbrokenchainofcauseandeffectbetweenthe occurrenceofaninsuredperilanddamagetoproperty.

R
Regulator The federal government agency responsible for the control and regulation of the insuranceindustry,likeSECP. ReinstatementThereactivationofsuspendedorcancelledinsurance. ReinsuranceInsurancepurchasedbyaninsurancecompanyfromanotherinsurancecompany (reinsurer) to provide it protection against large losses on cases it has already insured. Essentially,insuranceforinsurancecompanies. Rider (or Endorsement) An amendment to an insurance policy. It is used to add or remove coverage. RiskAchanceoflossorinjuryforwhichaninsuranceclaimmaybesubmitted.Forarisktobe insurable,relatedeventsthatcouldresultinaclaimmustbeunexpected.

S
Salvage On paying for a total loss of property, an insurance company takes title to what remainsoforwhatisrecoveredoftheproperty.Thisisarightofsalvage. ScheduleofInsuranceAlistofitemsindividuallycoveredbyapolicy, StandardRiskApersonwho,accordingtoacompany'sunderwritingstandards,isentitledto purchaseinsuranceprotectionwithoutspecialrestrictions.

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SubrogationOnceacompanyhaspaidalossforwhichsomeoneotherthanthepolicyholderis responsible,itmayhavetherighttorecoverthislossfromtheguiltyparty.Thisrightiscalled subrogation. SurrenderCancellationofapolicybeforeitsnormalexpirybymutualconsentofinsuredand insurer. SurveyAnexaminationofarisktobeinsured,followingwhichthesurveyorcompletesaform givingallparticulars.

T
Third Party A claimant under a liability policy, so called because he is not one of the two parties(insuredandinsurer)whohasenteredintotheinsurancecontractwhichpayshisclaim. ThirdPartyLiability(Auto)InsuranceCoversaninsuredifhisorhercarinjuressomeoneelse ordamagespropertyandheorsheisheldlegallyresponsible.

U
Umbrella Policy A special form of liability policy designed to protect the insured for certain unknowncontingenciesoverandabovethenormalcoverageandtoprovideexcessinsurance. Underwriter An underwriter is an employee of an insurance company who looks at an insuranceapplicationanddecideswhetherornottheinsurancecompanycanorshouldprovide theapplicantwithinsurance,basedontheriskthatpersonpresents. UnderwritingProfitorLossTheamountofmoneythataninsurancecompanygainsorlosses asaresultofitsinsuranceoperations.Itexcludesinvestmenttransactionsandincometaxes. UnderwritingRulesTherulesusedbyinsurancecompaniestoassesstherisktheyaretaking onbyinsuringaparticularcustomer.Theserulesaresetindividuallybyinsurancecompanies. Uninsurable Perils These are events or situations for which insurance coverage cannot be purchased.Thedamageasaresultoftheseincidentsisusuallypredictableorpreventable.For example,ifyoubuildyourhouseonafloodplain,yourhousewill,atsomepoint,beflooded. Flooding,inthiscase,isanuninsurableperil. UtmostGoodFaithAphraseinalegaldocumentcallingforthehigheststandardsofintegrity onthepartoftheinsuredandtheinsurer.

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W
Waiting period A period of time set forth in a policy which must pass before some or all coveragebegin. WaiverTheintentionalrelinquishmentofaknownright.Awaiverunderapolicyisrequiredto beclearlyexpressedandinwriting. WarrantyAstatementbythepolicyholderthatcertainconditionsoftheinsuredriskexistor willbemet.Iffoundtobefalse,itprovidesthebasisforvoidanceofthepolicy. Without Prejudice An action taken during claims negotiations designated as "without prejudice"isintendedtobewithoutdisadvantagetotheexistingrightsoftheparties. ~EndsHere~

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