Exploring Advanced Insurance Contract Fundamentals

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70 NEWS JAPAN - The topic of insurance contracts is vast, but it has to be studied carefully. After all, your family's financial security may be the price you pay for lack of conscientiousness. One or two small terms found in a footnote can drastically change your coverage, and you need to understand those terms. In this article we'll explain some additional fundamentals you need to know to understand your insurance contract fully.

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A waiver is voluntary surrender of a known right. Estoppel prevents a person from asserting those rights because he or she has acted in a such a way as to deny interest in preserving those rights.

Presume that you fail to disclose some information in the insurance proposal form. Your insurer doesn't request that information and issues the insurance policy. This is waiver. In the future, when a claim arises, your insurer cannot question the contract on the basis of non-disclosure. This is estoppel. For this reason, your insurer will have to pay the claim.

Coinsurance refers to the sharing of insurance by two or more insurance companies in agreed proportion. For the insurance of a large shopping mall, for example, the risk is very high. Therefore, the insurance company may choose to involve two or more insurers to share the risk.

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Coinsurance can also exist between you and your insurance company. This provision is quite popular in medical insurance, in which you and the insurance company decide to share the covered costs in the ratio of 20:80. Therefore, during the claim, your insurer will pay 80% of the covered loss while you shell out the remaining 20%.