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100 terms · Industry glossary

Insurance glossary

Understand insurance policies, claims, coverage, and risk with practical explanations for readers in Nepal.

100 terms to explore

A

Accidental Death Benefit

Accidental death benefit is a payment triggered when death meets the policy's definition of an accident and satisfies its conditions.

Actuary

An actuary is a professional who uses mathematics, statistics, and financial analysis to assess uncertain future outcomes.

Agricultural Insurance

Agricultural insurance protects specified farming exposures, including crops, livestock, and related risks where products are available.

All-risks Insurance

All-risks insurance generally covers accidental physical loss or damage unless excluded, within the insured subject matter and contract conditions.

Assignment

Assignment is a transfer of specified rights under an insurance policy to another person or entity, subject to the contract and applicable law.

Average Clause

An average clause reduces a covered property claim proportionally when the sum insured is below the value required by the policy.

B

Beneficiary

A beneficiary is a person or entity entitled to receive a specified insurance benefit when the relevant event occurs.

Bonus

A bonus in participating life insurance is an addition allocated according to the insurer's product rules and financial results.

C

Cancellation

Cancellation is termination of an insurance policy before its scheduled expiry under the relevant contractual and legal rules.

Cashless Treatment

Cashless treatment is an arrangement under which an insurer or scheme settles eligible healthcare charges directly with an approved provider.

Claim

A claim is a request for an insurer to pay or provide a benefit following an event believed to be covered.

Claim Settlement

Claim settlement is the process and outcome of determining and paying an insurance claim or otherwise resolving it.

Claims-made Policy

A claims-made policy responds to claims first made during the relevant policy period, subject to notification requirements and other conditions.

Co-payment

A co-payment is the patient's required share of an eligible healthcare expense under health insurance.

Comprehensive Insurance

Comprehensive insurance is a market description for relatively broad cover, especially in motor insurance.

Contractors All Risks Insurance

Contractors all risks insurance covers eligible physical damage to construction works during a stated project period, often with an optional or included third-party liability section.

Contribution

Contribution concerns sharing an indemnity-based loss between insurers when more than one applicable policy covers the same interest and event.

Coverage

Coverage is the protection an insurance policy provides for specified events, people, property, or liabilities.

Critical Illness Insurance

Critical illness insurance pays a defined benefit when a diagnosed condition meets the policy's listed definition and other requirements.

Crop Insurance

Crop insurance covers specified loss affecting insured crops during the agreed growing period.

Cyber Insurance

Cyber insurance covers specified financial consequences of cyber incidents, potentially including response expenses, data restoration, interruption, and liability.

D

Death Benefit

A death benefit is the amount payable when the insured person dies while eligible life insurance protection is in force.

Deductible

A deductible is the amount of a covered loss that the insured must bear before the insurer pays the remaining eligible amount.

Depreciation

Depreciation is a reduction in an asset's value to reflect factors such as age, use, wear, and obsolescence.

Disability Benefit

A disability benefit pays money or waives obligations when disability satisfies an insurance contract's definition.

E

Earthquake Insurance

Earthquake insurance covers specified losses caused by earthquake under a standalone policy or an extension to property insurance.

Endorsement

An endorsement is a written amendment to an insurance policy that changes specified terms.

Endowment Insurance

Endowment insurance combines a death benefit during a specified term with a maturity benefit if the insured person survives to its end.

Engineering Insurance

Engineering insurance covers specified construction, installation, machinery, and equipment risks through specialised products.

Excess of Loss Reinsurance

Excess of loss reinsurance pays specified losses above an insurer's retained amount, up to an agreed layer limit.

Exclusion

An exclusion removes a particular cause, activity, condition, or type of loss from coverage.

F

Facultative Reinsurance

Facultative reinsurance is arranged for an individual risk or specified portion of it, with separate acceptance by the reinsurer.

Fire Insurance

Fire insurance covers loss or damage caused by fire as defined in the contract, sometimes alongside additional named perils.

Flood Insurance

Flood insurance covers specified loss from flooding according to the policy's definition.

Foreign Employment Insurance

Foreign employment insurance is protection associated with workers taking employment outside their home country.

G

Grace Period

A grace period is additional time allowed to pay a renewal or instalment premium after its due date under specified conditions.

Grievance Redressal

Grievance redressal is the process for raising and resolving complaints about insurance sales, service, claims, or contractual treatment.

Group Insurance

Group insurance covers eligible members under a shared arrangement, often purchased by an employer, association, or institution.

H

Health Insurance

Health insurance helps meet eligible healthcare costs or pays defined health-related benefits under a specified plan.

Health Insurance Board

The Health Insurance Board is the Nepalese public institution associated with the government's health insurance programme.

I

Indemnity

Indemnity is the principle of compensating a covered financial loss rather than creating a profit from that loss.

Insurable Interest

Insurable interest means having a legally recognised relationship to the insured person or property such that the insured event would cause a relevant loss or disadvantage.

Insurance

Insurance is an arrangement in which an insurer accepts specified financial risks in exchange for a premium.

Insurance Agent

An insurance agent is an intermediary who sells or services insurance under an authorised relationship with one or more insurers, subject to local rules.

Insurance Broker

An insurance broker is an intermediary who helps arrange insurance, commonly by seeking suitable terms from insurers for a client.

Insurance Fraud

Insurance fraud is deliberate deception intended to obtain improper insurance benefits or another unlawful advantage.

Insurance Policy

An insurance policy is the contract documenting the insurer's promise and the policyholder's obligations.

Insurance Reserves

Insurance reserves are accounting estimates of amounts an insurer needs to meet obligations under insurance contracts.

Insured

The insured is the person, property interest, or organisation protected by an insurance policy.

Insurer

An insurer is the company or organisation that undertakes to pay covered benefits under an insurance policy.

L

Liability Insurance

Liability insurance covers specified legal responsibility for injury, damage, or other covered harm to third parties.

Life Insurance

Life insurance provides a stated benefit linked to an insured person's death or survival under the chosen product.

Livestock Insurance

Livestock insurance protects specified animals against covered events such as death from defined causes.

Loss Ratio

Loss ratio compares insurance losses with the relevant premium base over a defined period.

M

Marine Cargo Insurance

Marine cargo insurance protects goods in transit against specified risks, and it can include sea, air, and inland legs when the contract provides for them.

Material Fact

A material fact is information significant to an insurer's assessment of risk or its decision about the terms of insurance.

Maturity Benefit

A maturity benefit is the amount payable when an insurance policy reaches its stated end date and the eligibility conditions are met.

Microinsurance

Microinsurance is insurance designed to be accessible to underserved or lower-income customers, often through simpler benefits, smaller premiums, and convenient distribution.

Motor Insurance

Motor insurance protects against specified vehicle-related risks and may combine own damage insurance with third-party insurance.

N

No-claim Bonus

A no-claim bonus is a benefit earned for a qualifying period without claims, often used in motor insurance and some health products.

Nominee

A nominee is a person named by the policyholder to receive or facilitate receipt of policy money following the insured person's death, according to the applicable rules.

O

Own Damage Insurance

Own damage insurance covers eligible loss or damage to the insured vehicle itself.

P

Paid-up Value

Paid-up value is the reduced benefit retained by an eligible life insurance policy when further premiums stop after specified conditions have been met.

Parametric Insurance

Parametric insurance pays according to a predefined trigger, such as measured rainfall or earthquake intensity, rather than solely through assessment of each customer's actual damage.

Policy Lapse

Policy lapse is the loss or suspension of active protection following failure to meet a requirement such as paying a premium.

Policy Loan

A policy loan is borrowing secured against an eligible life insurance policy's value.

Policy Renewal

Policy renewal continues insurance for a new coverage period after the previous one ends.

Policy Revival

Policy revival, also called reinstatement in some markets, is restoration of a lapsed insurance policy under the insurer's conditions.

Policy Schedule

The policy schedule records the particulars of a specific insurance contract, such as the policyholder, insured property or person, coverage dates, sum insured, and premium.

Policyholder

The policyholder is the person or organisation that owns an insurance policy and normally takes responsibility for paying its premium.

Pre-existing Condition

A pre-existing condition is a health condition present before the relevant coverage start date, as defined by the health insurance policy.

Premium

A premium is the price paid for insurance coverage.

Property Insurance

Property insurance covers eligible loss or damage to buildings, contents, stock, or other specified property interests.

Proposal Form

A proposal form is the application used to request insurance and supply information for underwriting.

Proximate Cause

Proximate cause is the legally relevant effective cause of a loss used to assess whether insurance responds.

Public Liability Insurance

Public liability insurance covers specified liability for accidental injury to members of the public or damage to their property arising from insured business activities.

R

Reinsurance

Reinsurance is insurance purchased by an insurer to transfer specified parts of its own insurance risk to a reinsurer.

Replacement Cost

Replacement cost is the expense of replacing damaged property with a new equivalent, or restoring it on the valuation basis specified by the policy.

Rider

A rider is an additional benefit or modification attached to a main insurance policy, especially in life insurance.

Risk

Risk is uncertainty about an event and its financial consequences.

S

Salvage

Salvage is the recoverable value of damaged property remaining after an insured loss.

Solvency

Solvency describes an insurer's ability to meet its obligations, taking account of its assets, liabilities, and financial risks.

Sub-limit

A sub-limit is a smaller maximum within a policy's overall benefit or sum insured for a particular expense, item, event, or section.

Subrogation

Subrogation allows an insurer that has compensated an insured loss to pursue relevant recovery rights against a responsible third party, subject to law and the contract.

Sum Insured

The sum insured is the amount used to define the scale of protection under an insurance policy.

Surrender Value

Surrender value is the amount available when an eligible life insurance policy is terminated before maturity at the policyholder's request.

Surveyor

A surveyor is a specialist who investigates and assesses losses, commonly for non-life insurance claims.

T

Term Life Insurance

Term life insurance covers the insured person's life for a defined period and generally pays a death benefit if death occurs during that period under the policy terms.

Third-party Insurance

Third-party insurance covers specified legal liability to someone other than the insured and insurer.

Total Loss

A total loss occurs when insured property is destroyed, lost, or damaged to the extent recognised as total under the insurance policy.

Travel Insurance

Travel insurance covers specified risks during a journey, potentially including emergency medical expenses, cancellation, baggage loss, and assistance services.

Treaty Reinsurance

Treaty reinsurance is an agreement covering a defined portfolio or class of insurance business according to pre-agreed terms.

U

Underinsurance

Underinsurance occurs when protection is insufficient for the exposure or insured value.

Underwriting

Underwriting is the insurer's process of evaluating an application and deciding the terms on which it will accept risk.

Utmost Good Faith

Utmost good faith describes the expectation of honesty and fair disclosure in insurance dealings.

W

Waiting Period

A waiting period is a specified interval during which certain benefits are unavailable after coverage starts or after another defined event.