If you’re new to the world of insurance in the Philippines and not sure where and how to start, don’t worry. We’re here to simplify things just for you. This “glossary” will cover some of the terms you need to know about insurance without getting lost in all the jargon that the industry is quite known for. Happy learning!

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Agreed Value Policy - This simply means that you and your insurer have agreed on a value for an item, whether it’s jewelry, an artwork, or a car. As a consequence, if the item is damaged or lost, you get the agreed-upon amount.

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Replacement Value - Refers to the present Reconstruction Value of the building  based on the current cost - inclusive of inflation -  of labor and materials and  based on the existing  insured building’s or original specifications . This is usually determined by a private, independent licensed appraiser.

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Sound Value  - The net value after deducting accumulated depreciation from the Replacement Value. This is also known as ‘Actual Cash Value’. SV is very material data  in determining if the insured risk is under-insured or not.

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Claimant - This is just a fancy word for a person or a group that makes a claim for an insurance benefit. 

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Comprehensive Coverage - Mostly used in car insurances in the Philippines, this means that your insurance covers more than just accidents. It also covers theft, vandalism, -

 natural disasters, and voluntary bodily injury and property damage to third parties

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Declarations Page - Usually on the front page of your policy, this has all the basic information about the policyholder and his/her insurance policy. Also known as, a cheat sheet.

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Endorsement - In insurance, this is basically a policy update or an add-on that modifies or expands your coverage.

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Indemnification - It simply means amount of compensation or reimbursement. Yes, that’s really just it. 

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Lien Holder  aka Mortgagee- This refers to someone who has a financial interest in an insured item. For example, a bank is a lien holder of a car until it is fully paid off by the owner.

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Mitigation - This is a term used for taking steps to prevent the amount or the possibility of a loss. It can also mean preventing further damage after an accident or a loss. Maybe you have a leak in your house? The “mitigation” is to stop the leak and prevent further damage, like molds. 

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Policy Jacket - It’s a document that has all of the details of a specific policy like the terms and conditions, coverages, exclusions and more. It does not, however, include endorsements and/or the declarations page discussed earlier in this blog.

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Premium - This is the regular payment you make to keep your insurance coverage in the Philippines active.

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Umbrella Insurance - No, this doesn’t shield you from the rain. It’s better than that. It is an extra layer of protection that expands your insurance policy.

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Underwriting - This is a process that the insurer goes through to assess the risks and decide if they will charge you for the coverage. They typically look at age, health, driving record and the like for healthcare coverage, and ‘COLP’ - construction, occupancy, location and protection for building insurance.

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And voila! We hope this starter guide helps you better understand insurance. If you have other questions and/or clarifications, contact us at ______ now! 

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