What is Insurance? And what does Insurance mean to you?
By Derek Visser
My Insurance Broker
Jun 20th, 2016 at 09:22 pm • Richmond Hill, ON
What Insurance means:
The Definition of Insurance according to the Insurance Act of Ontario: Insurance means the undertaking by one person to indemnify another person against the loss or liability associated with a loss in respect to a certain risk or peril to which the object of the Insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event. Which leads to the following questions:
- What does Insurance mean to you? And
- What does indemnify mean?
What Insurance means to you is:
When you purchase an Insurance policy including “liability coverage” for your car in Ontario from an Insurance company, you have specified circumstances (Risks Perils) identified under the “liability coverage” portion of the policy, which are meant to act on your behalf in the event you are considered to be negligent. This may include instances where someone has felt that your actions have caused irreparable harm, either physically, or to their personal property, where they are unable to receive compensation or restitution elsewhere. This includes, for example, damage to others or other’s property, that in the event of an incident involving damages/losses of those types, you will be covered/reimbursed either monetarily, or through the repairing of your vehicle and/or the person or property damaged (among other possible indemnification options available) from the insurers funds. In Ontario, ‘No Fault Insurance’ has been enacted to place onus on your Insurance provider to indemnify you. Essentially, to cover your losses and dispute or recoup damages from the ‘At Fault’ party afterward. This allows for a quick, seamless, and amicable resolution to your loss, rather than lengthy, and at times difficult experiences with someone else’s insurance company. In essence, the insurer takes on the risk of you being involved in pre-specified incidents, and uses its funds to reimburse you in the event an incident occurs. Based on your coverage options, the types of perils covered and the limits applicable may vary, but this is where a trusted Insurance adviser such as a broker can assist in finding the right policy for you. As technology enables more ‘share-services’ such as UBER and Lyft to help mitigate our costs as consumers, keep in mind, that Insurance is the oldest one of them all. Specifically, sharing a pool of premiums collected by the masses to coverage and protect the losses of the few.
The word indemnify means:
That the insurer must make good the amount of the insureds (you) financial loss—no more and no less. This forms the basis of most insurance contracts. To place you right back in the position you were in before the incident, as if it never happened.