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Scope of insurance liability

The maximum amount which may become payable to the insurant by the insurer to indemnify for the losses incurred per occurrence of an insured event. Usually used in insurance contracts which do not contain the insurance amount (liability insurance).

Settlement of losses

A set of the insurer’s actions aimed to determine the causes, facts and circumstances (corroborated by   conclusive evidence) of an insured event and to pay the insurance indemnity.

Shares

Is a security issued by a stock insurance company. The share is the evidence of contribution of equity funds by its owner for the purpose of development of the insurance company and entitles the owner to a portion of the profit generated by the company in the form of a dividend.

Slip (reinsurance slip)

A document distributed by the reinsurer to potential reinsurant with a proposal to participate in facultative reinsurance of certain risks.

Stock Insurance Company

A form of organization of an insurance form on the principle of centralization of cash funds through a share sale. It is the most common type of an insurance company in the market economy.

System of seats and lump-sum system

With lump-sum system, the insured amount is determined for the vehicle in bulk. Each passenger (including the driver) in the vehicle at the time of the insured accident is insured in the amount that is a share of the total insured amount.

For example, if at the time of the accident there are three passengers in the insured vehicle, each of them is entitled to 30% of the total indemnity payable, if there are two people, the share will be 25%, if there is one person traveling in the vehicle at the time of the accident, the portion of the insured amount such person is entitled to is 40% of the total amount.

If the insurance is based on the system of seats principle, the amount of insurance is determined for each seat individually. Consequently, the indemnity will be payable for each seat and not in proportion as in the lump-sum system.

For example, there is an accident where the driver and the passenger of an insured vehicle have received injuries. If the insurance is based on the system of seats and foresees the insurance amount of $10000 per seat, each injured person will be entitled to $10000. If the insurance is done on the lump-sum principle with the total insured amount of $20000, the injured will receive $7000 each

Systems of insurance coverage

Methods of insurance coverage calculation: proportionate or prorated, first claim method and a method of the limit amount.