• Insurer – a company that has obtained an insurance license. The insurer undertakes to pay indemnity to the insured or to a upon occurrence of an insurance event and against payment of a premium.
• Policyholder – the person who concludes and is a party to the insurance contract with the insurer. This is not necessarily the insured or the beneficiary.
• Insured – the person whose property or whose liability is subject to insurance protection. Such are, for example, the owner of an insured property or of a car insured under ‘’Casco’’.
• Beneficiary – a person who is not a party to the insurance contract but has the right to receive the indemnity upon the occurrence of an insured event (e.g. the beneficiary is the lending bank, which receives the compensation under Life insurance upon the death of the borrower).
• Insurance policy – the written contract concluded between the insurer and the policyholder. It indicates the premium due, the main covered and excluded risks, the term of the policy and the object of insurance.
• Insurance premium – the amount that the policyholder owes to the insurer in exchange for the insurance protection. It can be paid as a lump sum or as installments, the first installment usually being paid upon conclusion and being a condition for the entry into force of the contract.  
• Insurance indemnity – the amount due by the insurer in the event of a covered insurance event. Depending on the type of insurance, the indemnity is calculated based on the value of the damage or is a pre-fixed sum.
• Sum insured – the term has two meanings. The first meaning is the maximum limit of compensation. The second meaning is the pre-fixed indemnity under some personal accident insurance policies paid  in the event of bodily injury or death of the insured.
• Insurable value – the value of the insured property. It is of three types – actual, replacement and agreed.
  1. Actual cash value – is calculated at the time of the damage. It consists in the value for which another property of the same type and quality could be purchased instead of the insured one. Depreciation is applied to it – the indemnity is reduced with regards to the ‘’age’’ and obsolescence of the property.
  2. Replacement value is calculated in the same way as the actual cash value, but without depreciation, consisting in replacement of the damaged property with a new one.
  3. Agreed value is a fixed amount – when concluding the contract, the parties agree in advance on the amount that will be paid upon occurrence, without making additional calculations. For example, when it is agreed that in the event of theft of the insured car, the amount ‘’X’’ will be paid, regardless of  the value of the car at that time.

• Term of the insurance contract – the insurance contract can be concluded for a specific or indefinite period of time, and the term can be longer than the coverage period.
• Coverage period – the time during which the insurer bears the risk of an occurrence and provides protection.
• Insurance period – the period for which the insurance premium is determined.

For example, the insurer concludes an open insurance contract with a courier company for 3 years (term of the insurance contract – 3 years), under which each shipment is insured for the period of its delivery (coverage period – from the date of  the shipment to the day of delivery). The contract stipulates for the insurance premium for the shipments will be calculated based on their weight and delivery time, at pre-fixed rates, which are updated on 01.01. each year (insurance period – one year – until 01.01 of the following year).  

• Insurance risk – an unpredictable event. The probability of its occurrence, as well as the number and type of events covered under the policy, serves to determine the insurance premium.
• Insurance coverage – the sum of covered, not covered and excluded risks:

1. Covered risk – a risk for which the insurer is responsible and upon the occurrence of which he is obligated to pay compensation to the insured. The covered risks are explicitly stated in the insurance policy.
2. Not covered risk – a risk that is not included in the insurance coverage. When it occurs, the insurer is not responsible for paying compensation. Most often, upon payment of an additional premium, it may be included in the coverage.
3. Excluded risk – a risk that is explicitly excluded in the policy or general terms and conditions and for which the insurer is not liable. Most often, upon payment of an additional premium, it cannot be included in the coverage.

For example, in property insurance, if the risk of ‘’fire’’ is covered, but you decide to also insure against the risk of ‘’theft’’, the former will be covered and the latter not covered, with the option of including it in the coverage for an additional premium. However, the risk of ‘’fire due to short circuit’’ may remain excluded, for which you will not receive coverage even for an additional premium.

• Risk insurance – insurance in which compensation is paid only when a covered risk occurs. For example, Life insurance can be risky, as it covers the risk of illness or death of the insured, and compensation is paid only if one of these events occurs. Risk insurance is usually concluded for one year, and the premium is paid once for this period – in whole or in part.
• Insurance with a savings plan – insurance that combines protection in the event of an insured event with the possibility of accumulating funds. This is the Life insurance with savings plan. In this case, the premium is usually paid monthly, and the contract is concluded for a period longer than one year.  
• Liability insurance – insurance that covers the liability of the insured towards third parties. It serves to cover damages caused by the insured to other persons. Such is the ‘Motor third party liability’’ insurance for drivers, which compensates the damages that other parties suffer as a result of a traffic accident.
• Property insurance – insurance that covers the risk of damage or loss of property (buildings, cars, equipment), regardless of the person that caused the damage. Such as the ‘’Casco’’ insurance, which covers damages to the vehicle cause by incidents or by another person.

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