Insurance theory · page 2 of 10
Policies
Policyholder, coverage, limit, deductible, policy period, renewal and lapse.
A policy is the contract: it says who is covered, for what, for how long and for how much. Most analysis starts from the policy table, so its vocabulary matters.
Who
- The policyholder owns the policy and pays the premium; at Harbour Mutual, a row in
customers. - The insured is the person or thing covered. For motor that is the car and its drivers; for home, the building or its contents. Often, as here, the policyholder is also the insured.
What
- A product is what is sold, such as Motor Comprehensive; products are grouped in lines of business: motor, home and travel (
products.line). - A coverage is one thing the policy pays for: third-party liability, theft, storm and flood (
policy_coverages,coverage_types). - The limit is the most the insurer pays under a coverage (
limit_amount). - The deductible, or excess, is the part of each claim the customer pays themselves (
deductible). A €500 deductible on a €2,300 repair means Harbour Mutual pays €1,800.
When
Cover runs from the start (inception) to the end (expiry) of the policy period, usually a year. At the end the customer can renew for another year. At Harbour Mutual each year is its own row with its own number: HM-MC-004211-2024 and HM-MC-004211-2025 are the same customer's Motor Comprehensive, 2024 and 2025 terms.
| Status | Meaning |
|---|---|
| active | Cover is in force on the story's today, 31 December 2025 |
| expired | The term ran to its end |
| lapsed | Ended early because premium was not paid |
| cancelled | Ended early at the customer's or the insurer's request |
One row in
policies is one term of cover, not one customer and not one car: count rows carefully.Check your understanding
Answer every question, then check.