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Insurance Terms Every Policyholder Should Know

Insurance Terms Every Policyholder Should Know

Are you feeling stymied by your policy’s jargon?

Here is a list of some popular insurance terms to help you understand it.

 

Deductibles, assumption, subrogation…sometimes, it feels like you need to be an insurance agent to understand your policy!

But at Harry Levine Insurance, we believe in insurance transparency. The way we see it, the more you understand the clauses and numbers listed on your policy, the more “in-control” you feel over your coverage.

Below, you’ll find a list of common insurance terms to help you decipher all that paperwork. Of course, if you have any additional questions, our friendly agents are ready to assist you!

 

Actual Cash Value

An item’s fair market value, adjusted for depreciation. (See “Replacement Value”)

Adjuster

An individual who investigates claims to determine how much (or if) the insurance company should reimburse a loss.

Agent

An individual who sells insurance policies to a client. Agents may either be captive or independent.

All Perils

A type of insurance policy that provides coverage for all risks except those specifically excluded from the policy. HO5 policies are often referred to as all perils coverage but, as always, there are exceptions. (see “Named Perils”)

Assumption

The process in which one insurer transfers one or more policies to another. This may happen when an insurance company becomes insolvent.

Binder

A form of insurance that is issued temporarily until a formal policy is issued.

Bodily Injury Liability

A form of insurance that provides coverage for injury, illness, or death to a third-party.

Broker

An individual who locates insurance policies for a client. (see “Agent”)

Captive Agent

An insurance agent who can only write policies for a single insurer. (see “Independent Agent”)

Carrier

An insurer or insurance company.

Certificate of Insurance (COI)

A document that verifies and describes a policyholder’s insurance coverage. COI’s only provide a snapshot of policy coverage in-force at the moment they are issued. They do not constitute or substantiate any coverage that a policy may or may not actually have.

Claim

A formal request by a policyholder to an insurance carrier for reimbursement for a covered loss.

Covered Loss

A type of loss for which any insurance policy provides coverage (subject to the entirety of its terms).

Declarations Page

A page of an insurance policy that gives a summary of the provided coverage.

Deductible

The amount of money a policyholder is responsible for contributing toward a claim before the insurance policy kicks in. (see “Hurricane Deductible”)

Depreciation

The decrease in value of property that naturally occurs over time.

Dwelling

The structure of a home (as distinct from the land, contents, or non-residential outbuildings).

Endorsement

A change that adds coverage to an existing insurance policy.

Exclusion

A loss that is not covered under an insurance policy.

Hazard

A condition or factor that makes a risk more likely to occur.

Hurricane Deductible

Also called a Named Tropical Cyclone Deductible, this deductible only applies to losses caused by any named tropical storm (including hurricanes).

Independent Agent

An individual who can write an insurance policy from one of many different insurance companies. As a result, independent insurance agents can provide a wide range of quotes. (see “Captive Agent”)

Inland Marine

A form for property coverage that provides coverage during transport over land, while property is out in the open, or under several other circumstances not best fitting traditional Property Insurance Coverage.

Liability Coverage

A type of insurance that provides coverage in the event that a third party experiences damages for which the policyholder is responsible.

Limit

The highest amount that an insurer will reimburse a policyholder for a covered loss. (see “Sublimit”)

Loss

Injuries or damage experienced by a policyholder.

Named Perils

A type of insurance policy that provides coverage only for risks that are specifically named in the policy. In most cases, this includes either 10 or 16 risks. (see “All Perils”)

Policy

A contract between an insurer and policyholder.

Policyholder

The individual(s) who are covered under an insurance policy.

Premium

The fees paid by a policyholder to an insurer, either monthly or annually.

Property

Physical items owned by a policyholder.

Replacement Cost

The cost to replace or restore property to its original condition. (see “Actual Cash Value”)

Sublimit

A limit for a specific type of loss that is lower than the policy limit. (see “Limit”)

Subrogation

A process that allows an insurer to be reimbursed by an at-fault party’s insurance company.

Term Life Insurance

A life insurance policy that expires after a specified period of time.

Third Party

An individual associated with your claim who is neither the policyholder nor the insurer.

Umbrella Insurance

A policy that increases a policyholder’s liability coverage.

Underwriter

An individual who helps determine whether a policy should be issued.

Whole Life Insurance

A life insurance policy that lasts for the remainder of the insured’s lifetime.

 

Got more insurance questions? We’re here to help! Call today for all your insurance needs.

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