Everyone needs property damage insurance for their home, auto, property, business, etc. These policies are written in very small print, fill up many pages, are wordy, and include insurance terms that make no sense. Why can’t insurance forms, and legal papers for that matter, be written in plain English instead of upper-crust, formal, “I don’t know” language of the Gods?
As a holder of property damage insurance, it is important to know what insurance jargon means. If you know what you are reading, you can make better decisions and not rely on guesswork.
General Insurance Terms:
Knowing what these terms are will open a few doors.
Accident – An incident happens when your vehicle or home is damaged by another vehicle, fixed object, or structure.
Additional Insured – Someone who is not a policyholder but is added onto the policy, so they are covered by your property damage insurance. A good example could be someone who does not own your particular car, but you are allowing them to drive it. Your name is not on the policy, but there is a notation that you can drive their car. The actual insured gets all the messages, feedback, and responsibility.
Adjustor – Someone who works for the insurance company assesses the value of the losses and settles the claim (a person that is good to know.)
Agent – A licensed person who helps you find the best rates and terms on your insurance policy. Agents can be self-employed, work directly for the insurance company, or be licensed to sell insurance policies from any insurance companies. Agents ensure you have the best costs and coverage on your policy.
Carrier – Another word for the insurance company.
Claim – A formal, written request sent to the insurance company after an accident.
Declaration Page – A page that is the contract between the insurer and the insurance company. It states who owns the policy, what property is insurance, and how much the policy is worth.
Deductible – The money portion the insurer (or you) must pay before the insurance company pays.
Endorsement – This is usually done through a separate form and is an adjustment to the original insurance policy’s coverage after the initial signing.
Exclusions – Provisions in an insurance policy that lists out the exclusion or limitations of your insurance policy.
Lapse – This is not a good term. Avoid a lapse at all costs. It is a term used when your insurance policy cancels or expires. If you let your insurance lapse for even a day, your rates will rise.
Liability – Your responsibility and the adverse effects of your actions.
Loss of Use – Loss of use is described as damage done in an accident or other cause, and that cause prevents someone from being able to live in their home or drive their vehicle.
No-fault – This term refers to an insurance policy where you are covered for any losses by your own insurance company regardless of who is at fault in the accident. In other words, if you are in an accident, even if the other driver is at fault and you suffer injuries, your insurance company pays for your injuries instead of the other driver’s insurance.
Premium – This s the amount you pay as a policyholder to the insurance company. You can pay in regular installments or as agreed in the policy.
State minimum – State minimum insurance coverage is the amount required to drive legally in your state. Some states require liability insurance at a set minimum, and other states require uninsured motorist coverage.
Subrogation – Subrogation is when your insurance policy covers damages incurred, but then the insurance company seeks payment from a third party who was also involved and is the cause of the accident.
Sum Insured – The amount that the goods at risk were calculated and is reflected within the premium.
Third-Party – Anyone who may have been affected by your actions or by the accident.
Umbrella policy – This is a property damage insurance policy where additional liability coverage is provided. It is written or enacted after your other insurance policies have reached their coverage limits. For example, “when it rains, it pours,” but don’t fear, your umbrella policy will take over.
Underwriting – The process insurance companies go through to determine if they will provide coverage to a potential customer. (A good person to get to know).
Vehicle Identification Number or VIN – Your car’s serial number is called the VIN. Find the number on your car where the dashboard meets the front window, on the inside of the driver’s side door or your old insurance policy.
These are only a few of the confusing terms and definitions are written in insurance policies. They are popular terms and may confuse when you are trying to resolve an accident or claim. Learn them, and you will be a savvy insured. Questions? Contact Risk Managers LLC for property damage insurance on your home, car, or other property.