For many people, it is easy to get mired down in all of the jargon and red tape that is so common in the insurance industry. The claims process tends to get a little bit confusing if it is something that you aren’t used to, and knowing what kind of insurance you need can provide challenges as well. That’s especially true when you don’t know a handful of important terms that are commonly used in the process. This post will be a guide to some of those basic terms that can cause unneeded stress. A basic understanding of these simple definitions can make all the difference when dealing with your insurance related issues:
Policy: The policy is the document that outlines the coverage provided by the insurance company to the insured. It shows what is covered and what is not.
Claim: A claim is when an insured requests payment for an incident that is supposed to be covered in the policy.
Deductible: This is the amount of money that you are required to pay before an insurance company will start to pay for claims.
Named Insured: The individual defined as the insured in the policy contract.
Premium: Your premium is the amount that you pay for the insurance.
Limit: The limit is the highest dollar amount that an insurance company is able to pay out on a policy.
Loss: The loss is the damage that occurs during an incident. When a loss takes place, the insured files a claim and is reimbursed by the insurance company.
Insurable Value: The cash value or the replacement cost of an item covered in the policy. For buildings, this value does not include the value of the land on which the building stands.
Actual Cash Value: Repayment value for the loss of, or damage to, property. This is usually the replacement cost, minus depreciation.
Underwriter: A professional who identifies, examines, and classifies the amount of risk represented by car, home, property, or individual to be insured.
Adjuster: A professional who investigates claims and recommends settlement options.
Loss of use/additional living expense: This covers the inflated cost of living that comes after a loss. For example, if you are in an accident and your car is in the shop, it could cover the cost of your rental car.
Liability Insurance: the portion of a policy which covers you in the event you are found responsible for injuries to others or property.
Uninsured and underinsured motorist coverage: Uninsured motorist coverage can protect you in the event that you are in an accident with a driver with no insurance or you are in a hit and run. Underinsured motorist coverage protects you from drivers with low limits on their coverage that might not be able to cover all of the damage caused by the accident.
These simple definitions will help make taking care of your insurance a breeze. Shopping for insurance and making a claim will be much easier now that you are aware of these basic terms. Insurance doesn’t have to be painful. We also have a more complete glossary of insurance terms and information on our website if you click HERE. If you knew all of these terms or had a question about something that wasn’t listed, the glossary is a great resource.
You are also more than welcome to give us a call at (303)798-2534 if you want to learn more about any of these terms or if you have questions about anything else. We are here to serve and help you. Please don’t hesitate to reach out if there is anything that you need.