Navigating the world of insurance can feel much like learning a new language. In many ways, it is precisely that. We want you to feel confident about your insurance experience, so we’ve included the following 12 key insurance terms that can help you feel more confident when working with your insurance agent. You don’t have to understand the specifics of every term but knowing these can help you feel better prepared when buying insurance to meet your needs.
Act of God
This term refers to accidents or events that occur without the aid of humans. For instance, a lightning strike that causes a wildfire that burns down a home might be designated as an act of God. These are incidents that cannot be reasonably prevented.
Coinsurance
This refers to the percentage (usually) of a bill that is your responsibility rather than the insurance company’s responsibility once you’ve met your deductible.
Deductible
Your expected financial contribution before your insurance protection kicks in. In other words, it’s your share of the risk. Insurance companies often reward customers who opt for higher deductibles with lower premiums.
Depreciation
The loss of value of items over time. For example, your car loses the greatest amount of value in the first year but continues to depreciate in value over time and with additional mileage.
Errors and Omissions
Also referred to as professional liability insurance, this provides protection related to financial damage to your customers caused by mistakes or undelivered goods and services. This insurance protects companies, workers, and individual contractors.
Estimate
Insurance providers often request that you solicit multiple estimates (price quotes for repairs) of damage after an accident or covered event. This may be used in their approval of the costs and the repairs.
Loss of Use
Sometimes referred to as “additional living expenses,” loss of use refers to the situation in which your home is unlivable while repairs are underway, and you must seek alternative living arrangements during this time.
Liability
Ultimately, liability is about responsibility. In insurance terminology, it relates to financial responsibility for injuries, property damage, death, etc. Liability insurance protects people from some of the financial responsibilities associated with accidents.
Rider
This term refers to additional benefits or protection beyond those of a basic insurance policy. For instance, some people who have classic cars, have a rider protection policy for an “agreed-upon value” in which depreciation doesn’t erase the value of the protection.
Underwriting
The process by which insurance companies assign premiums based on their perceived risks to individuals.
Total Loss
Refers to property damage or losses so severe that the property cannot be recovered or salvaged or the costs of repairs exceed the value of the property.
Now that you understand all these terms, it is likely that questions remain. Questions that can only be fully answered by insurance experts, which is why choosing an agent that can be a trusted partner is essential. Contact the team of professionals at Arnold Insurance for answers to all your insurance-related questions and to learn more about the types of products and services we offer that can meet your unique and specific coverage needs.
