Insurance Jargon: 10 Key Terms You Need to Know
Insurance can be a complex and confusing topic, and it's filled with a lot of jargon and technical terms. If you're not familiar with this language, it can be difficult to understand your insurance policy and make informed decisions about your coverage. To help you navigate the world of insurance, here are 10 key terms you need to know:
Deductible: This is the amount of money you need to pay out-of-pocket before your insurance policy kicks in and starts covering your expenses. For example, if you have a $500 deductible and a $1,000 claim, you will need to pay the first $500 of the claim and your insurer will cover the remaining $500.
Premium: This is the amount of money you need to pay for your insurance coverage. Your premium is typically paid on a regular basis, such as monthly or annually, and it is determined by a variety of factors, including your age, location, and the type of coverage you have.
Coverage: This is the protection provided by your insurance policy. It typically includes the types of risks or events that are covered by your policy and the maximum amount that your insurer will pay out in the event of a claim.
Exclusions: These are the events or risks that are not covered by your insurance policy. It's important to understand what is excluded from your coverage so you know what you're not protected against.
Limits: These are the maximum amount of money that your insurer will pay out for a covered claim. For example, if you have a $100,000 limit on your auto insurance policy, your insurer will only pay up to $100,000 for a covered claim, even if the total cost is higher.
Endorsement: This is a change or addition to your insurance policy that modifies your coverage. For example, if you add a new car to your auto insurance policy, you will need to add an endorsement to your policy to cover that car.
Claim: This is a request for payment under your insurance policy. If you experience a covered event, such as a car accident, you will need to file a claim with your insurer to request payment for your losses.
Underwriting: This is the process of evaluating your risk and determining the premium you will need to pay for your insurance coverage. Insurers use a variety of factors, such as your age, location, and driving record, to determine your risk and set your premium.
Actuary: This is a professional who uses statistical analysis to determine the likelihood of certain events occurring and to calculate the cost of insuring against those events. Actuaries play a key role in the underwriting and pricing of insurance policies.
Risk management: This is the process of identifying, evaluating, and mitigating the risks that you face. Risk management is an important part of the insurance process, as it helps insurers determine the types of coverage they offer and the premiums they charge.
By understanding these key insurance terms, you can better understand your insurance policy and make informed decisions about your coverage. For more information on insurance jargon and how to choose the right coverage for your needs, contact our team at (480) 807-7753.