Confused By an Insurance Term?
These 10 Simple Definitions Will Help
If you’re new to the insurance world, you may feel a little lost from time to time. The industry is full of jargon that can confuse clients who have little or no experience with coverage. Don’t worry, though, because we’re here to help. Take a look at our primer on policy language and find the insurance term you need to know.
Premium – This simply means the monthly amount you pay for an insurance policy.
Deductible – This insurance term refers to the out-of-pocket money you must pay for covered home and car repairs, medical care, etc. before insurance takes over the bills.
Replacement Cost – It’s the amount of money it would cost to replace a vehicle, a home, a piece of equipment, or whatever you have insured.
Actual Cash Value – This refers to the real value of an insured property, meaning the replacement cost minus depreciation.
Named Insured – “Named insureds” are the individuals or businesses listed in a given policy.
Assured – It’s a basic insurance term for “insured individual or business.”
Adjuster – You may have heard this one before. An “adjuster” is a person who examines an insurance claim and decides if and/or how much an insurance carrier should pay.
Third Party – A “third party” suffers damages resulting from a policyholder’s actions or negligence.
Exclusion – Specific acts, items, property, locations, or types of damage that aren’t included in an insurance policy are called “exclusions.”
Liability – This insurance term basically means “responsibility.” If you are liable for damage, you could officially be held responsible for it and open to lawsuits. Liability insurance helps cover the cost of litigation and claims. For instance, suppose your auto insurance policy has $100,000/$300,000 in bodily injury liability limits. That’s how much money is available to others to cover medical expenses if you injure someone in a car accident.