It almost goes without saying, but you need insurance. Whether for your personal assets, such as your home and vehicles, or for your business, you should have protection from whatever life throws at you. One of the problems many people have when purchasing insurance is understanding just what it is they are talking about. This can lead to not getting the right coverage, paying the wrong amounts, or any number of complications. Here are some common insurance terms that you should know, along with an explanation. This will make your insurance experiences much easier for you.
Policy
Your insurance policy is the document that outlines all of the terms and conditions of your coverage. It will clearly state what you are protected against, and what you are not.
Insurance Claim
An insurance claim is what you submit to your insurance company for compensation or coverage. Your insurance company will have a process that you have to follow in order to properly submit your claim.
Liability
LIability is the responsibility for damage or injury as a result of a certain event. If you run a business, then it’s important that you have tailored professional liability coverage to protect yourself from losses if you are found liable.
Premium
How much you pay to the insurance company to provide your coverage. There are several factors that come into play when determining your premium.
Deductible
How much the covered party must pay before the insurance company will provide compensation. In most cases the higher a deductive is, the lower the premium is.
Replacement Value
This can take one of two forms. You can either be covered by a comparable current model of whatever it is that is damaged, or the cash value. If you choose cash value, then your compensation will account for depreciation. A 10 year old vehicle will not have the same replacement value as a brand new one, for example.
Exclusions
Exclusions are things that are not covered under your policy. It’s always important to check what the exclusions are in your policy in case there is something that you may need, or so that you know to take greater care. These can include pests, wear and tear, and human error.
Peril
A peril is something that can cause the damage for which you need compensation or replacement. This can be an accident, fire, flood, or another natural disaster. Always check to see what perils are covered and which are exclusions.
Guarantor
A guarantor is someone who will vouch for your version of events when you are making a claim. They also can provide assurances to the insurance company that you will be able to pay your premiums. This is most often the insured person, but it can be a third party if you are incapacitated.
Quote
When you are searching for insurance coverage, you must get a quote from all possible insurance providers. A quote is a guide to what you can expect to pay with that provider.
Don’t go in blind. When dealing with insurance, make sure that you have a grasp of these 10 key terms so that you can make the best insurance choices.