Let’s face it: The insurance world can be confusing. At Lindow, we live in it every single day — and we still understand why reading your insurance policies and updating your coverage isn’t usually at the top of your list of fun things to do.
Who do you trust when faced with so much contradicting information? How can you guarantee that you’re getting the right coverage at the right price? Why is every document filled with so much jargon?
Understanding a few key insurance terms can make conversations with your agent — and any independent investigations into your insurance policies you do on your own — considerably easier as you move forward.
Read on for an explanation of some of the most common insurance terms.
A brief insurance term glossary
- Insured: When you get an insurance policy, you are the insured (and likely your family members as well). This term refers to the people protected when a claim arises.
- Insurer: The insurer is the company actually providing your insurance — in short, your insurance carrier.
- Coverage: Your insurance coverage is the protection you get against financial loss that is outlined in your insurance contract. Your independent insurance agent can help make sure you have the right amount of coverage for your unique situation.
- Policy: Your insurance policy is a formal, written contract that outlines your insurance coverage.
- Rate: Your insurance rate determines your insurance premium — when multiplied by a limit of insurance or measure of exposure, it gives the number you pay for your specific amount of coverage. Your agent can help explain what this looks like in your unique situation!
- Claim: An insurance claim is what you file when you suffer a loss and want your insurance company to pay for it. Your insurance provider doesn’t automatically know when you suffer damages, so you have to go through the claim process to tell them.
- Adjuster: A claims adjuster, sometimes called a claims handler, is someone who will investigate your insurance claim to determine if it will be covered by your provider — and how much your insurance carrier will pay you.
- Damage: Damage is defined as physical harm to your property, such as the actual dent in your car after a vehicular accident or the shattered window after a tree falls from your yard.
- Damages: Damages, not to be confused with physical damage, refers to the money that someone is legally obligated to pay someone else after an accident occurs.
- Deductible: Your insurance deductible is the amount of damages or loss that you are responsible to pay before your insurance company steps in to take care of a claim. The higher your deductible, the lower your premium.
- Premium: An insurance premium is the amount of money you pay your insurance company to provide coverage in case a claim arises, usually on a monthly basis. Your premium has an inverse relationship with your insurance deductible.
- Limits: Limits are the maximum dollar amount of protection you have for specific coverages. It’s important to make sure your coverage limits align with your unique risks!
- Loss: Loss refers to the damage sustained by the insured (you or your family) that your insurance company agrees to cover after a claim.
At Lindow, it’s our goal to make your insurance process as easy as possible. We don’t just want you to tolerate the process of getting the right coverage — we want you to enjoy working with your agent. We’ll get to know you on an individual basis to make sure you understand your policies and are comfortable with every document you sign.