Insurance can be filled with A LOT of jargon and mumbo-jumbo. We all hear insurance-y terms tossed around in ads, tv shows, and online, but do we know what they really mean? Here are few quick, basic insurance terms you should know:
Actual Cash Value aka ACV – A method of valuing property or possessions that takes into account depreciation. For example, say you insure your television at actual cash value. That television was purchased 5 years ago for $800. If that TV is stolen and a claim is made, the actual cash value will be calculated, and since it’s 5 years old, its not really worth the full $800 originally paid. The flip-side of this would be to value something using replacement cost (below).
Appraisal – The estimated value, or estimated extent of damage, provided by a qualified professional. Used to determine value at the time of a loss.
Bodily Injury Liability – If you are found liable (or legally responsible) for an accident, this coverage pays for the costs associated with injuries to the other person or people involved including medical bills, lost income, etc.
Claim – A request from a policyholder (ie. you!) to an insurance company for compensation of losses that are covered by their insurance policy.
Claims Adjuster – A professional who investigates clams and recommends settlements.
Collision Coverage – Coverage that protects your car from accidents. This is what will pay your repair costs if your vehicle is damaged in an accident.
Comprehensive Coverage – Additional auto insurance coverage that protects against damage to your car NOT caused by a collision like: fire, natural disasters, falling objects, animals, theft or vandalism.
Deductible – The amount you need to pay before your coverage steps in and begins paying. For car insurance, you pay a deductible for each claim.
Depreciation – Decrease in value based on age, use, or other factors.
Endorsement – An amendment or addition to an insurance policy that changes, removes, or adds coverage or terms. May also be referred to as a “rider.”
Lapse – A period of time without insurance coverage, usually due to lack of payment, cancelled policies, etc.
Liability – Something that you are held accountable or responsible for. If you injure someone in a car accident and you’re at fault, you are liable for their medical and car repair bills. If you have a tree on your property that is rotten or has split and is about to fall over, that is a liability. When you’re the friend who always gets in fights with strangers when you’re out for the night. You’re a liability…… kidding!
Limit – The maximum amount an insurer will pay in the event of a covered loss. If the limit on your auto insurance policy is $250,000, the company will only pay up to that amount for a single claim.
Premium – The amount you have to pay annually to your insurance company to keep your policy active. The total is usually broken out into monthly payments.
Perils – Dangers that are listed and covered by an insurance policy.
Replacement Cost – A method to value property or possessions. Sometimes referred to as “RCV”, it is the amount of money it would take to replace your damaged or destroyed item with the exact same or a similar home in today’s market. This is the alternative to ACV.
Umbrella Insurance – An insurance policy that provides coverage for liability claims that aren’t fully covered by your standard insurance, usually larger claims and lawsuits.
Uninsured Motorist Coverage – Coverage that protects you from other drivers with no insurance or very minimal insurance coverage. Bodily injury coverage will help pay for you and your passenger’s medical costs.
Have a term that you hear ALL. THE. TIME. and want some clarification on? Have any other questions? Or if you just want to learn more about the kind of coverage and service you get as an R&G client, fill out the form below and say hi!
Mel Meyerhans | CISR Elite
Consultant | Personal Insurance
Mel holds a CISR Elite designation – A Certified Insurance Service Representative Elite – which showcases her exceptional insurance education and depth of knowledge. Joining RogersGray in 2013, Mel is a personal insurance consultant focused on online sales and loves helping clients get the best coverage for their lifestyle.
You can connect with Mel on LinkedIn or on Facebook.