Insurance is confusing! The terms that are used in the insurance industry can be difficult to understand and make it more confusing to understand what your insurance agent is saying. Let us help break it down.
Let us start at the beginning with coverage. The formal definition of coverage is “The specific protection provided by a policy against the results of the hazards insured against.” In other words, this is the amount of protection you have against a covered loss. For example, if your home burned down this term would apply to the amount that is set to cover your home and personal property.
In order to get coverage, you will want to get a quote. So, what is a quote? Formally, a quote is “The rate at which an insurance company indicates its willingness to assume certain liabilities or provide coverage under an insurance policy.” In other words, it is an estimate of how much money you would pay each month for the type of insurance coverage you are looking to buy. Getting a quote does not mean in any way that you are committed to buying the insurance, it is just a way to find out what it would cost you if you did.
If you did purchase the insurance, you would be paying a premium. Formally, a premium is “a periodic payment by the insured to the insurance company in exchange for insurance coverage.” In other words, premium is just another word for cost. It would be your payment for the insurance and is usually paid in either monthly, bi-annually, or annual installments.
In the event that you experienced an accident or had damage, you would want to file a claim. Formally, a claim is “a demand by a person seeking to recover from a loss that may be covered by an insurance policy.” In other words, it is a fancy way of saying that you, the insured, would ask your insurance company, the insurer, to pay for damages to your insured product. Filing a claim is the act of asking the company to pay for the damages. Whether or not they will, depends on the type of coverage you purchased.
This is where exclusions come in. Formally, exclusions are “specific losses not protected by the policy.” In other words, these are specific incidents in which you do not have coverage under your policy.
Another term that we have used a lot in this article is policy. Formally, a policy is “a contract between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay, in exchange for a premium. The insurer agrees to pay for loss caused by covered perils under the policy language”. In other words, it is a contract that outlines the amount of coverage provided for a covered claim.
We know that insurance can be complicated. With Gannon Associates Insurance, you have a whole team of dedicated professionals taking care of your insurance needs. We take the time to get to know you, learn about your unique needs, and identify potential risks that you may face. We then match you with the companies that may fit your individual needs. We are committed to creating custom personal insurance plans for our clients.
Give us a call at 844-GANNONS or visit us at www.gannonassociates.com to get the conversation started today!