It’s a safe bet that, at some point in your life, your home- or auto-insurance policy is going to be used — whether you’re rear-ended on your way to work or a kitchen fire claims your new cabinets. Here are some basic insurance terms that can help you communicate when you need to file a claim.
- Policy: The written contract stating the conditions of your insurance coverage.
- Agent: The person who sells and services insurance policies.
- Adjuster: A person who investigates claims and recommends settlement options based on estimates of damage and insurance policies held.
- Claim: A demand made by the insured, or the insured’s beneficiary, for payment of the benefits as provided by the policy.
- Indemnity: Restoration to the victim by payment, repair, or replacement.
- Coverage: The scope of protection provided under an insurance policy. In property insurance, coverage lists insured perils (the cause of a loss, e.g. fire), properties covered, locations covered, individuals insured, and the limits of indemnity.
- Coinsurance: Property insurance requires policyholders to carry coinsurance — insurance equal to a specified percentage of the value of property — in order to be eligible for full payment on a loss. Read more about insuring to value at grinnellmutual.com.
- Actual cash value: Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old sofa will not be replaced at current full value because of a decade of depreciation.
- Qualifying event: An occurrence that triggers an insured’s protection.
- Deductible: Amount of loss that the insured pays before the insurance kicks in.
For more information
An extensive list of insurance terms defined is available from the National Association of Insurance Commissioners.