Insurance is a deep and complex field with myriad terms and formulas that even the most seasoned insurance professionals need reminding of, and even then some things just sound like gibberish. Fortunately you don’t need an underwriter’s grasp of Loss Control Reports or attractive nuisances. No one is ever going to ask you if the “Specified Perils” in your marine policy include pilferage or petty thievery, but if someone did happen to ask such a question you should check them for a parrot and peg-leg because there’s a good chance you’re talking to a pirate.
While it’s true that the average person will never need to know 95% of the ins-and-outs of the insurance industry and the jargon that comes along with it, there are going to be times where knowing a thing or two comes in handy—like insuring your home, business, or life. Although there are many types of insurance policies that come with their own special terms or include concepts that aren’t always found in other policies, there are going to be some common terms that you’ll find in almost every corner of the insurance realm.
So if you don’t know your PIP from your PAP or can’t tell an expiration date from an experience rating, don’t fret. Here are some of the most commonly used and need-to-know terms you’re likely to come across on your search for the right coverage:
Premium – This is the amount you pay for your policy. This will usually be paid on a monthly basis over a twelve month period. Similar to a gym membership, you will pay this monthly premium whether you use your policy or not.
Insured – An insured is someone who is named on and covered by an insurance policy. This could refer to a person, persons, property, or any entity that is entitled to the benefits of an insurance policy.
Deductible – This is the amount you are expected to pay before your insurance policy will pay on any given covered loss or service. Deductibles are applied in different ways depending on the type of insurance policy you are using. If the cost of the covered service is less than your deductible, you pay that entire cost.
Claim – A claim is a notification to the insurance carrier that you are requesting reimbursement for a loss covered within the terms of your policy. This could be auto insurance, health insurance, or any other insurance. A claim is what you file when you intend to actually use the insurance you carry.
Liability – This is a type of insurance policy that you may use in the event that you are held legally responsible for a loss or losses to third parties.
Copayment – Often referred to as a copay, this is a fixed amount which an insured pays for covered services.
Coinsurance – Coinsurance refers to a percentage an insured may pay for costs of covered services after the deductible has been met. The insured pays a much smaller amount while the carrier covers the lion’s share of the cost. While this is similar to a copayment, the distinction is made in the amount owed. Coinsurance is a percentage of a bill, while a copayment is a flat fee regardless of the billed amount for services.
These are simply a few of the terms and a bit of the lingo you are going to come across while searching for and actually using insurance policies. There are many more, and it can be a challenge just remembering all of them, but that’s exactly why your team at Cooksey Insurance Agency is here. Gives us a call today with any questions! We’re looking forward to it.