What do these Insurance Jargons truly mean?

by Ronel Forbes

November 11, 2021

It’s critical to be precise, especially when dealing with insurance difficulties. You should understand what you’re insured for, when you can utilize your coverage, and what your duties are in the event of a loss or claim.

However, insurance phrases can be difficult to understand, and difficulties can develop if you don’t know what the word or phrase means.

The good news is that many of the most commonly used insurance terminologies are simple to understand. When it comes to making insurance decisions, you’ll feel more assured once you’ve mastered these broad terminologies.

Every sector has its own lingo, and the insurance industry is no exception. As you explore insuring yourself or your belongings, you may come across certain crucial insurance definitions and words.

Commonly used Jargons in Insurance

Accidental damage

As opposed to fire, theft, or risky behavior on your side, damage produced by accident. Each claim for accidental damage is normally subject to an insurance excess.

Agreed value

At the commencement of the insurance period, you and the underwriters agree on the value of the insured things. When a claim is made, this value is used.

All risks

The broadest form of insurance coverage is all-risks coverage. The risks covered are not mentioned, but the exclusions are, and all unidentified hazards are automatically covered.

Antique automobile

Antique vehicle aficionados have restored, maintained, or conserved a private passenger automobile that is 25 years old or older. Classic car insurance can cover antique, vintage, and classic automobiles.

Appraisal

An authorized person’s estimate of the property’s value or the level of property damage. Appraisals are used to estimate the value of a property after it has been damaged or destroyed.

Arson

Property destruction that is done on purpose and with malice.

Buildings insurance

Buildings insurance covers the fabric of the building as well as the cost of damage to your property’s structure. The roof, walls, ceilings, flooring, doors, and windows are all included. Garages and fences are examples of outdoor constructions that are included.

Business interruption

Covers money lost while your business is closed or you are unable to trade. Also included are the costs of repairs to get your business up and operating again.

Cancellation

Terminating an insurance contract before the policy’s scheduled termination date.

Claim

A request for compensation from an insurance company by a policyholder or a third party for damages covered by insurance.

Claimant

A person who asks the insurer for a payout for insured losses.

Classic automobile

A rare or historic private passenger car that is at least 10 years old (age varies by state) that has been restored, maintained, or conserved by classic car enthusiasts. Classic automobile insurance covers these types of vehicles.

Coastal area

A site near a body of water, such as an ocean, gulf, bay, harbor, inlet, sound, bayou, or the water that surrounds a barrier island (but not limited to).

Collision coverage

Damage to your car caused by a collision with another vehicle or object is covered (subject to deductible).

Coverage that is comprehensive (also known as Other than Collision Coverage)

Damage to your car that is not caused by a collision or a breakdown (subject to deductible). Theft, vandalism, weather occurrences, and animal encounters are all examples.

Declarations page

A page of your policy – usually the front page – that contains basic information like as the policyholder’s name, the property or vehicles insured, coverages, and premium amounts. It’s sometimes referred to as the “dec[k]” page in casual speech.

Deductible

The amount that a policyholder agrees to pay before an insurance company will pay for a loss. There may be multiple deductibles for different sorts of losses, such as wind, hail, hurricane, earthquake, all-peril, collision, and comprehensive, in addition to the normal deductible.

Depreciation

A loss in property value owing to wear, age, or other factors. Compare the real-world cash value.

Endorsement

A statement that modifies, deletes, or adds coverage, terms, or provisions to an insurance policy.

Exclusion

An insurance policy provision that excludes and/or limits certain coverages.

FR-44/SR-22

If you are guilty of certain traffic infractions or driving under the influence of alcohol or drugs, you must file a legal document. To certify that you have motor liability insurance, the state may require you to file a FR-44/SR-22 form.

Both are legitimate documents that demonstrate financial accountability, although they have various titles depending on where you live. When a FR-44/SR-22 policy expires or is canceled, an insurance company will provide a FR-46/SR-26 form, which certifies the policy’s cancellation.

Garaging location

The location where a car is normally stored or garaged, which may or may not be the same as the policyholder’s primary residence or policy mailing address. Students who drive themselves to school 100 miles or more from home should use their school address as their garaging address.

Gated community

A gated housing complex with restricted admission.

Hazard

A condition that causes or increases the likelihood of a loss. A wood-burning stove, for example, may enhance the risk of a fire-related loss.

Insurable interest

A consideration of the value covered by a policy. If a loss occurs to the person or property they’ve insured, a person with insurable interest will be put in a real bind.

People, for example, have an insurable interest in their own lives and property, but they rarely have an insurable interest in the lives or property of their neighbors. In order for an insurance contract to be lawful and valid, it must have insurable interest.

Liability coverage

Coverage for personal harm or property damage to those that you are responsible for (as provided by your policy and state law).

Mitigation

Steps made to avoid or limit the amount of loss or the likelihood of it occurring.

Motor vehicle report (MVR)

A person’s driving history, including details of any accidents or violations, as submitted to a state’s motor vehicle agency.

Non-standard carrier

An auto insurance company that accepts high-risk drivers due to its underwriting rules.

Personal injury (Homeowners insurance)

False arrest, libel (written), slander (verbal), and breach of privacy are all examples of personal injury to others.

Premium

The fee charged by an insurance company in exchange for providing coverage.

Real property

Land and the permanent structures, such as buildings, outdoor fixtures, machinery, and equipment, that are erected on it.

Rental reimbursement (auto)

If your automobile can’t be driven due to a covered loss, this coverage can help pay for alternate transportation (such as the bus, metro, or another car). This is also known as Loss of Use, transportation expense, or rental car expense in your insurance.

Renters Policy (also known as Tenants Policy)

A coverage that protects a tenant and some of their personal belongings.

Warranty

An insurer’s stipulation in a policy that is exceedingly strict. In the event of a breach, the insurer has the right to refuse liability.