Cancellation: The termination of a policy before its expiration date at the request of the insured or insurer. Depending on the type of insurance or policy terms, there may be monetary penalties for cancelling the policy early.
Claim: The amount requested by an insured party (claimant) following a loss that may be covered the policy.
Claims Adjuster: A specialist who investigates and settles a claim on behalf of the insurer. They can approve the claimant’s full claim, an adjusted amount or suggest to the insurer to deny it.
Coverage: The specific protection offered by a policy. Depending on the coverage, a full claim may not be awarded.
Damages: The monetary award to a party who suffers bodily injury or property damage when another party is responsible.
Deductible: A dollar amount owed by the insured before policy coverage begins. Policies with high deductibles tend to have lower monthly premiums, while low-deductible plans tend to have higher premiums.
Fraud: The false representation of facts, with the intention to deceive an insurer and/or another party. Depending on the jurisdiction and severity, insurance fraud can bring heavy legal penalties, even imprisonment.
Indemnify: The restoration of the insured to their financial position prior to a loss.
Package Policy: Unlike bundling, which combines different types of policies from the same company, packages combine related policies or coverages sold as a single policy. For example, homeowners insurance may include coverage for theft and fire, while hurricane insurance includes flood and wind coverage.
Policyholder: A person who owns an insurance policy but not necessarily the insured party or beneficiary.
Preferred Provider Organization (PPO): In health insurance, an organization that an employer or insurer enters into a contract with for discounted services. Therefore, organizations considered “out of network” may not be eligible for claims.
Premium: The payment made to an insurance company in exchange for coverage.
Rider: An amendment or modification to a policy.
Underwriting: The insurer’s process of evaluating and rating risks, as well as the amount of coverage offered. Underwriting is performed by an underwriter who makes the decision to accept or deny a policy application. For homeowners insurance, this typically occurs following the home appraisal.
Even with a baseline knowledge of an insurance policy, working with a trusted insurer who is willing to work with you directly to understand your options, existing coverage or claims is important for a positive experience.
.
