You don’t need to be a lawyer to make sense of your insurance policy.
What’s more, understanding the language used in these contracts helps you get the best products for your lifestyle.
“It’s good to make that practical connection between what could happen and how certain coverages protect you,” said Ray Eng, vice president of insurance sales for AAA Northeast.
This A to Z guide for decoding insurance jargon will get you started.
Actual Cash Value -The calculated worth of insured property at the time of loss or damage. Replacement cost – depreciation = actual cash value.
Beneficiary – The person who receives the payout from a will, life insurance policy, annuity or similar contract.
Captive Agent – An individual who sells insurance contracts for a specific insurer.
Deductible – The portion of the loss you pay for before your policy kicks in.
Endorsement – An addition to an insurance policy that adds to or changes the terms. Also called a rider.
Flood – Not typically included in a homeowners policy, this extra coverage protects your property from floods.
Hazard – A circumstance that increases the likelihood of loss.
Independent Agent – An agent who represents multiple insurance companies.
Liability Coverage – The part of your policy that will pay out if you’re found responsible for someone else’s injuries.
Named Perils – Hazards specifically named in a policy.
Occasional Driver – Someone who is not the main driver of the car he or she usually operates.
Personal Injury Protection – Coverage that pays for the insured’s medical expenses regardless of who is at fault for a crash.
Quote – An estimate of what your insurance premium would be with a given insurance provider.
Renters Insurance – An affordable insurance policy that protects a renter and their belongings.
Standard Risk – Someone who is insurable at standard insurance rates. High- or low-risk policyholders may pay higher or lower rates based on such risk.
Term – The period when an insurance policy is in effect.
Umbrella Policy – Excess liability insurance that could also cover losses not covered by other insurance policies.
Whole Life – A life insurance policy that remains in effect for a person’s entire lifetime with guaranteed cash value and a payout upon their death. In contrast, a term life insurance policy is cheaper but has no cash value when the term ends.
Need more help? Talk to your insurance agent about the specific terms of your policy. AAA.com/Insurance