There are a number of different terms used in the insurance world. Below is a brief explanation of some of the most used insurance terminology.
When you are making a change to your policy this is called an endorsement. When you purchase an additional coverage on your policy your agent will endorse it accordingly. Here is an example of some of the endorsements available:
When a peril happens to an insured, the insured can file a claim with their company. The claims process should be quick and efficient and is one of the biggest factors considered when choosing a company. Claims are very serious and should not be made frivolously. They can and will impact your insurance premiums for several years. If you are unsure of whether or not something is covered you should inquire with your agent. If you file a claim and it is not covered it will still go into your insurance history as an unpaid claim and this can still negatively effect you. Why you ask? The most important factor when you are rated is claims frequency. This can make you ineligible for many of the best rated insurance companies. So if you have 4 or 5 unpaid claims in a 5 years window you are considered a higher risk with a propensity to file a claim even when it may be unnecessary.
A peril is the cause of the loss. There are several different types of perils that are covered under a standard home policy, such as:
There are also a few different types of insurance policies. There is a ‘named peril’ and an ‘open peril’ or ‘all peril’ policies. Essentially a named peril will cover you only for the perils that are listed within your policy. An open peril or all peril policy will cover everything except what is specifically excluded from your policy. The open peril policy is more comprehensive and is the preferred policy.
Most commonly seen in auto insurance terminology, comprehensive can be used when explaining what type of homeowners policy you have. You may hear things such as “We offer a comprehensive policy”. This simply means complete coverage, or including all aspects of coverage. In auto insurance, this is an additional coverage that can be purchased to cover the vehicle itself from all things other than collision coverage.
Being liable for something or someone means that you are responsible. In insurance term personal liability coverage is a type of third party coverage that covers an insured if your are legally responsible to pay for damages to others. You will likely see this word written several times throughout your policy as it applies frequently.