Insurance jargon can be complicated or confusing if you’re not sure what everything means. To help you better understand insurance policies, payments, agents, and more, we’ve compiled a mini-glossary with some keywords that pop up often when discussing insurance plans.
Actuary - a professional who assess risk and deals with financial implications of uncertainty in relation to insurance. Actuaries evaluate the probabilities of events and give a value to their potential outcomes in order to minimize financial losses if said event were to occur.
Agent - a professional who sells insurance. There are two types of agents: exclusive agents, who represent only one insurance company, and independent agents, who are self-employed. Insurance companies that use exclusive agents are called direct writers. Here at Ben Brown Insurance, we have a staff of independent agents, which helps us fulfill our pledge to pursue the policies that will be best suited for your needs.
Annual Statement - the summary of an insurers financial operations for a given year, including a balance sheet, that is filed with the state insurance department.
Apportionment - the process of determining how much each of multiple insurers contribute to cover a loss when multiple insurers cover the same loss.
Appraisal - a survey that determines the insurable value of a property or the amount of a loss.
Beneficiary - in reference to life insurance, the person who is paid when the insured party dies. There are primary beneficiaries (first entitled to the benefits), secondary beneficiaries (entitled if the primary beneficiary is no longer alive), and tertiary beneficiaries (entitled if both the primary and secondary beneficiaries are no longer alive).
Claims Adjuster - a professional employed by an insurance agency that evaluates losses and settles policyholder claims. Unlike public adjusters, these adjusters negotiate on behalf of the insurance company, not the policyholders, and receive part of the settlement.
Deductible - The amount of money you pay directly out-of-pocket for a claim. The higher your deductible, the lower your insurance bill - usually. Whatever your deductible is, you are only required to pay that much on a covered loss and the insurance company covers the rest (up to the amount specified in your policy).
Insurance score - a score, known as your Credit-Based Insurance Score is derived from your credit report. It measures how likely you are to have an insurance claim, not your credit.
Liability limits - the maximum amount your insurance policy will cover for liability. Minimum liability limits are the minimum amount of auto liability insurance your state requires.
Loss of use coverage - the coverage your insurance will pay if your property or car is unusable while it is being repaired. For example, rental car reimbursement is a type of loss of use coverage.
Premium - the total cost you pay for one term of policy coverage. An insurance term usually lasts either six or 12 months.
Rider - adds something to an insurance policy.
Total loss - what occurs when the cost of repair is larger than the current value of your property or automobile.
Umbrella insurance - an additional level of liability coverage that may cover you if your other policies (i.e. auto or homeowners) have used up the maximum amount they will pay.
Underwriting - the process an insurance uses to assess risk and determine the eligibility of a potential customer for an insurance policy.