Have you ever stumbled across an insurance term and thought to yourself… huh? You’re not alone. Rather than opening countless new search tabs on your smart device, we have launched a brand-new glossary series to clarify insurance jargon. Today is dedicated to the basics. Here are a few general terms that will likely appear in your next insurance conversation.
Coverage Forms: Insurance companies use Coverage Forms to structure coverage conditions and exclusions. This helps everyone know which losses are included in your policy. For example, a Property Coverage Form will list which perils (damaging events) your policy will cover. In general, there are three types of coverage forms:
Dec Page: Short for Declaration page, this is a document summarizing your insurance coverage. These are often found on the front of your policy, provided by your insurance carrier. They outline essential information like limits, deductibles, named insured, endorsements, and more. Any time you’re shopping for new insurance, you will often be asked to submit your current Dec page.
Deductible: This is the amount of money a policy holder must pay out of pocket before the insurance company provides financial aid. You often get to choose your deductible when you purchase your insurance policy. Typically, the higher the deductible, the lower the premium (what you pay to have coverage in the first place).
Elimination Period: Commonly found in Medical or Disability Insurance, this is sometimes referred to as the “Waiting Period.” This is the time between an injury/illness and when insurance coverage kicks in. This allows the insurance company to avoid policy misuse and vet the need.
First-Party Claims: A First-Party Claim is when the policy holder makes a claim against their own policy. In other words, if an accident occurs, a claim is initiated by the policy holder and for the policy holder. One very common reason for these types of claims are uninsured/underinsured car accidents. If someone hits you and doesn’t have proper coverage, you will most likely need to initiate a First-Party Claim.
Liability: Liability refers to mishaps that happen because of you, your car, home, family, or property. The person at fault for these accidents is also financially responsible for the damage, medical bills, legal fees, and more. Liability insurance is foundational to every insurance policy and can financially step in on your behalf if you cause an accident.
Probationary Period: Commonly found in Medical or Disability Insurance, this is a set amount of time that allows insurance companies to complete their vetting process after you apply for coverage. During this time, you may not initiate a claim, meaning your risks are not yet covered.
Third-Party Claims: If you’re involved in an accident that is not your fault, you can file a liability claim against the other party’s insurance. Similarly, if you’re responsible for the accident, and cause injury to another person, that individual can file a liability claim with your insurance. These would be considered Third-Party Claims.
Need further clarification on any of these terms? We are just one phone call or email away!