When dealing with insurance policies, whether it's personal coverage, business insurance or employee benefits, there are many terms that come into play that describe concepts, tools and policy types that are unique to the industry. This specialized vocabulary can be confusing, particularly in cases like when you are trying to determine the difference between market value and replacement value. While your best strategy is to have your J.P. Perry agent help guide you through technical and complex policies, we have listed some of the more used terms along with their meanings that you will find within insurance policies.
Some Of The Most Used Terminology
Appraisal: An assessment of the value of something, often by an expert.
Actual cash value: The amount you paid for something minus the amount it's depreciated.
Liability insurance: A type of policy that protects you if someone else gets injured or their property is damaged, and it's your responsibility.
Beneficiary: The group, individual, trust, or charity that is named to receive any benefits from your life insurance policy.
Claim: When you experience a loss covered by your insurance policy and make a formal request to receive benefits.
Deductible: This is the amount you must pay out of pocket before your insurance benefits kick in.
Peril: The specific potential causes of damage or loss covered by your insurance policy.
Premium: This is the amount you pay to maintain your insurance policy each month, and is based on your level of risk.
Reinsurance: When an insurer purchases insurance to protect their own risk.
Replacement cost: The cost of replacing something without taking into account its depreciated value.
Risk assessment: When you work with an insurer to determine your level of personal or business risk and to decide the cost of your policy.
Umbrella policy: This type of policy can cover costs after your regular policy has been exhausted, or cover perils that may not be covered by your primary policy.