Med Pay? BEEP? Dec pages? Insurance terms explained
Insurance can be very confusing, with different policies for different needs. And to make it even more challenging, it probably seems like insurance websites and insurance documents are written in a completely foreign language.
This is of course why we recommend working with an independent agent – someone who is on your side during the process and can explain everything you need to know.
Even if you work with Point Insurance independent agent, it is good to have some basic knowledge about insurance. Below are definitions for some common terms to help you understand your coverage a little better.
General insurance conditions
- Actual Cash Value: This type of cover pays out according to what an item was worth when it was damaged ̵1; it takes into account depreciation and wear and tear. For example, if you could have sold your couch for about $200 right before it was damaged, that’s the actual cash value, even if a similar new couch would cost $1,000.
- Actual replacement cost: This pays the amount needed to replace a damaged item with a new one (like the $1,000 couch above). It does not take into account depreciation or wear and tear.
- Adjuster: A person who works for an insurance company to evaluate losses and adjust claims.
- Additionally insured: Someone who is not a policyholder but who is still covered by an insurance policy.
- Declaration page: This creates a contract between you and the insurance company. It describes who owns the insurance, which property is covered and for how much, etc.
- Deductible: The amount you agree to pay out of pocket before your insurance cover takes effect. For example, if the cost to fix your car is $2,000, but your deductible is $1,000, you would pay $1,000 of the total cost. Usually, a higher deductible means a lower premium.
- Approval: This is a change to your insurance coverage, usually through a special form.
- Exclusion: Something specifically listed in your policy that is not covered by the policy.
- Responsibility: Your responsibility for damage to other people or property. You buy insurance to protect yourself against liability and other risks.
- Loss of use: When damage from an accident or other cause prevents someone from being able to live in their home or drive their car.
- Med Pay (medical payments): This pays for medical expenses for those covered by your policy in the event of a car accident, regardless of fault. It also covers medical expenses for guests if injured on your property. Still, unless it’s a car accident, it usually doesn’t cover damage someone suffers to their property.
- Premium: The amount you pay for insurance.
- Subrogation: When an insurance company pays a claim and then seeks compensation from a third party who was responsible for causing the damage or loss. For example, your insurance company may pay for your car to be repaired even though an accident was not your fault – and then seek compensation from whoever was at fault.
- Term: Your policy is in force, usually six or 12 months.
- Umbrella: An insurance that provides additional liability protection. It starts when your other policies have reached their coverage limits.
- Underwriting: The evaluation process that insurance companies use to determine whether they will provide coverage to a customer.
Conditions for car insurance
- Aftermarket parts: Vehicle parts manufactured by a company other than the one that originally came with the vehicle.
- Bodily Injury Protection: Covers costs for physical injuries, such as hospital bills or medical care.
- Collision Protection: This pays for damage to a vehicle caused by you or someone else covered by your policy.
- Comprehensive coverage: Comprehensive coverage applies if your vehicle is damaged by something beyond your control, such as a fire or a falling tree.
- PIP (Personal Injury Protection): This pays medical expenses for a policyholder or additional insured and their passengers, regardless of fault, if they are injured in a car accident.
- Uninsured/Underinsured Motorist (UIM): Pays for your damages and expenses if another driver is at fault in an accident but does not have sufficient insurance to cover your costs.
Conditions for homeowners’ insurance
- Additional accommodation expenses: Coverage for expenses above your normal living expenses, like if you have to stay in a hotel because you can’t live in your damaged home.
- Disaster: a disaster, such as a hurricane or tornado, that affects a specific area and results in significant damage.
- Flood Insurance: Typically, standard homeowner’s policies do not provide coverage for floods – they must be purchased separately.
- Home Content: These are the things inside your house that are not fixed to the structure, such as your furniture, appliances, etc.
- Danger: A specifically defined risk, such as hail, flood, wind, etc.
- Scheduled Personal Property: Separate coverage for valuable items, such as expensive jewelry, that exceed the limits of your policy or are otherwise excluded.
If something is not clear when buying or considering insurance, don’t hesitate to ask questions! We’re here to help you get the coverage you need—and make sure you understand it, too.
