A crash course in insurance terms. Simple explanations that will help you better understand your policies.
Agency: A business that helps clients choose, buy and manage insurance policies from a variety of companies.
Carrier: A company that creates and issues an insurance policy.
Claim: A demand for money or services due to alleged injuries or damage. In a liability policy, a claim starts with the filing of a lawsuit or legal proceedings. For other policies, a claim starts as a result of loss or damage to property and equipment or on-the-job injuries.
Claims-made policy: An insurance policy that covers you for incidents that either occur or are reported while a policy is in force.
Conditions: The conditions of a policy identify the requirements of both insured and insurer on procedures, rights, provisions, exclusions, cancellations and changes in coverage.
Declarations: Typically, the front page or pages of a policy that outlines the insured’s name, address, policy number, limits and other key information.
Deductible: The amount the insurer will deduct from the loss before payout. The insured is responsible for this amount.
Endorsements: A supplemental provision that modifies or amends an existing policy’s agreements, definitions, exclusions, conditions or coverage terms.
Exclusions: Provisions in a policy that preclude coverage under certain conditions or circumstances.
Extended reporting endorsement: A feature that can be added to your claims-made professional liability policy that allows you to report claims for an extended period after your policy expires. Also known as “tail” coverage.
Indemnity: Compensation for loss or injuries that have already occurred or a guarantee to repay another party for loss or damage that might occur in the future.
Losses: Damage to the space and equipment used for policyholder’s business or any threats to the financial health of their business. These include liability loss, income loss and property loss.
Policy number: Identifying number assigned to the written contract between insurer and insured.
Occurrence-based policy: An insurance policy that covers you for incidents that occur while the policy is in force, whether you report them while the policy is in force or after the policy ends.
Premium: The actual cost of an insurance policy.
Quote: The estimated cost of an insurance policy.
Subrogation: After payment for a claim, the process of recovering the loss amount from the legally responsible parties.