As you experience different life events and take on more financial responsibility, you will need many kinds of insurance to help protect your economic situation and secure a stable future. However, shopping for coverage can be challenging, as it’s likely you will come across a number of words and phrases you’re unfamiliar with. This is why it’s important to ask an insurance company for clarification on basic terminology used by the industry. Expanding your insurance vocabulary with the following definitions will allow you to make more informed coverage decisions.  

7 Key Insurance Terms to Know 

1. Claim 

A claim is a notification policyholders file with their insurance company when a loss has been suffered. This is how you will let the provider know you need funds to help pay for damages you’ve incurred as the result of a covered disaster. 

2. Deductible 

When an insurance policy is chosen, a deductible amount must be set, which is how much the policyholder is willing to pay out-of-pocket for damages in the event they need to file a claim. The deductible has to be satisfied before the coverage kicks in to take care of the balance.  

3. Endorsement

Policy endorsements are written forms attached to an insurance policy with the intention of altering the insured’s coverage, terms, or conditions. These are often purchased when additional coverage is necessary.

4. Exclusion 

Exclusions are every type of risk that is not covered by an insurance policy. Before selecting coverage, it’s vital to understand what conditions and disasters an insurer will not pay out on to prevent having gaps in the protection. 

5. Insurability

This refers to the degree an individual or company is deemed insurable by a company. Every provider will assess the potential risk to determine how likely it is you will file a claim. Each company takes several factors into consideration when evaluating insurability. 

6. Peril

Perils are specific events covered by an insurance policy, such as fire, windstorm, lightning, hail, and theft. If you have a named-perils policy, you will only be covered for the risks explicitly named in the policy, so it’s imperative to know what is and isn’t included to avoid costly surprises.

7. Premium

The payment a policyholder makes monthly, bi-annually, or annually to maintain their insurance coverage is known as the premium. This is how you ensure the insurance company will pay any valid claims you end up having to make. 

The insurance decisions you make will have a significant impact on your long-term financial health. The more educated you are during the shopping process, the easier it will be to determine your coverage needs. For assistance finding a suitable policy from a reputable insurance company, look no further than Somers Agency LLC. They offer residents throughout Lorain County, OH, a variety of high-quality personal and business coverage options to fit whatever your unique circumstances may be. Contact them at (440) 324-3447 to request a quote or visit their website to view a complete list of products they offer.