An insurance policy protects you from the unexpected, but figuring out what your coverage includes isn’t always easy. Many policies are filled with industry jargon and technical terms that make them difficult to grasp, especially for those buying protection for the first time. Get to know the terms below to ensure you get the right kind of protection.

Understanding Insurance Terminology

1. Coverage Limit

Every policy, whether it’s car, home, or umbrella insurance, will only pay a certain amount on any claim. If the damages from an incident exceed the coverage limits of your policy, you might be forced to pay the remainder out of your own pocket.

2. Deductible

The deductible is the amount you’ll have to pay before coverage kicks in. For instance, if your auto insurance has a $500 deductible and a fender bender causes $1,500 in damage, your insurer will only cover $1,000 of the cost of repairs.

3. Liability

If you cause an auto accident or someone is injured in your home, you could be held legally responsible for losses. Liability coverage, usually included with home and auto policies, will protect you from lawsuits related to these damages and cover your legal expenses.

4. Exclusions

Almost every policy specifically excludes damage caused by certain events. For instance, the standard home insurance policy excludes flood, earthquake, and mudslide damage, so you’ll need to purchase an additional amendment for maximum protection.

5. Fair Market Value

Many insurance policies are based on the current market value of your property — not what you originally paid or what it would cost to replace. When it comes to home insurance, the current value of a home may not be enough to rebuild after a total loss.

For over a century, Reed Brothers Insurance has been the trusted source of coverage for customers throughout Kentucky's Lexington County. Their agents work with a variety of carriers and will be glad to find options suited to your needs, explain confusing terms, and help select the coverage that’s right for you. Visit them online for a look at the policies they offer, get more coverage and safety tips on Twitter, or call (859) 253-2728  to request a free quote.