The ABC's of Insurance

10/14/2020 | Stephanie Marsh

It is very common for industries to have their own ‘lingo’ and the insurance industry is no exception to that.  Insurance terminology can be complex and even intimidating at times.  Our team strives to explain coverages and exposures in easily understood terminology and relatable communication styles to educate our customers what they are purchasing and what it will cover.  The alphabet only has 26 letters, while the insurance industry has thousands of terms, but hopefully this guide serves as a starting place to introduce some common insurance terminology!  As always, if you have any questions, your team at WalkerHughes Insurance is happy to help! 

A is for Arbitration.  Arbitration is a form of dispute resolution between insurance carriers if adjusters reach differing liability determinations during the claims process.

B is for Back-up of Sewer and Drain.  This coverage is not automatically included on a homeowner’s policy, but a very important endorsement to carry.  It provides coverage for back up through sewers and drains as well as overflow of a sump pump or related equipment – even if the equipment suffers a mechanical breakdown. 

C is for Certificate of Insurance.  A COI is an official document confirming insurance coverage is in place and what limits a policy holder carries.  This is often requested by commercial contracts and vendors will ask to be listed as “certificate holders” and receive confirmation of coverage.  

D is for Declarations Page.  Also referred to as the ‘Dec Page’, this is the very first page of your policy containing very useful information such as your policy expiration date, coverage limits, deductible amount, and much more!

E is for Exclusions.  Exclusions are certain provisions in an insurance policy that exclude coverage for specific events.  Often times, you can buy back coverage for certain exclusions in the form of policy endorsements – also an important E word!  

F is for Fiduciary Liability.  Fiduciary Liability policies are designed to protect businesses from claims of mismanagement and the legal liability associated with serving as a fiduciary.  If a company sponsors a retirement or health insurance plan for employees and manages it in any way, they are considered a fiduciary. 

G is for Group Health Plan.  Group Health is a medical insurance policy typically sold to an employer covering a group of members of a company or organization.  It typically provides health insurance to its members at a lower cost since the risk to insurers is spread across the members. 

H is for Hired and Non-Owned Auto.  This extends liability coverage to protect your business when business owners rent, or lease vehicles or employees use personal vehicles to run company errands. 

I is for Independent Agent – that is us!  As an independent agency, we work with multiple insurance carriers and we can compare options to make sure we are providing the best coverage for the best rate to our policyholders.  

J is for Jewelry.  There are a couple different ways to insure your jewelry items.  Most homeowner’s insurance policies include a sublimit for jewelry, $1,500, that applies to covered perils only.  For broader coverage, jewelry should be ‘scheduled’ on your homeowner’s or covered by a personal articles or jewelry floater.  Items would then be covered at full stated value for not only covered perils – including theft, but also mysterious disappearance. 

K is for Key Person Insurance.  This is a life insurance product that allows an organization or business owner to purchase coverage on their business partners or key employees whose absence or replacement would have a direct financial impact on the business.     

L is for Loss of Use.  Loss of Use is the portion of a homeowner’s policy that protects the policyholder in the event the home is damaged or destroyed by a covered peril and they must live elsewhere for a period of time while repairs are being made.  

M is for Multi-Policy Discounts.  It is important to make sure you are making the most of available discounts, and many carriers offer an inventive for bundling home and auto policies with the same company. Questions on that or other discounts that may be available to you, chat with your agent!

N is for Named Insured.  Listed on the policies Declarations Page, the Named Insured is who purchased the policy, who the insurance company is going to protect and who is afforded the broadest coverage under the policy.  There are others that qualify as insureds under the policy, but the Named Insured is the policy’s listed owner.     

O is for Occurrence.  An occurrence is an event that results in a loss and ultimately filing a claim. 

P is for Premises Liability.  This is insurance purchased to protect against exposures and accidents that could happen to those visiting your place of business.  Often called “slip-and-fall” accidents, should a patron fall in your parking lot due to icy conditions or in your lobby, premises liability would provide coverage since they were injured at your location. 

Q is for Quote.  This is the estimate provided by an insurance carrier for their cost to issue the policy.  Often quotes can be subject to additional information being returned by the proposed insured.  As an independent agency, we are able to provide multiple quotations to review coverage and price for our policyholders. 

R is for Risk Management. Risk Management as related to insurance is the process of assessing, minimizing, and preventing accidental loss to a business through the combination of insurance products and resources, utilization of training and implementation safety measures. 

S is for SR-22.  SR-22 is a certificate mandated by a court or local DMV following certain vehicle related infractions or automobile accidents verifying that a motorist has insurance coverage in place at the time of the incident. 

T is for Towing and Labor.  Available by endorsement to many automobile policies, this provides coverage and reimbursement for roadside assistance should your vehicle require towing or labor preformed at the site where your vehicle was disabled. 

U is for Umbrella Policy.  Similar to how umbrellas shield you from rain, an umbrella policy is an additional layer of liability that goes over top of your existing policies should as extra protection should a loss occur that exhausts policy limits.  Umbrella policies are available in both personal and commercial lines.

V is Valuation.  The financial assessment of the worth of an item or property, determining a valuation provides a dollar figure for the assets to be insured.  The insured and the insurer must agree on this figure to determine how much premium is being collected in exchange for how much will be paid to the insured in the event of a loss. 

W is for Workers Compensation.  Workers Compensation insurance exists to insure one of an organization’s greatest assets – its people.  This policy provides wage replacement and medical benefits and protects the employer should an employee become injured on the job.

X is for X-ray.  Policyholders can review their summary of benefits on their medical insurance policies to determine the amount of cost share involved for X-rays and other diagnostic services.

Y is for Youthful Operator.  It is no secret new drivers can be more expensive to insure due to their lack of experience and statistics demonstrating they are more likely to be involved in accidents their first few years on the road.  With that being said, many carriers offer discounts such as Good Student for maintaining a 3.00 GPA and Drivers Training for completing a course that can help absorb some of that cost.

Z is for Zone – flood zone.  Each flood zone describes the flood risk for a certain area and zones are identified to determine the insurance requirements and costs associated.  Which zone your property falls in can have a huge impact on the cost of obtaining flood insurance.