"Insurance Vocabulary"

Insurance policy
A legal contract between a person buying insurance (a policyholder) and an insurance company.
Premium
The amount a policyholder pays an insurance company for a desired amount of coverage .
Deductible
The portion of loss that you pay before the insurance company pays the remaining cost,
Claim
An oral or written notice to the insurance company of a incidental claim.

"Auto Insurance Terms"

What is a deductible?
A: A deductible is the amount of money that you agree to pay before your auto insurance policy kicks in. Deductibles are designed to cut down on insurance costs by eliminating small or frivolous claims. The higher the deductible you are prepared to pay, the lower your premium will be. Collision and comprehensive insurance policies always carry deductibles.

What is comprehensive coverage?
A: Comprehensive coverage covers the cost of repairs to or replacement of your vehicle should it be stolen, vandalized, involved in a hit-and-run, or damaged in some way. Coverage usually include fire, flood, and falling objects, etc. This is an optional policy.

What is collision coverage?
Collision coverage helps pay for repairs if your car is damaged in an accident caused by you or an authorized driver. This is an optional policy.

What is liability coverage?
Liability coverage insures you against the cost of injury and damage you cause to another in an automobile accident. It's consists of two policies, bodily injury liability and property damage liability. Auto liability insurance is required by Law in virtually every state.

What is uninsured motorist coverage
This policy covers the cost of injury or damage caused by another driver who is not insured. It covers the policy holder, authorized drivers, and any passengers. It usually consists of separate limits for bodily injury and property damage.

What is underinsured motorists coverage?
This policy pays for injuries and damage caused to the policy holder by a driver with inadequate insurance. It typically pays the difference between the at-fault driver's liability limit and the holder's policy limit. There are separate limits for property damage and bodily injury liability. This coverage is sometimes combined with uninsured motorist coverage under one policy.

What is bodily injury coverage?
Bodily injury coverage is liability coverage that insures you against the injury you cause to others in an automobile accident, and consists of two figures. The first limits the cost of injury coverage per person injured, and the second limits the total dollar amount of injury coverage.

What is personal injury protection?
Personal injury protection, otherwise know as PIP, is similar to medical payment coverage. However, PIP usually covers a broader range of events, including medical bills, lost wages, loss of services, etc.

What is medical payments coverage?
Medical payments coverage typically pays the medical bills of the covered driver, family members, and passengers when injured in an accident, regardless of who was at fault. This coverage is required by Law in some states.

What is property damage coverage?
Property damage is the part of liability coverage that insures you against the cost of damage to another persons property caused by you in an automobile accident. Property is defined as cars, houses, fences, etc.

What is no fault insurance?
No fault insurance covers the injury-related expenses of the policy holder in the event of an accident, regardless of who was at fault. Some states impose no fault insurance laws.

What is gap insurance?
Gap insurance is an optional policy that insures the driver of a new car for the difference between the car's financed value and its fair market value. Should the car be totaled in an accident during the first few years after purchase, the owner will be covered for the amount still owed on the car. Because it covers only the difference in value, this is a relatively inexpensive policy.

What is an umbrella policy?
An umbrella policy is an additional liability coverage that extends further than your auto liability limits.

What are split limits and combined single limits of liability?
Split limits of liability provide for separate coverage limits for bodily injury and property damage. A combined single limit policy has one coverage limit for the total cost of injuries and damage. Split limits of liability are much more common.

What is SR-22 insurance?
SR-22 is a form that high-risk drivers may be required to file with the state before they purchase car insurance. It requires the provider to notify the state should the policy be terminated or canceled. DUIs, multiple speeding tickets, and driving without insurance or a valid license are all reasons a SR-22 may need to be filed. The requirement usually lasts for three years after the initial event.

What is emergency roadside assistance insurance?
This is an optional policy that covers the cost of towing or simple roadside repairs like fixing a flat or jump-starting a dead battery. It does not cover the costs of any major repairs that require a garage or service station.

What is rental car reimbursement coverage?
This is an optional policy that helps pay the cost of renting a car while your auto is being repaired.

"Medical and Life Terms"

What is HMO Health Insurance?
An HMO (Health Maintenance Organization) is one of many managed healthcare systems available to Americans to provide health insurance in case of illness or accident. HMO’s are one of the two most popular healthcare systems available in the United States, along with its cousin, the PPO (Preferred Provider Organization).
Participants enrolled in HMO’s pay a fixed monthly fee for their healthcare, which is considered a pre-payment to healthcare to the provider. In return, the participant receives medical services including doctor visits, hospitalization and surgery for no other cost, except a nominal co-payment (usually less than $25).
Each HMO has a network of doctors who participate in the system. When first enrolling in the system, all HMO participants choose a PCP, a primary care physician, from the HMO network who will serve as a caretaker for the enrollee’s future medical needs. The primary care physician (also known as a primary care provider) is the first line of defense, and the first person to call, in the time of medical need (except an emergency). The PCP gives referrals for specialized care and recommends further medical treatment when necessary.

Major medical coverage
A type of Health Insurance that provides benefits up to a high limit for most types of medical expenses incurred, subject to a large deductible. Such contracts may contain limits on specific types of charges, like room and board, and a percentage participation clause sometimes called a coinsurance clause. These policies usually pay covered expenses whether an individual is in or out of the hospital.

Coinsurance
Coinsurance is simply an agreement between you and the insurance company, wherein, you agree to carry insurance on your property in an amount equal to at least 80% (90% or 100%) of its actual cash value (or replacement cost). In return for doing this, you receive a rate credit.

Term life insurance
Term life insurance policies are very popular because of their low cost and relatively long term of coverage. These policies provide a low cost way to get maximum insurance protection for a set period of time at a fixed cost. The premium rate you pay for term insurance is guaranteed to remain the same low amount for the duration of the term of coverage selected. Many insurance companies offer term insurance policies for a periods of 5, 10, 15, 20 and now even 30 years.

Face value
It is important to understand the terms of any insurance policy that you are considering before making a purchase. Term insurance policies build no cash value. They pay a benefit only if you die during the term of the policy coverage. If death occurs, the beneficiary collects the face amount (death benefit) of the policy income-tax free. Premium rates for renewals of these policies will normally increase at the end of the guaranteed policy period. Term insurance policies require that you furnish evidence of insurability at renewal to qualify for these rates.

Cash-value life insurance
The principal objective of cash value life insurance is the same as with term insurance: to create an immediate estate should the insured die. The cash value in the policy can also be accessed through loans or withdrawals for emergencies or other needs. It is important to remember that loans or withdrawals of a policy's cash value will reduce the policy's death benefit.

Whole life insurance
A permanent life insurance policy is any plan that is guaranteed to pay out at some point, rather than expire. Whole life insurance is the most basic and consistent permanent life insurance policy you can buy.
Under a whole life policy, the premium and death benefit you are quoted at your policy's start remain the same throughout the policy's life. But because your insurer will be investing your premiums, the policy may also may accumulate a cash reserve. These funds can be put to use as premiums, reinvested, or saved - it's your choice.
Whole life insurance can be considerably more expensive than its limited cousin, term life insurance, but the death benefit is guaranteed as long as premiums are met.