Frequently Used Personal Lines Insurance Terms and What They Mean

Navigating the world of personal lines insurance can be confusing, especially with the myriad of terms used. It’s crucial to understand these terms to make an informed decision about your coverage.

The following is a breakdown of some commonly used personal lines insurance terms and what they mean.

Premium

The premium is the amount you pay for your insurance policy, and it can be paid monthly, quarterly, semi-annually or annually. Various factors impact the premium amount, including the type and amount of coverage, your age, location and any discounts you may receive.

Deductible

The deductible is the amount you must pay out of pocket before your insurance kicks in to cover a claim. For example, if your policy has a $500 deductible and you file a claim for $2,500, you would need to pay $1,000, and the insurance company may cover the remaining $1,500 for a covered incident, in accordance with policy terms.

Policy Limit

The policy limit is the maximum amount an insurance company will pay for a covered loss. It’s vital to choose limits that adequately protect your assets. For instance, if your homeowners insurance has a policy limit of $300,000 and a fire causes $350,000 in damage, you would be responsible for the additional $50,000.

Riders or Endorsements

Riders or endorsements are additions to an insurance policy that provide extra coverage or modify the existing coverage. For example, you might add a rider to your homeowners insurance to cover valuable jewelry or art collections.

Claim

A claim is a request you make to your insurance company for payment based on the terms of your policy. After an incident, you may file a claim to receive compensation for your losses or damages.

Exclusion

Exclusions are specific conditions or circumstances not covered by your insurance policy. It’s crucial to read your policy carefully to understand what is and isn’t covered so you can make informed decisions and purchase additional coverage if needed.

Underwriting

Underwriting is the process insurance companies use to evaluate the risk of insuring you. This process determines whether you qualify for coverage and, if so, what your premium will be. It involves assessing factors such as your health, driving record and claims history depending on the coverage you seek.

Personal Lines Insurance in Athens, AL

Understanding these terms can empower you to choose the right insurance coverage for your needs, ensuring you are well-protected in various situations.

Always take the time to read your policy documents and ask the agents at SOS Insurance Agency for clarification on anything you don’t understand. Contact us today to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.