Simplifying Insurance Jargon

Each industry or field has its list of words that are exclusive to that industry. The words are used by experts to communicate effectively. So here we will simplify some of the insurance jargon.

Also, without knowledge of those industry specific words, it’s then hard to for an “outsider” to grasp the concepts that auto insurance experts will be discussing. So to bridge the gap between a layman and a car insurance expert, some of the industry’s jargon is simplified below.

Policyholder – Insurance Jargon

An individual or entity that buys insurance coverage from an insurance company.

Policy

A written contract between a policyholder and an insurance company. Importantly, it stipulates the insurance coverage type and how much the insurer will pay when a claim is made.

Policy term

That’s the period in which a policy is active.

Premiums

The amount of money a policyholder pays monthly or yearly to maintain a policy.

Ombudsman

A regulatory board that settles disputes between policyholders and auto insurance companies.

Claim

A request made by a policyholder to an insurance company for compensation because it is in line with the terms and conditions of his/her policy

Claimant – Insurance Jargon

A person or entity (usually a policyholder) that files for an insurance claim.

Risk

A policyholder’s probability of submitting an insurance claim. Therefore, in most cases, the higher the risk, then the higher the number of premiums levied on the policyholder.

Agent – Insurance Jargon

An individual that sells insurance policies on behalf of insurance companies.

Underinsured

A policyholder is underinsured if his/her insurance does not fully cover the highest amount of possible damage or loss.

Write-off

A vehicle is considered to be a write-off or totalled if it is damaged beyond repair or if it costs more to repair than to buy.

Cancellation

The termination of an insurance policy by an insurance company or policyholder before it expires.

Depreciation

The reduction in value of a fixed asset such as a vehicle or building due to wear and tear. Also, a vehicle depreciates every time it is driven.

Loss

The amount of money that an insurance company pays whenever a valid insurance claim is paid out.

Amendment

An alteration to the outline of the original insurance policy contract.

Commission

An amount of money expressed as a percentage of the premium paid to an agent by an insurance company as compensation for services rendered.

Arbitration – Insurance Jargon

A method of settling a dispute between two parties through an impartial third party. Significantly, the Ombudsman arbitrates disputes between policyholders and insurance companies.

Coverage

The benefits and protection granted to a policyholder by an insurer for having an insurance policy.

Inception date

The date on which the coverage of an insurance policy begins to be in effect.

Expiration date

The date on which the coverage of an insurance policy ceases to be in effect.

Fraud

The act of presenting a false claim or lodging a falsified claim with the intention of receiving funds from an insurer. Importantly, it is also a prosecutable criminal offence.

Anti-theft device

It’s an active or passive device that prevents the theft of cars and can result in the policyholder paying low premiums.

Primary residence

It’s the place where the policyholder will mainly live during the length of the policy.

 

Complete the form on this page to get a FREE car insurance quote

All info was correct at time of publishing January 13, 2019