Understanding insurance jargon can be daunting for both new and seasoned policyholders. At Gambale Insurance Group, your independent insurance agency in Stuart, FL, we believe in empowering our clients with the knowledge to make informed decisions about their coverage. In this guide, we will break down common insurance terms to help you navigate the complexities of insurance policies with confidence.

Common Insurance Terms Explained

Liability Insurance

Liability insurance protects you from potential financial loss if you’re ever found legally responsible for causing injury or property damage. 

 For example, in auto insurance, liability coverage pays for the other party’s medical bills and property repairs if you’re at fault. This type of coverage is crucial in policies like home, auto, and umbrella insurance.

Policyholder

The policyholder is the entity or individual who owns the insurance policy. They are mainly responsible for paying the premium and hold the right to make changes or file claims. For instance, if you purchase a home insurance policy, you’re the policyholder.

Claim

A claim is an official, documented request for payment or services covered by the policy. Claims are made by the policyholder to the insurance company. After incidents like car accidents or home damage, you file a claim to receive compensation or repair services. Your insurance company then assesses your claim to determine the payout or services based on your policy terms.

Underwriting

Underwriting is the formal process insurance companies use to find out the risk of insuring a person or asset. This involves evaluating risk factors and deciding the terms of your policy, including the premium. 

For example, boat insurance underwriters might review the valuation of your vessel, while auto insurance underwriters examine your driving record.

Coverage Limit

An insurance coverage limit is the maximum amount that an insurance company will pay for a loss that’s covered within the policy. Different limits exist for various coverages within a policy. 

For example, your auto insurance may have a $100,000 limit per accident for bodily injury liability and a $50,000 limit for property damage liability. Understanding your coverage limits and your personal needs is crucial for adequate protection.

Exclusion

An exclusion is a situation or circumstance not covered by your insurance policy. Specific events or conditions listed in your policy will not be paid for by the insurer. 

 Common exclusions include intentional damage, wear and tear, and certain natural disasters. Understanding exclusions is essential to knowing what is and isn’t covered.

Endorsement

An endorsement (or rider) is an amendment to an existing insurance policy that changes its terms or coverage. Endorsements can add, modify, or exclude coverage. For instance, you might add an endorsement to cover high-value items like jewelry or art in your home insurance policy.

Actual Cash Value vs. Replacement Cost

These insurance terms refer to how your insurance company calculates payouts for damaged or lost property:

• Actual Cash Value (ACV) reimburses you for the item’s current value, factoring in depreciation—for instance, replacing a five-year-old TV with the value of a used TV, not a new one.
• Replacement Cost covers the cost of replacing the item with a new one of a similar kind and quality without considering depreciation. You receive enough money to buy a new TV similar to the stolen one.

Umbrella Policy

An umbrella policy provides additional liability coverage beyond the limits of your standard policies, such as home or auto insurance. It offers extra protection against significant claims and lawsuits, covering costs like legal fees, medical bills, and property damage. This policy is ideal for comprehensive financial protection.

Subrogation

Subrogation is the process by which your insurance company seeks reimbursement from the at-fault party’s insurer after paying your claim.

For instance, if another driver causes an accident and your insurance pays for damages, your insurer may pursue the other driver’s insurance for reimbursement. This helps keep your premiums lower and holds the responsible party accountable.

Call an Independent Insurance Agency in Stuart, FL

By understanding these insurance terms in Stuart, FL, you can make informed decisions to ensure that you and your assets are adequately protected. At Gambale Insurance Group, we help you find the right coverage for your needs, whether it’s home, auto, boat, or umbrella insurance. Our seasoned insurance professionals are here to guide you every step of the way. 

If you have a question about insurance or need further clarification about your existing policy, we’re here to help! Don’t hesitate to contact us today at (772) 223-6007.