The Terminology Of The Insurance Industry

In the world we live in today, we need some sort of risk management to protect us from everyday incidents and occurrences. And the risk management we have and need comes in the form of insurance. There are so many different types of insurance available, the most typical probably being automotive insurance. Vehicle insurance, in exchange for a monthly premium, will pay valid claims arising from an accident or collision. Premium, claim? What do these things mean? I know from first-hand experience that the world of insurance to a newcomer can be like an endless pit: dark and difficult.

Before you can understand automotive insurance, you have to learn how to speak insurance. Understanding the lingo of the insurance industry will ultimately allow you to choose the policy best suited to your needs. Yes, you can employ an independent broker to handle your insurance business for you, however, you don’t want to entrust them with everything. The best option would be for you to get to know the terminology associated with car insurance so you can be broker-independent and insurance-savvy! By doing this, you’ll be able to make your own insurance choices and probably be able to save some money too!

The organization you decide to take your insurance plan with is called the insurer, and the person the policy belongs to is known as the insured. A policy can be explained as the written paperwork or contract of insurance between the insurer and insured. In order to have a policy, you have to pay a monthly premium. A premium is the amount the policy holder must pay per month in order to keep the policy with the insurance company in place. These are just the basic principles of insurance industry terms and it gets a lot more challenging from hereon.

An insurance broker is someone that acts as an intermediary between a client (you) and the insurance company. They have the ability to offer a person numerous different bargains from different companies; whereas an insurance agent works for one specific insurance provider and can only give you options and deals from that company. When you suffer a loss that is covered by your automotive insurance company, like a car crash, you submit a request to your insurance company to pay or reimburse you for any damages or expenses occurred in the accident. This request is seen as an insurance claim.

Collision cover can be described as coverage that will pay for physical damage to your vehicle caused by a collision either with another vehicle or with a building, fence or pole. Comprehensive coverage refers to the coverage that pays for damages to your vehicle caused by something other than a collision, such as falling items, animals, fires, hale thunder storms, theft and vandalism. If you were to damage another person’s property or vehicle with your own, your liability coverage will take care of the cost of these damages.

There are a lot more terms that you’d need to learn before completely understanding automotive insurance, but this is a start. Other terms, definitions and explanations can be found on an insurance company’s website or in articles on the internet. Best of luck!