The world of home, auto, and life insurance frequently speaks its own language. Agents and carriers often abbreviate insurance phrases for reasons of time and space; additionally, many clients may not fully understand what every insurance term really means.
Below is a helpful insurance glossary to help our clients better understand various aspects of their coverages:
ACV – Actual cash value (ACV) is the amount to replace a policyholder’s damaged or stolen property, minus depreciation, at the time of the loss. It doesn’t replace what was lost but rather reimburses the policyholder for the item’s current value.
RCV – Replacement cost value (RCV) is the amount to replace or fix a policyholder’s home and personal items. (Even if coverage was purchased that pays RCV, some types of property may only be paid at ACV.)
Deductible – The amount a policyholder pays for covered services before the insurance plan starts to pay. With a $1,000 deductible, for example, the policyholder pays the first $1,000 of covered services. After the deductible is met, the insurance policy covers the remainder of covered services.
Claim – An insurance claim is a formal request from the policyholder to their insurance company asking for payment after a covered incident. These incidents can include anything covered by the insurance policy, like a hospital stay, a natural disaster, or theft.
Exclusion – An exclusion is a provision within an insurance policy that eliminates coverage for certain acts, property, types of damage or locations. Things that are excluded are not covered by the plan, and excluded costs do not count towards the plan’s total out-of-pocket maximum.
Peril – A peril is an event, like a fire or break-in, that may damage a home or belongings. The perils covered by a policyholder’s homeowner’s insurance are listed in their policy.
Limit – A limit is the highest amount an insurer will pay for a claim that an insurance policy covers. If a policyholder files a covered claim, their insurance policy will pay up to a certain amount. The policyholder is responsible for any expenses that exceed the limit.
Loss – A loss in insurance terms is the financial damage one suffers due to an insurable event. Under the terms of a policy, the insured needs to incur a loss in order for them to have a claim for damages.
Lapse – A lapse is a period of time when insurance coverage is not in effect. This could be because a deductible was not paid, a policy expired before a new policy was renewed, or, as an example, a vehicle was purchased before auto insurance was acquired. Policyholders can be held liable for damages and costs if an accident or injury occurs during a lapse of insurance coverage.
Independent Agent – The agents at Gill Insurance are independent agents, in that we represent more than one insurer. We sell policies provided by multiple insurance companies, which offers our clients more choices of coverage at multiple price quotes. We work for our clients, not the insurance companies, and take the time to listen to them and understand their individual needs.
The agents at Gill Insurance are available to navigate our clients through every aspect of purchasing insurance coverage, including understanding all terms and conditions of their policy. Give us a call today to get started – (843) 388-5021.