Glossary of Terms

Deductible

Definition: The amount you must pay out-of-pocket for covered expenses before your insurance policy begins to pay.

Example: If your deductible is $500 and the repair costs are $2,000, you pay $500, and your insurer covers the remaining $1,500.

Premium

Definition: The amount you pay to your insurance provider, usually monthly or annually, to keep your policy active.

Example: If your car insurance premium is $100 per month, you pay this amount to maintain your coverage.

Liability Coverage

Definition: Insurance that covers costs if you are found legally responsible for causing injury or property damage to others.

Example: Liability coverage can pay for medical expenses and repair costs if you cause a car accident.

Policy Limit

Definition: The maximum amount your insurance company will pay for a covered claim under your policy.

Example: If your policy limit for property damage is $50,000, the insurer will not pay beyond this amount for a single incident.

Endorsement (or Rider)

Definition: An add-on to your policy that modifies or enhances your coverage, often for an additional cost.

Example: You can add an endorsement to your homeowners policy to cover expensive jewelry.

Claim

Definition: A formal request you make to your insurance company for payment after a covered loss or event.

Example: Filing a claim after a car accident helps you get reimbursed for repairs or medical expenses.

Exclusion

Definition: Specific conditions or situations that your insurance policy does not cover.

Example: Flood damage might be excluded from a standard homeowners insurance policy.

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