Insurance brokerage

Insurance Glossary-Important Terms You Should Know

Posted by Admin on 13 Sep 2022

To save time and other resources on both ends it is important to know the correct terminology for the product you are buying. You can always ask and learn from prior experience but once in a while, it is refreshing to have a client who is educated in the area of insurance. 

So let’s take a look at some standard terms used in the insurance industry!

Agent

An agent is someone who is a representative of an insurance company. They are the ones who get in contact with you and it is their duty to sell you the right products that you require. Not only that, they are obliged to let you know if you are buying something you don’t need because your prior policy already includes that.

Cover Letter

A cover letter or a binder is a temporary document you get which covers you till you get an insurance policy issued. This usually happens in the case of car insurance, where you are provided with a cover letter that acts as temporary coverage for your vehicle. 

Bodily Injury

This is mostly under the liability cover. It covers the physical injuries of the person involved in an accident. It covers their medical bills and overall treatment till they are back to health. 

Claim

After you have your policy you can “claim” it whenever needed with the proof. Claiming is when you face an accident or mishap and then rather than spending money out of pocket to repair or recover your belongings you ask your insurer to cover you. This is exactly what you are getting insured for. But be mindful that while claiming you need to provide proof of damage. 

Deductible

The deductible is the amount you need to pay out of pocket when claiming the policy. It is a sum of money that needs to be paid before the claim. It is less than the price of the policy. But you should also consider if the amount of claim is more than or equal to the repair price, if so you are better off just getting the damages repaired on your own rather than buying insurance. 

Grace Period

The grace period follows the premium expiration date during which you can pay for the policy renewal so the coverage continues without any interruptions. 

Insurer

The insurer is the company you get the cover from. It is different from an agent. The agent works for an insurer while an insurer is a fully functional body on its own.

Liability

Liability is when you cause damage to someone else. Most times they ask for you to pay and you can give them your insurer’s information and they can contact them to get covered. 

Premium

Premium is the amount you have to pay in order to get your insurance policy issued. This needs to be paid before the insurance is issued along with your documents like ID card, car documents, travel dates, and other documents required for your respective insurance policy. 

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