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Insurance Simplified: 4 Commonly-Used Industry Terms, and What They Actually Mean

10 Aug
Insurance Simplified: 4 Commonly-Used Industry Terms, and What They Actually Mean

Insurance Simplified: 4 Commonly-Used Industry Terms, and What They Actually Mean

Insurance Simplified: 4 Commonly-Used Industry Terms, and What They Actually Mean

Most people won’t admit it, but buying insurance feels like learning a second language. There are so many technical terms and phrases that it’s easy to get lost when researching policies. The bad news is that insurance will always involve a certain amount of complicated language. The good news though, is that anyone can figure their way around with a little bit of curiosity and focus.  

Knowledge Is Power:

The California Department of Insurance suggests that, “Auto policies can vary a lot. Every motorist should discuss insurance needs openly with an agent, broker, or insurance company. These representatives can help you, but it is your responsibility to choose the insurance that is best for you. It is also important to be familiar with your auto policy before you need it.” Here are a few basic explanations of frequently-used insurance jargon:  

1.    Insurance Premium:

An insurance premium is the total amount people pay in order to buy an auto insurance policy. The cost of an insurance premium is decided by each individual’s risk profile. If you are a risky person to insure, the premium becomes expensive. If it’s less of a risk to insure you, the premium becomes cheap.  

2.    Insurance Claim:

An insurance claim is a formal request made to an insurance company. This request asks the company to pay for damages caused during an accident. Filing an insurance claim is the first step a person takes in order to activate the services or benefits promised in an insurance policy.  

3.    Deductible:

A deductible is a fixed amount of cash which people who purchase insurance have to pay out-of-pocket. This financial obligation is due whenever damages have occurred after an accident, or when an insured person is directly responsible for certain damages. Deductibles represent a fraction of the total cost of damages incurred during an accident. Insurance companies pay the other proton of this fraction.  

4.    Insurance Broker:

An insurance broker is a licensed middleman who is authorized to help average consumers find suitable insurance. Insurance Brokers scout for policies which are appropriate to unique customer needs. Brokers help each insurance buyer figure out their risk profile, and then find a reasonable policy which matches this profile.  

Conclusion:

Learning about insurance shouldn’t be intimidating. It should make people feel safe and reassured. That’s why it’s important to educate yourself as much as possible about the options available to you. Long before you ever pick up the phone to ask about rates or quotes, window-shop so that you can familiarize yourself with the lingo. Every time you see a term or explanation you don’t understand, look it up and figure out what it means for yourself. For more information, visit our website or give us a call at 1-800-639-7654 to find out how Adriana’s Insurance Services can help you stay safe. We got you covered!