While searching for insurance, you may want to familiarize yourself with the following terms:
- Commission – Payment made to a state-licensed agent or broker in exchange for helping insurance customers obtain and maintain insurance policies.
- Coverage Limit – The maximum amount an insurer will pay toward any covered loss, regardless of the actual costs incurred.
- Deductible – The amount you must pay out of your own pocket before the policy will pay anything toward a covered loss.
- Insurance Commissioner – State official with the authority and responsibility to enforce a state’s insurance laws and regulations to protect the insurance customer from fraud, abuse and misrepresentation.
- Insurance Policy – Financial contract between a policyholder and an insurer, which is usually an insurance company (or carrier). In exchange for payment, (a premium) the insurer agrees to pay in the event that the person or property insured suffers a type of loss named in the policy.
- Policy Term – the period of time policy protection remains in force (typically six months or a year). At the end of the policy term, the policy needs to be renewed to continue coverage.
- Premium – Payment to an insurance company in exchange for protection from a specified loss. Typically premiums are paid monthly, every six months, or once a year.
- Underwriting – A statistical evaluation of the risk factors of the policy used to determine if an insurance company will provide insurance, and if so, at what cost and with what limitations.