Basic Insurance Terms
Everybody requires insurance of some kind. You probably have insurance for your car, house, business, and even your pet. Insurance is designed to protect you from unexpected financial loss, making it a very valuable tool in your personal financial plan to keep it on track. With it being so important, it is vital to understand the basics of a policy to gain a complete understanding of how to optimize your coverages and understand what they are. Below you will find a helpful guide to some basic insurance terms to help give you a better understanding of your policy.
What is a Declarations Page?
The declarations page serves as your official insurance documentation and proof of coverage. This specific page includes details about the policy’s effective and expiration dates, deductible amount, coverage limits, and policy premiums.
What is a Deductible, and how does it apply to me?
Your deductible is the amount you must pay out-of-pocket before your insurance company begins to help. For example, Let’s say your home insurance has a $1,000 deductible and your home is damaged in a windstorm that results in $10,000 of damage to your home. You must pay the first $1,000 before your insurer will step in and pay for the remaining damage balance.
What is an Insurance Premium?
Insurance premium, also known as the rate, represents the amount of money you pay to an insurance provider to maintain your coverage. You can typically pay this in full for the policy period or on a monthly basis.
What does it mean when someone mentions Coverage Limits?
You will find the coverage limits on your declarations page. Your coverage limits represent the max benefit you could possibly receive from the policy contract. These are very important to know so make sure you speak with your agent about them!
What are my effective and expiration dates?
The effective and expiration dates simply show when the policy coverages become effective and when that specific policy expires and needs to be renewed.
Now that we have covered some of the basics, keep an eye out for more in-depth information that will have you fully understanding your policy like a pro. Of course, if you would like to speak with an insurance professional give one of our team members at The Staples Agency a call and we will happily help.