The ABCs of insurance
Let’s talk insurance.
Listen, we know it can be daunting. Choosing coverage and making sure everything you want to protect is covered at a price you can afford … it’s a lot.
But that doesn’t mean it has to be difficult.
OCCU is here to help. Our Insurance Services team can help you find the plans you need when it comes to your home, your vehicle and more. Set up an appointment and they’ll be happy to talk you through the process. But before you move ahead, let’s go back to basics with the ABCs of insurance. (OK, maybe we didn’t get every letter of the alphabet covered, but you know what we mean.)
Adjuster – A person who investigates an insurance claim to determine if the insurer should pay for damages or injuries, and how much. If you’re in a car accident, for example, and you file a claim, the insurance company will assign an insurance adjuster (or claims adjuster) to verify that you’re covered and determine what damage is covered.
Agent – An agent is an insurance company employee who sells insurance policies.
Auto insurance – If you drive, you’ll need this. It’s a protection plan against financial losses when you’re in an accident or your vehicle is otherwise damaged. It can include: Coverage for vehicle damages — both yours or another driver’s vehicle; property or bodily damage caused by an accident; medical expenses for injuries sustained in an accident. Most states require drivers have a certain amount of insurance to get behind the wheel.
Beneficiary – If you have life insurance, the beneficiary is the person who will receive the proceeds upon your passing.
Claim – The request you, as a policyholder, make to an insurance company, asking for payment after a covered incident.
Collector car insurance – This insurance protects your classic car. Because collector cars tend to maintain or increase in value over time, this type of insurance will cover up to an agreed-upon amount. Standard car insurance may not cover the full value of a classic car.
Collision coverage (auto policy) – Coverage that pays for the cost of repairing or replacing a vehicle if it is damaged in an accident, regardless of fault.
Comprehensive coverage (auto policy) – An optional policy that protects against damage to your vehicle that didn’t occur in a collision. If your car is stolen, for example, or a rock hits your windshield and cracks it, it may be covered under your comprehensive insurance policy.
Covered vehicle – The vehicle specifically listed in your insurance policy.
Deductible – The amount you, as a policyholder, need to pay for services before an insurance plan covers your cost. You determine this amount when you choose your plan. Common deductible amounts are $250, $500 and $1,000. The lower your deductible, the more expensive your policy will likely be.
Depreciation – Loss in value to your property (home, car, possessions, etc.).
Earthquake insurance – A policy that covers some of the losses and damage to your home and belongings that occur due to an earthquake.
Equipment breakdown coverage (home policy) – This type of policy covers certain appliances and equipment in the event of a mechanical or electrical failure.
Excess liability coverage – A policy that offers financial protection if the claim exceeds the limit of an existing liability policy. It’s essentially like having a second policy on top of your existing coverage.
Final expense life insurance – Also known as burial insurance, this covers end-of-life expenses like funeral arrangements and medical or legal expenses that would otherwise need to be settled by your beneficiary.
Flood insurance – A policy that covers losses and damage to your home that occur specifically due to a flood. In many places, without this supplemental policy, your home will not be covered in the event of a flood.
Hidden water damage endorsement – This covers water damage to your home caused by a leak you can’t see within the plumbing or a household appliance.
Homeowners insurance – Covers damage to your home, property and personal belongings in your home. It may also cover accidents and injuries that occur in your home or on your property. Most, if not all, mortgages require the borrower to carry homeowners insurance.
Insurable interest – A financial stake in an insured item, such that losing the item would have a negative financial impact. Essentially, if you have an insurable interest in something — like your home or your car — you own it (at least partially) and if something were to happen to it, you would suffer a monetary loss.
Liability insurance – A type of coverage that covers claims that you (or your car or your business) caused bodily injury or property damage to someone else.
Lienholder – A lender with a legal interest in your property until it’s paid in full. This can be a financial institution or a private party.
Life insurance – A type of insurance that pays out a sum of money upon the death of the insured person.
Named insured – The person protected by an insurance policy.
Named peril coverage – A specific type of damage or disaster listed by name on an insurance policy. If a certain peril (e.g., flood or windstorm damage) is not listed on a policy, it is likely not covered.
Occurrence – An incident such as a car accident or a fall that could result in a claim being filed.
Permissive driver – A permissive driver is a person you have given permission to drive your vehicle. Depending on your policy, your car may or may not be covered in the case of an accident or may only be partially covered.
Pet insurance – It’s like health insurance for your pet, paying in part or full for your pet’s veterinary treatment.
Premium – The amount you pay your insurance company for your coverage.
Qualifying event – The incident that could result in a claim being filed (See also: Occurrence. It’s just a more insurance-y way to say it.)
Renters insurance – When you rent a home, you don’t need to insure the building, but you definitely want to insure all your stuff inside of it. That’s what this is for.
Replacement cost coverage – This policy helps pay to repair or replace damaged property. It may be available for both your home and your personal belongings.
Roadside assistance insurance – Coverage designed to help you if you have vehicle trouble at home or on the road. This could include things like towing, flat tire repair or fuel delivery.
Service line coverage (home policy) – This coverage can often be added to a homeowners policy to cover the cost of repairing or replacing a broken utility line running into the home.
Simplified term life insurance – Simplified term life insurance is essentially term life insurance (see below), covering a certain length of time and paying out upon death. But the application process does not include a medical exam. “Simple” does not mean guaranteed, though. You may not qualify if you have certain medical issues or a high-risk job or hobby. So, if your passion is skydiving or swimming with sharks, you may be out of luck.
Term life insurance – Life insurance coverage for a certain amount of time — usually 10, 20 or 30 years — that pays out to your beneficiary if you pass during the term.
Uninsured/underinsured motorist coverage – These policies protect you if you’re in an accident that’s not your fault. If the at-fault driver does not have insurance or their liability limits are too low to cover your medical expenses (if you have any due to the accident), this policy can help.
Umbrella policy – This is extra liability insurance coverage that goes beyond the limits of your other insurance, providing additional security to those at risk.
Universal life insurance – This is a type of permanent life insurance policy that offers nearly lifelong coverage as premiums are paid. With this type of policy, you may also have the option, after money has accumulated, of withdrawing a portion or borrowing against the policy. This policy is more flexible than a whole life policy (see below) as you can adjust premiums and death benefits.
Whole life insurance – This is a type of permanent life insurance, similar to universal life insurance (see above), but premiums are fixed (and usually higher) and death benefits are guaranteed.
Now you know your insurance ABCs. When you’re ready to explore your options and find the right coverage for your life, our Insurance Services team is ready to help.