Frequently Asked Questions and Insurance Terms
We understand that insurance can be confusing and complicated. One of our goals is to provide knowledge and expertise to make the insurance buying and claims process easier for our clients. Below you will find some of the most common insurance terms to help you feel comfortable with your policy.
Other Questions? We’re happy to help. Call us today at 515-993-4135
Additional Living Expenses
If you cannot live in your home because of a covered loss, the policy will pay for additional living expenses while your home is being rebuilt or repaired.
Bodily injury liability and Property Damage (BI/PD)
Covers your legal liability, up to the limits you select, for damages caused in a covered vehicle accident. If you are sued as a result of a covered accident. a lawyer will be paid to defend you.
Liability limits are available as either split limits or a combined single limit. Split limits divide bodily injury liability limits into per person and per accident. (For example, $100,000/$300,000 means that a company will pay up to $100,000 for bodily injury liability per person in a covered accident and up to $300,000 total per accident.) For property damage, your insurance company pays up to the limit you select per accident. Combined single limit combines your liability coverage for bodily injury and property damage into one total limit for per accident.
Collision Coverage
Portion of an auto insurance policy that covers the damage to your vehicle from a collision or overturn.
Comprehensive
This covers damage done to your vehicle by causes other than collision, such as vandalism, theft, or striking an animal.
Deductible
The amount that you pay out of pocket toward a loss. This amount is paid first, before your insurance policy provides coverage. If the covered loss is greater than the deductible, the amount of your deductible will be deducted from your settlement.
Full Coverage
Although not a technical insurance term, this typically refers to an auto policy that includes collision and comprehensive coverage.
Insurance Score
Insurance scores are confidential rankings based on credit information. This includes whether the consumer has made timely payments on loans, the number of open credit card accounts and whether a bankruptcy filing has been made. An insurance score is a measure of how well consumers manage their financial affairs, not of their financial assets. It does not include information about income or race.
Studies have shown that people who manage their money well tend also to manage their most important asset, their home, well. And people who manage their money responsibly also tend to handle driving a car responsibly. Some insurance companies use insurance scores as an insurance underwriting and rating tool.
Liability
Your legal obligation to pay because of bodily injury or property damage caused to another person.
Medical Payments
A coverage in which the insurer agrees to reimburse the insured and others such as guests or passengers up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident. Payments are without regard to fault.
Peril
A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded.
Personal Liability
This applies if someone is injured or property is damaged and you are to blame.
Replacement Cost
The amount it would cost to replace lost, stolen or destroyed property at current market price.
SR-22
This is simply proof that you have insurance. It is a filing that your insurance company provides to the state on your behalf. The state usually requires such proof in the event of a serious violation or numerous tickets in a short period of time.
Subrogation
The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.
Uninsured motorist and underinsured motorist
This coverage pays for damages that you are legally entitled to recover for your bodily injury. In general, this coverage provides what you would have received from the other person’s insurance company if that person had insurance. This coverage may also protect you if the person who caused the damage does not have enough insurance to fully compensate you for your injuries. This coverage does not apply to physical damage to your vehicle.
Water Damage
Protection provided in most homeowners insurance policies against sudden and accidental water damage, from burst pipes for example. Does not cover damage from problems resulting from a lack of proper maintenance such as dripping air conditioners. Water damage from floods is covered under separate flood insurance policies issued by the federal government.
