Insurance 101: The Basics

basic 101

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As you experience changing events in your life or take on greater responsibilities, you may find yourself needing different kinds of insurance such as health, home, automobile, and life insurance.  Navigating which insurance policy to select can be difficult, especially if there are insurance terms you don’t understand. Don’t worry, you’re not alone. Only 4% of Americans understand important insurance terms.

At Boyd Insurance & Investments, we realize that insurance is not always exciting to learn, but its terminology doesn’t have to be confusing. In fact, having a basic understanding of insurance definitions can make the difference between having the proper coverage in place and one that leaves you paying thousands of dollars out of pocket. Our aim at Boyd is to make Insurance & Investments approachable and accessible for everyone in our community.

Basic Insurance Terms

To help you get started, we’ve compiled and defined a list of basic insurance terms to make shopping for a policy easier and to better understand your coverage needs.

  • Insured – ALL – The person(s) covered by the insurance policy.
  • Insurer – The company which accepts risks after receiving premiums and pays claims.
  • Policy – A  legal document issued by the insurance company that outlines the general terms and conditions of the insurance.
  • Claim – A request for an insurance company to pay for a loss or medical procedure.
  • Premium – The monthly or annual amount that you must pay in order to have the insurance coverage.
  • Deductible – The annual amount of money that you must pay out of pocket for medical expenses or damages before your insurance starts to make payments.
  • Peril – The cause of the loss or damage (ex. fire)
  • Risk –  a broad term referring to the chance of loss
  • Depreciation –  Decrease in the value of an item due to age, usage, wear, and tear. (Most things decrease in value as they age.)
  • Third-Party – Anyone other than the two parties in the insurance agreement. The first party is the insured, second is the insurer, and the third party is the other person. For example: If you had an accident and the car by Mr. Neighbor was also damaged in the accident, then he is a third party.
  • Co-payment – a fixed amount that you pay for a covered service; they can take effect either before or after you\’ve hit your deductible.
  • Co-Insurance – the percentage of the cost that you pay for covered services after you\’ve reached your deductible. If your coinsurance is 20%, for example, you would pay 20% on all covered services until you reach your out-of-pocket maximum.
  • Exclusions  – The section of the policy contract that specifies the condition or item not protected by the policy.
  • Out – of – pocket Maximum – the most you\’ll have to pay for covered health care services in a year. Deductibles, copayments, and coinsurance go toward your out-of-pocket limit; monthly premiums do not count.

Call us today!

Boyd Insurance and Investments is here to help provide Protection for Life through all of life’s unforeseen circumstances. If you have any questions call (941) 745-3800 or get an online quote today!

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