Understanding Insurance Terms As A Policy Holder

by | Jan 20, 2021 | Uncategorized

The insurance process can be an intimidating one. All those phrases, words, and legal jargon can make it seem like your lawyer or insurance agent is speaking a different language. Don’t worry, we’ve got you covered!

In this article, we’ll be looking at a few of the most common terms used to help in understanding insurance.

Umbrella Coverage

Contrary to what the name might suggest, this is not insurance coverage for your favorite umbrella. Think of this insurance coverage as a safety net. Let’s say you have insurance on your home up to $250,000; then, a fire breaks out and you lose everything, the total value of which exceeds your initial coverage. All together, your losses add up to about $500,000.

If you lack umbrella coverage, you’d be out of luck. However, if you currently have an umbrella coverage policy, it will then kick in to cover a portion of (if not all) those additional damages. It is great for having something that covers a lot of things, just not one thing in particular.

Subrogation

Subrogation refers to the right of an insurance company to seek reimbursement from third parties made to or on behalf of the insured. It’s an unfamiliar term and the definition doesn’t do much to help us, so let’s use an example like we did before.

The best example may be one of the most common: say you have car insurance and your car is totaled by no fault of your own. It was the result of another driver’s reckless actions. In this case, your insurance company would reimburse you according to your policy and then seek subrogation from the driver at fault, meaning they essentially ask them or their insurance provider to make pay for the damages the other driver was responsible for.

Hazard/Hazardous Activity

This one isn’t too complex at first glance, but it takes on an additional and complex meaning when involved in the insurance industry. A hazard or a hazardous activity can be one of many things: it simply must involve an inherent level of danger or risk.

Hazards are generally defined in insurance agreements as a way to protect insurance companies from fraudulent or intentionally-fulfilled claims. For example, the inclusion of these hazardous exclusions have a special meaning within life or casualty policies.

Without these inclusions, an individual would be able to purchase a large life insurance policy and then decide to potentially increase their chances of cashing it in by actively seeking out hazards or risks (sky-diving, bungee-jumping, etc.). By defining hazards or hazardous activities within the insurance contract itself, companies protect themselves from these very situations.

While there are many other terms to know, we hope these few can help in understanding insurance. Luckily, you don’t need to become an expert considering you should have help. If you’re having issues with an insurance policy or a recent claim that was filed, but you are unhappy with the results or communication, our team can help you get what you need. Reach out to us here to set up a consultation.

Legal Insight
The Difference Between Compulsory and Non-Compulsory Insurance

The Difference Between Compulsory and Non-Compulsory Insurance

The first step towards determining the difference between the two types of insurance policies is to look at the unfamiliar word the two have in common: compulsory. Compulsory, per Merriam-Webster, is defined as “something that is mandatory or enforced; we can then...

Statutes of Limitations For the Greater Cincinnati Area

Statutes of Limitations For the Greater Cincinnati Area

As we mentioned in our other article for this month, the statute of limitations (maximum amount of time after an event that legal proceedings can be initiated) is different for each state, so it’s important to be aware of the specific set of laws for your state....

Personal Injury: Law Terms You Should Know

Personal Injury: Law Terms You Should Know

Even the simplest of personal injury cases can still be muddled with a slew of legal terms that might seem like they’re in a different language. With personal injury being so common, it’s important to be well versed in this terminology whether you’re a lawyer or not....