Whether you have insurance for your business or your personal healthcare, some terms pop up over and over again on your forms and policies. Here is some basic insurance terminology you should know.
Premium
The premium in an insurance policy is the amount you, as the policyholder, pay each billing cycle for your coverage. Premium amounts will vary by type of insurance, coverage, and location. Each insurance agency will offer slightly different premiums, so shop around to find the best deals.
Deductible
The deductible is the amount you’re responsible for paying before the insurance company pays its share. For example, with health insurance, you will pay the full cost of certain tests and procedures until you reach the deductible limit, after which the insurer would step in and pay on your behalf.
Appraisal
Appraisals are assessments that an insurer carries out to determine the total value of your items. These often happen after damage to your property to ascertain the specific amount an insurer should reimburse you.
Head or Tail Coverage
In professional liability insurance, head or tail coverage provides security for professionals as they transition between jobs. For instance, suppose a doctor decided to move from Indiana to Illinois. The state laws are slightly different, and their insurance provider doesn’t insure across state lines. The doctor will end their current coverage and look for insurance in Illinois.
Head coverage—also known as prior acts coverage—is when a policyholder adds extra coverage to the beginning of their policy to insure anything that happens between the end of their old policy and the beginning of the new one. Tail coverage works the other way around—it’s an additional policy that you can add to the end of your previous insurance for protection in between.
This basic insurance terminology you should know can help you navigate your personal and professional life with ease. When you use insurance agencies to mitigate your risks, be sure you understand every word on the policy before signing.
