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Insurance Policy Definitions

As with just about every other profession and discipline out there, insurance has it's own distinct and sometimes confusing vocabulary. If some the language you see in your insurance policy have you confused, here's some definitions to help what you're reading more understandable:

  • Deductible.  An agreed specified sum to be deducted from the amount of loss and assumed by the insured. For example, if you were to have a $500 deductible, and are having your car repaired due to a claim that cost $2000, you would absorb the first $500 (the deductible) yourself. The insurance company would pay the remaining $1500 in repairs.
  • Comprehensive. Ok, I'll admit... this is a misnomer. To most of us, the word "comprehensive" means anything and everything, so you would think that if you have comprehensive insurance coverage, you are covered for any damage that happens to your property. Unfortunately, this is not the case. The coverage is simply comprehensive in comparison to other coverages that have more exclusions and fewer perils insured.
  • Peril. In insurance terms, a peril is simply the cause of loss or damage to property. Common perils include fire, theft, water damage, and windstorms.
  • Exclusions. All insurance policies have limitations. Those limitations are often excluded perils. For example, the peril of flooding is often not covered by home insurance polices; in other words, flooding is an exclusion.
  • Endorsement. An endorsement is simply a change to your existing policy. Whenever you request a change to your insurance, you are changing a legal contract. To make everything official, the insurance company will reprint your policy along with the change, often calling it an endorsement or sometimes a revision.
  • Renewal. Most all insurance polices provide coverage for one calendar year. When the policy is about to end, you will receive a policy renewal in the mail to provide coverage for the next year, along with necessary changes such as inflation cost increases and rate changes. Don't forget to pay for the renewal before your policy expires!
  • Clause. No, this isn't referring to that jolly fellow in the red suit who swings by around Christmas. A clause is a portion of your insurance policy that describes special limitations, exclusions or modifications.
  • Direct Billing and Broker Billing. When you pay for your policy, you are either making payment directly to your broker, or directly to the insurance company. If you policy says broker bill, you'd have to contact a Knight Archer Insurance broker to pay it. If it's Direct Bill, you can contact the company directly (if you wish), though we encourage you to still visit your broker in case there are any questions or concerns you may have about your policy.
  • Dwelling. Dwelling is the unnecessarily complex term that insurers use to refer to the home you live in. Another term is habitation.
  • Loss. Don't overthink this one: the loss is... well... what you've lost as the result of a peril. A loss will likely result in a claim...
  • Claim. A claim is your action as a client of the insurance company, stating that you've suffered a loss and are seeking replacement or repair of your property.
  • Quote. A cost estimate of an insurance policy based on what you've told the broker.

If you're still confused, don't be afraid to simply ask us! Our brokers are always available during store hours to help you understand your policy on your own terms.

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