Have you ever gone to the doctor’s office and had them explain to you what illness you had? It sounds like another language and no one understands a word the doctor has just told you. So you say, “What does that mean?” For the next few minutes, the doctor breaks it down for you in layman’s terms. Oh, so I just have a really nasty head cold. Why couldn’t they have just said that instead of using all this medical jargon and make me feel stupid? Sometimes, that’s how insurance agents can be as well. The problem is we don’t even realize when we speak to clients in that manner.
In order to help clear up some of that insurance lingo that we like to use, here are just a few of the major words or phrases insurance people use.
Full Coverage: What is full coverage? Well, honestly, in insurance there is no such thing as full coverage. NOTHING is ever fully covered. When people use the phrase “full coverage” they are referring to your auto insurance and the comprehensive (also known as “comp”) and collision coverage that are also known as deductibles. The deductible is what your portion is before the insurance pays out on the rest of your claim. You pay your deductible and the insurance pays the rest of the claim agreement. There are deductibles not only for your auto policy but also your home, health, life, and business policies.
Liability: We hear all the time, “I just need to get liability only.” When in fact, most people don’t even know what liability covers or what it means in regards to their auto insurance. So what is liability? Liability is what your insurance company will pay the other person. It covers the other person’s bodily injury and property, whether that’s their car or a building. The liability will never ever ever cover the insured or the insured’s vehicle. Liability will always go to someone else. So when you have liability only, you are not covered for injury and neither is your vehicle covered for damage.
Underwriter: “Let me check with my underwriter” we tell clients on a daily basis. I’m sure our clients are wondering, who the heck is the underwriter? I thought you (the agent) had my insurance. An underwriter is a person that works directly for the insurance company (i.e. Progress, Safeco, Travelers) and they have the authorization to accept or deny any insurance application submitted to their company based on the information provided to them by the potential client and insurance agent. Sometimes, as agents we have to get approval before we can begin your insurance policy. If there are questions on a policy as far as what is covered and what is not covered, an underwriter is the best person for us to talk to because they know what their company will allow and what they won’t allow. Many times, as an insurance agent, our hands are tied and there is nothing we can do for our clients no matter how much we would love to help them. We are only allowed so much authority (in fact it’s very little) before we have to get approval from our underwriters.
Terms we use every day don’t sound foreign to us, but we know what they mean, just like our doctors. It’s our clients that are left feeling confused. What are some insurance terms you’ve either heard or have always wondered what they mean?
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