Insurance Lingo EXPLAINED

Listen, we get it. Insurance jargon is confusing and, unfortunately, the law requires your policy be filled with it. Luckily, our network of Independent Insurance Agents as well as our Claims Adjusters and Customer Service Reps at Pioneer do a pretty fantastic job of explaining things to our customers. But, in case you’ve never had the pleasure of speaking with one of those fine folks and you’re still a bit confused, let’s do a breakdown of some common insurance terms.

But first, this feels like the right time for a disclaimer (lol…insurance, am I right?). What we’re about to discuss is in no way policy language, but rather, the simplest way we can break down jargon for you. These definitions should not be interpreted differently than policy language. Layman’s terms are always overruled by your actual policy contract.

Second disclaimer: this article is probably going to be slightly more boring than normal. It’s important information…but,  you’ve been warned.

Alright, let’s proceed.

First, let’s talk about perils. What in the world is a peril? Think of a perilous situation or being “in peril.” Basically, it’s bad things that can happen to your property. You might also hear this referred to as an “Act of God.” On the Homeowners Insurance side, that might include wind, hail, theft, and so on. Read your policy…there’s an actual list of perils in there. This will help you figure out what a covered loss would look like for you and whether or not it’s worth it to file a claim.

Super helpful, that insurance policy of yours.

Second, and this might be an easy one for some, an Adjuster or Claims Adjuster is the person who is assigned within the Insurance Company to “adjust” or work on your claim. At Pioneer, our Adjusters are top-notch and work as efficiently as possible to make you whole again (that’s insurance talk for “pay your claim”).

Third, Insurance Agency vs. Insurance Company. An Insurance Company is the party (yes, we’re a party) that provides a product and an Insurance Agency is the party that sells the product to the customer. It’s a B2B2C setup if you’re familiar with business lingo. So, Pioneer provides a product and we rely on our network of super-skilled Independent Insurance Agents to sell our products for us to you, the customer.

Fourth, filing a claim. Again, this might be an easy one for some. What this means is you’re reporting property damage to your Insurance Company. At Pioneer this can be done either through your Independent Insurance Agent, our mobile app, or our website.

Next up is Coverage A, Coverage B, Coverage C.

Um, what? Is that a real thing? Yes, it is. Let’s break it down:

Coverage A covers the cost to rebuild your home and other attached structures like an attached garage or breezeway. Coverage A is not based on the current value of your home but the cost to rebuild it if a covered loss occurs.

Coverage B, on the other hand, is detached structures. So, think of a pole barn, a shed, or a detached garage.

And, lastly, Coverage C refers to your belongings or personal property. This could be your TV, furniture, or that 1990s Lego set you have stashed away in the attic. You get the picture.  

Depreciation is a “fun” one. Basically, we’re looking at the age of property here (wear and tear). Your ten-year-old TV has probably lost some value over the years. So, what we do is calculate value based on its age to determine how much to pay you. After a covered loss occurs, we owe you for the same like, kind, and quality as what you had (that’s insurance talk for “we owe you money for the item that you had in its current condition”). Make sure to talk to your agent about a Replacement Cost policy. We’ll make another blog post about this at a later date so stay tuned.

Insured, Policyholder, and Named Insured are all different ways of saying that a person is listed on the policy and has coverage. The only exception to that is the Named Insured is the owner of the policy and the only one who has the right to make changes to the policy.

Next up is deductible. It has come to our attention that most people *think* they know what a deductible is but a lot of people actually don’t. Here’s how your insurance company looks at it. A deductible is the amount that you, the Insured, agree to cover should a loss occur. That means that you selected a $1,000 deductible when you signed on the dotted line, you agreed to pay that much up front if a loss occurs. Another thing to consider before filing a claim is whether or not your loss will exceed your deductible. This just means if your loss is valued around $900 but your deductible is $1,000, it’s not worth submitting a claim because you owe the first $1,000. Even if your claim exceeds the deductible but not by much, it’s worth reconsidering the claim route.

Another good one to talk about is proof of ownership. Proof of ownership is what it sounds like: proof that you owned an item. Proof of ownership can be an owner’s manual, receipt, photo of the item, or even the box it came in. Insurance companies like to see this so here’s a quick tip for you: keep the items mentioned above and if you’re feeling really ambitious, take photos of every room in your home and make an inventory list. Save all of these somewhere digitally. It sounds like a lot of work but, if your home burns to the ground you’ll be so thankful you took the time to do that, rather than trying to remember everything during a catastrophic event.

Here's one that might sound familiar. An endorsement (or rider as some call it) is an add-on to your policy. You have your base policy and then there are additional coverages available that you can tack onto your policy. A good example of this might be for Backup of Sewers and Drains which provides additional coverage for water damage in your home caused by, you guessed it, a backup of sewers or drains. If you have items you think are valuable, talking to your agent is always a great place to start. They can find the right endorsement for your every need.

In addition to endorsements, you can also schedule items on your policy. Valuable or high-value items that you believe need their own separate and special coverage can be specifically listed on your policy. A great example of this would be wedding or engagement rings. If they are damaged, lost, or stolen, your schedule will help pay to repair or replace it. Expert tip: get your rings re-appraised every few years and have the value updated on your insurance policy!

There are so many more terms we could talk about but we’ll save those for another day. We hope this cleared some things up for you but, if we confused you even more…our bad. Reach out to your Independent Insurance Agent for clarification! They’re insurance policy gurus and there to answer any and all questions that may arise.

Disclaimer: This is a general interpretation of processes and coverage. All claims are subject to Insuring Agreements, Endorsements, Exclusions, Terms, and Conditions of the Policy.

Have any questions about what you just read? Please contact your Independent Insurance Agent or email us at socialmedia@psmic.com!