Insurance Glossary

The Ultimate Insurance Glossary: Part 2 – Demystifying Insurance Jargon

 

In Part 1 of “The Ultimate Insurance Glossary,” we equipped you with the definitions of key insurance terms from A to M.

As promised, we’re back with Part 2 to complete your guide through the rest of the insurance lexicon. With a full understanding from A to Z, you’ll be ready to make informed decisions and effectively manage your insurance policies.

 

Insurance Glossary

 

Insurance Terms Defined: N to Z

 

N – No-claims Bonus: The Reward for Safety

A no-claims bonus is a discount given to the insured for every year that they have not made a claim, encouraging safe practices and care.

O – Over-insurance: When Too Much Cover Can Cost You

Over-insurance occurs when the value of your insurance policy exceeds the actual value of the insured item, leading to unnecessarily high premiums with no additional benefit.

P – Premium: The Price of Protection

Your premium is the price you pay for your insurance policy. It’s the cost of transferring your personal risk to an insurance company.

Q – Quote: Estimating Your Insurance Cost

A quote is a preliminary estimate provided by an insurance company detailing how much you’ll need to pay for coverage. It’s the initial step in determining if the proposed insurance matches your budget and needs.

R – Rider: Tailoring Your Policy

A rider is an addition to an insurance policy that adjusts coverage by adding or excluding certain conditions or items. It allows you to customize your policy to fit your specific needs.

S – Subrogation: The Insurer’s Recourse

Subrogation is a process that allows an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid by the insurance carrier to the insured for the loss.

T – Term Life Insurance: Protection for a Period

Term Life Insurance is a policy that provides coverage at a fixed rate of payments for a limited period, the relevant term. After the period expires, coverage is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions.

U – Underwriting: Assessing Your Risk

Underwriting is the process by which insurers evaluate the risk of insuring a potential policyholder and decide on the terms and cost of the coverage. It’s the behind-the-scenes assessment that determines your insurability.

V – Valuation: The Worth of Your Insured Items

Valuation is the determined worth of an insured item. It’s crucial for setting the right coverage limit, ensuring that you’re neither under-insured nor over-insured.

W – Waiver of Premium: Keeping Your Coverage During Hardship

A waiver of premium is a provision in some insurance policies that allows for the waiving of premium payments in the event the policyholder becomes seriously ill or disabled.

X – Excess: The Insured’s Initial Burden

Excess, also known as a deductible, is the amount that you, the policyholder, are responsible for paying toward each claim you make before your insurance covers the remaining costs. It is a form of self-insurance and works to prevent minor claims.

Y – Yearly Renewable Term (YRT): Flexible Term Insurance

Yearly Renewable Term (YRT) is a type of term life insurance policy that is renewed every year without the need for proof of insurability but often with increasing premiums.

Z – Zero Depreciation Cover: Full Coverage Without Depreciation

Zero Depreciation Cover is an add-on cover in auto insurance where the full cost of vehicle parts is covered without any deduction for depreciation in case of a claim.

 

Empowerment Through Understanding

With the completion of Part 2, you now have a comprehensive view of the terms that form the backbone of most insurance discussions and documentation.

Armed with this knowledge, you’re not just a policyholder—you’re a well-informed participant in your own financial security.

If you missed Part 1, which covers A to M, be sure to read it for a full understanding of the glossary.

And remember, our team of experts is always available to clarify any points or help tailor your insurance coverage to your needs.