Basic Insurance Terminology
Listed below are a few key terms to know before discussing insurance. If you have had a lot of experience dealing with insurance in other contexts, these will likely be familiar to you.
The policy. The written document or contract between you or your company and the insurance company.
Premium. The periodic payment paid to the insurance company for the benefits provided under the policy.
Rider. A special provision, sometimes referred to as an endorsement, attached to a policy that either expands or restricts the policy.
Claim. Notification to an insurance company that you believe a payment is due to you or your company under the terms of the policy.
Commission. A fee or percentage of the premium paid to an insurance broker or agent.
Deductible. The amount of out-of-pocket expenses that you or your business must pay before the payment is made by an insurer. For example, if the deductible for business equipment loss is $1,000 per year and you suffer $1,000 in damage in one year, there will be no payment under the policy.
Exclusions. Losses an insurance policy will not cover.
Underwriter. The person or company that evaluates your business and determines if it qualifies for insurance coverage.