What do Those Weird Insurance Terms Mean?
By: Vanessa Paris
Have you ever tried to learn more about insurance only to be taken back to the confusion of your high school French class? If your answer is “Oui,” perhaps the following terms and their meanings will help.
Acceleration Clause – No – not Santa’s cousin who drives like Mario Andretti. A clause used in your insurance contract that gives your insurer the right to demand payment for your policy in full, under specific circumstances outlined there. What could cause your insurer to invoke the acceleration clause? A couple of examples would be non-payment of premiums by a certain date or destruction of property.
Binder – In some circles, a binder is a three-ringed contraption for holding paper. In insurance circles, a binder is a temporary insurance contract that provides proof of coverage until a permanent policy is issued. For example, when you purchase a new vehicle and you need to call your ERIE Agent to bind coverage until you get the official paperwork complete.
Coinsurance – No, this is not insurance on your coin collection. Coinsurance, in property insurance terms, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it’s a percentage of each claim above the deductible paid by the policyholder.
Convertible – We’re not talking about a slick little sports car that’ll leave your hair looking like you stuck your finger in a socket. We’re talking term life insurance coverage that can be converted into permanent insurance, regardless of an insured’s physical condition and without a medical examination.
Endorsement – This one doesn’t involve a celebrity talking about her favorite body wash. An insurance endorsement is a written agreement attached to a policy expanding or limiting the benefits. Also called a “rider,” an endorsement can cover that coin collection mentioned above when added to your home or renters policy.
Floater – Nope, not those annoying little things that sometimes pop up in your field of vision. A floater is a separate policy available to cover the value of goods beyond the coverage of a standard renters insurance policy, including movable property such as jewelry or sports equipment.
Umbrella – No, insurers don’t insure umbrellas. A personal umbrella policy provides an extra layer of liability protection. It provides an additional $1 million coverage (up to $5 million available) for you and your eligible family members against lawsuits arising from personal injury or property damage claims.
If insurance terms or phrases ever trip you up, give Bowers Insurance a call. That’s the benefit of having your own local Agent to assist you. We can translate and make sure your policy is as clear as a clochette (that’s French for “bell”).
How well do you really know insurance? Take our insurance pop quiz and find out.