Understanding Insurance Jargon

Everyone has encountered insurance jargon at one point in their lives. The very fact you’re reading this probably means you’ve come across some that you’re trying to understand. The insurance market is a sea of technical terminology and complex conditions and your basic understanding of these terms forms the basis of understanding your insurance policy.

Liability

Many insurance policies are designed to manage or respond to your liability in a certain situation. Gun owners liability insurance for example is designed to take into account the possible risks and worst-case scenarios that you would be accountable for.

Risk Management

Risk seems like a fairly straightforward word until you starting using it in terms of insurance where it can seem quite daunting. Assessing your risk is thinking about every possibility for something to change or happen and managing these risks is the steps you take to reduce their potential impact. In essence it’s putting a safety net in place.

Comprehensive

Just how comprehensive is comprehensive insurance? That’s almost like asking how long is a piece of string. Many people rely on umbrella policies to cover a wide range of risks and liabilities, but comprehensive policies can also contain terms and conditions regarding very specific circumstances. This is one of those terms that will always call for a discussion with your broker every time you encounter it.

Migrating Risk

This is a term that sounds more technical than it is. Migrating Risk is what happens with you purchase insurance, especially in the case of a financial risk. To migrate the risk is to transfer the potential impact onto someone else, your insurance carrier. It doesn’t make the risk disappear but it means you don’t bear the brunt of it if it happens.

Fraud

Insurance fraud is something that some people both intentionally and unintentionally commit every day. It all comes down to being honest. Being honest about your claims history, the value of what you are insuring, your income. Many insurance carriers carry out fraud investigations and background checks on their clients, it’s nothing to take personally – it cuts down on the number of phony claims being made and ensures insurance premiums are unnecessarily driven high.

Insurance isn’t there to put you off, but it does require a specialized understanding as it can make all the difference when it comes to purchasing a new policy. The best course of action is to ask your broker about anything you’re unsure of, or ask us! Is there any insurance jargon you’ve encountered recently?

If you are unsure about other insurance terms or have questions about insurance, dont hesitate to ask an expert here.

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