The insurance world is full of terms that are foreign to most consumers. It makes it challenging to shop and buy insurance, when most insurance agents seem to speak a different language. Here are some of the most common terms to help make shopping for insurance easier.

Actual Replacement Cost
Actual replacement cost is the amount of money it would cost to replace a damaged item with a new one at the time of the claim. Actual replacement cost does not factor in an item’s age and depreciation, or the effects of wear and tear over time.

Additional Living Expenses
If you’re unable to live in your home while it’s being repaired or rebuilt after a covered loss, some insurance policies provide additional living expenses to help pay the cost of temporary housing and living expenses for a defined amount of time.

Claim
Request by a policyholder or third party from an insurance company for losses covered by an insurance policy.

Collision coverage
Pays to repair damage to your vehicle that is caused by an accident involving other vehicles and objects like guardrails, trees and buildings. It does not cover damage to another driver’s vehicle.

Comprehensive coverage
Pays to repair or replace your vehicle if it is stolen, vandalized or damaged in some way other than in a collision. Includes loss or damage from fire, flood, falling objects, wind, hail and collision with an animal.

Declarations page
A summary document of an insurance policy that identifies the policyholder, the property or vehicles covered, the coverage and the premium amounts.

Deductible
The amount of money you agree to pay out-of-pocket for a claim. The deductible you choose often affects how much you pay for your insurance. A higher deductible usually means a lower insurance cost.

Insured
The person or parties who are protected by an insurance policy.

Insurer
The company that provides the insurance coverage and services to the insured.

Liability coverage
Pays for bodily injury and property damage that you, your family or friends cause while driving your car as well as legal and court costs if you’re sued in an accident.

Loss
Direct and accidental damage to the insured automobile or property used as the basis for filing a claim.

Policyholder
The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the insured.

Premium
Your insurance premium is the total cost or amount you pay in exchange for one term of policy coverage. One term of policy coverage is usually 6 or 12 months.

To learn more, contact your independent Provident Insurance agent. We serve Plainfield, Greenwood, Avon, Brownsburg, Indianapolis, Carmel, Zionsville and the entire central Indiana area. Stop in one of our convenient locations to discuss your insurance needs today.