Insurance 101: The Ultimate Glossary of Must-Know Terms
Insurance can feel like a maze of confusing jargon. But understanding the key terms is crucial for making informed decisions about protecting yourself, your loved ones, and your assets. Let's decode the insurance lingo together!
Types of homeowners insurance
- HO-1: This is the most comprehensive type of homeowners insurance. It covers the dwelling, other structures on the property, personal property, and additional living expenses.
- HO-2: This type of insurance covers the dwelling and other structures on the property, but it does not cover personal property.
- HO-3: This type of insurance covers the dwelling, other structures on the property, personal property, and additional living expenses. It also covers personal liability.
- HO-4: This type of insurance covers renters' personal property.
- HO-5: This type of insurance covers the dwelling, other structures on the property, personal property, additional living expenses, and personal liability. It also covers additional perils, such as flood and earthquake damage.
Umbrella Insurance
Offers additional liability protection beyond the limits of your other insurance policies.
Underground Building
A building with most of its value below ground level.
Underlying Limits
The minimum liability limits required on your auto, home, or other primary insurance policies before you can purchase an umbrella policy.
Underwriter
The insurance company employee who assesses the risk of insuring you and sets your premium rates.
Unfinished Area
A building space used only for parking or storage.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
- Uninsured Motorist Coverage: Protects you if you're hit by a driver who doesn't have any insurance. It can cover medical expenses, lost wages, and pain and suffering.
- Underinsured Motorist Coverage: Protects you if you're hit by a driver who has insurance, but not enough to cover all of your damages. Your UIM coverage will kick in to cover the difference.
Unit
An individual living space within a condominium building.
Universal Life Insurance
Offers flexible premiums and death benefits, along with a cash value component.
Utilities
Building systems like electricity, heating, plumbing, and air conditioning that must be protected from flood damage.
V-Zone Certificate
Documentation confirming a building's compliance with flood-resistant construction standards in high-risk coastal areas.
Valued Policy
An insurance policy with a predetermined payout amount in case of total loss.
Variance
An exception to floodplain management regulations granted by a community.
Violation
Failure to comply with floodplain management regulations.
Waiting Period
The time you must wait after buying an insurance policy before certain coverages become active.
Walled and Roofed
A structure with enclosed walls and a roof attached to a permanent site.
Water Systems
Building systems for water supply and drainage.
Watercourse
The channel of a river or stream, excluding adjacent floodplains.
Wave Height Adjustment
An added measurement to account for wave height in determining flood risk.
Wellness Coverage
Covers routine care like checkups, vaccinations, and dental cleanings.
Wet Floodproofing
Measures to protect a building from flood damage while allowing water entry.
Whole Life Insurance
Provides coverage for your entire life and includes a cash value component that grows over time.
Workers' Compensation Insurance
Provides wage replacement and medical benefits to employees injured on the job.
Write Your Own (WYO)
A program that allows private insurers to write and sell flood insurance policies under the NFIP.
Write Your Own (WYO) Program
Private insurance companies participate in the NFIP and sell and service flood insurance policies, but claims are paid by the federal government.
Don't Be Afraid to Ask!
If you come across an insurance term you don't understand, don't hesitate to ask your insurance agent or company. They are there to help you navigate the complexities of insurance. Remember, knowledge is power when it comes to protecting your financial well-being.
Pro Tip: Always read your insurance policy carefully and ask questions to ensure you have the right coverage for your specific needs and circumstances.
