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!
Excess and Surplus Lines
Property/casualty coverage that isn’t available from insurers licensed by the state and must be purchased from a non-admitted carrier.
Exclusions
Specific situations or events that your insurance policy won't cover.
Exclusions
Homeowners insurance does not cover everything. Some common exclusions include flood damage,earthquake damage, and wear and tear.
Executive Order 11988 Floodplain Management
A presidential order directing federal agencies to manage floodplains.
Existing Construction
Buildings constructed before the effective date of the applicable flood map.
Expense Ratio
Percentage of each premium dollar that goes to insurers’ expenses including overhead, marketing, and commissions.
Experience
Record of losses.
Expiration Date
The end date of an insurance policy.
Explanation of Benefits (EOB)
A statement from your health insurer detailing the services you received, the amount billed, the amount covered, and the amount you owe.
Exposure
Possibility of loss.
Extended Coverage
An endorsement added to an insurance policy that provides additional coverage for risks other than those in a basic policy.
Facultative Reinsurance
A reinsurance policy that provides an insurer with coverage for specific individual risks that are unusual or so large that they aren’t covered in the insurance company’s reinsurance treaties.
Fair Access to Insurance Requirements Plans (Fair Plans)
Insurance pools that sell property insurance to people who can’t buy it in the voluntary market because of high risk over which they may have no control.
Fair Market Value
The agreed-upon price for a property in a typical sale.
Federal Emergency Management Agency (FEMA)
The federal agency that oversees the National Flood Insurance Program (NFIP).
Federal Policy Fee
An administrative fee charged for each flood insurance policy.
Federal Reserve Board
Seven-member board that supervises the banking system by issuing regulations controlling bank holding companies and federal laws over the banking industry.
Fill
Earth material used to raise ground level, subject to regulations.
Financial Assistance/Subsidy Arrangement
Agreement between an insurance company and FEMA for participating in the Write Your Own (WYO) program.
Finished (Habitable) Area
An enclosed space with finished walls, used for purposes other than storage or parking.
Firewall
A wall designed to contain or seal off fires in a building.
First-Party Claim
A claim made by the policyholder against their own insurance company.
First-party Coverage
Coverage for the policyholder’s own property or person. In no-fault auto insurance it pays for the cost of injuries.
Floater
Attached to a homeowners policy, a floater insures movable property, covering losses wherever they may occur.
Flood
Overflowing water or mudflow causing temporary inundation of land.
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.
