Whether you’re trying to save money or to understand the industry better, it can be very confusing to dig into the world of insurance. This is because, like most industries, there is a lot of specialized terminology. Here are some insurance tips about the major (and sometimes majorly confusing) terms you may come across as you dive into your policy or search for a new one.
The binder is a temporary insurance contract. This is one that is issued as proof of coverage and holds you over until your full insurance policy and contract are finalized. If you’ve ever bought a car, you’ve had a binder – it’s the proof of insurance you had to give the dealership so you could leave with the vehicle.
The acceleration clause is a clause in the insurance contract that allows the insurer to demand full payment of the policy under specific circumstances, such as destruction of the property or failure to pay premiums by a certain date. With car insurance, for example, most contracts are for six months or a year, but people pay the full amount in monthly installments. If you were to miss too many installments (depending on your contract), they might require you to pay the remainder (the balance for all of the remaining months) at one time.
The endorsement is also called a rider, and it is a way to extend or limit benefits of a policy. For instance, if you have a home insurance policy, you could have a rider (endorsement) that specifically covers the value of your rare book collection.
An umbrella policy is an added layer of protection against liability. Depending on the type of policy you are looking at, you could have an umbrella that provides $1 million to $5 million of coverage against personal injury or property damage lawsuits.
The floater is a separate policy that extends the protection of a standard renter’s insurance policy. For instance, if you have the standard renter’s policy, you might also have a floater to cover the value of your jewelry or sports collectibles.
In insurance, convertible refers to a specific type of life insurance policy. A convertible policy is a term life insurance policy that can convert to permanent insurance, all without you needing a medical exam (so your physical condition can’t affect the conversion).
Get in Touch with Wachter Insurance
Whether you need homeowners’ insurance or auto insurance, our team at Wachter Insurance Agency, Inc. is here to help. We offer our clients competitive rates, professional customer service, and a huge range of policies to choose from for your needs. We have been serving Maryland, West Virginia, Virginia, Pennsylvania, and the District of Columbia since 1969 and we would love to help keep your home and family safe every day of the year. For more information, call us at (301) 371-6335 or visit us online. For more blogs like these, follow us on Facebook, Google+, Twitter, and Pinterest.