Common Insurance Definitions Health Insurance Definitions
PPO - A type of health plan that allows you to choose any doctor or specialist within the network. A PPO doctor network is typically larger than an HMO network. Most PPO health plans will have a yearly deductible, coinsurance and possibly co-pays.
HMO - A type of health plan with a "must use" provider network. All referrals for specialists are coordinated through the primary physician. You have no yearly deductible and the cost for medical treatment is only a co-pay.
POS - Dual option health plan that allows you to choose between a PPO or HMO network. This type of plan is the richest plan available in the market because it offers the best of both worlds; a PPO network, and a HMO copay cost system.
DEDUCTIBLE - Yearly amount you are responsible for before a health plan reimburses for medical expenses. Typical deductible is between $500 and $1500.
CO-PAYS - Payments made for doctor visits. Typical co-pays are between $20 and $50. Co-pays do not count toward your yearly deductible and depending on the plan may not count towards your out of pocket maximum.
CO-INSURANCE - Percentage of medical bill you or family member would have to cover after the yearly deductible is met. Common percentage is 20% with a yearly maximum of $2500 to $4000.
IN-NETWORK - A provider is considered in-network if the provider has accepted the negotiated rate contract offered by the insurance carrier.
Health Savings Account
A HSA is a tax-favored savings account that is used in conjunction with a high-deductible HSA qualified health insurance plan. The savings accounts is used to pay for qualified medical expenses with tax deductible money.
Contributions to an HSA may be made pre-tax, and funds in the HSA may be invested at your discretion. Unused funds remain in the account and accrue interest year-to-year, tax-free.
- Pre-tax money is deposited each year into an HSA and can be easily withdrawn at any time with no penalty or taxes to pay for qualified medical expenses. Withdrawals can also be made for non-medical purposes, but will be taxed as normal income and are subject to a 10 percent penalty if done prior to age 65.
- Any HSA funds not used each year remain in the account, and earn interest tax-free to supplement medical expenses in the future.
- In order to have a Health Savings Account, you must have an HSA-eligible health insurance plan.
Auto Insurance Definitions
Minimum bodily injury and property damage coverage is required by the Department of Vehicles. Without the states minimum coverage you are subject to state fines and suspension of your driving privileges. However, without the right amount of coverage your could be jeopardizing your savings or assets if you are held responsible for an accident.
- Bodily Injury Liability - Pays for medical expenses, loss of income, legal defense, and other expenses caused from an accident while you are operating your vehicle.
- Property Damage Liability - Pays for the damage to another person's property caused from an accident while you are operating your vehicle.
- Uninsured/Underinsured Motorist - Reimburses you and your passengers medical expenses, loss of income, and other expenses caused by an uninsured motorist.
- Medical Payments - Pays for you and your passenger's medical expenses.
- Comprehensive - Reimburses for damage to you vehicle resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen, damaged by flood, or fire.
- Collision - Reimburses for damage to your vehicle resulting from incidents involving collision.
- Emergency Roadside Service - Pays the cost of towing and roadside assistance.
- Car Rental Reimbursement - Pays the rental car expense while your car is being serviced or repaired
Home Insurance Definitions
Your home is your most valuable possession. Having the proper understanding of you insurance coverage is crucial. A homeowner's insurance policy is a package of coverage's that provides comprehensive protection.
- Property/Dwelling Coverage -This coverage protects the permanent structures of the house from perils. A peril is the legal definition used for an incident that causes damage to your home, ie, fire, snow, wind, and explosions. Typical perils excluded are flood, nuclear hazards and earthquakes.
- Personal Liability - This coverage pays for damages that you are legally obligated to pay and that results from an incident with the property or yourself. The coverage will also pay for medical payments for other people injured on your property.
- Personal Property - covers your on-premises personal property, subject to the policy limits.
- Extended Replacement Cost - This coverage, subject to the conditions of the policy, pays the full cost of replacing the permanent structures if the property is destroyed or damaged beyond repair.
- Replacement Cost on Contents - covers the actual cost to replace the personal property, with no deduction for depreciation.
- Actual Cash Value on Contents - Covers the cost of the property minus depreciation.
Commercial Insurance Definitions
Commercial insurance protects your company's business property and offers defense from liability claims. Every business is unique so every business policy should be customized. A major fire at your worksite or even a minor fall by a visitor can have a devastating impact on your business. By obtaining a customized business policy you can protect your small business from big financial losses.
Typical business coverage's:
- General Liability - This coverage protects your business in case someone claims that your business was somehow responsible for their physical or financial damage.
- Products Liability - This is the liability a merchant or manufacturer has to assume if some defect in the product sold or manufactured injures a third party or damages his/her property.
- Premises Liability - This coverage protects your building(s) and its contents that are covered under the insurance policy.
- Property Damage - Covers tangibles such as buildings, furniture, inventory, and equipment. Some policies also cover cash, securities, hard to replace records, accounts receivables, as well as lost revenue
- Business Interruption - This coverage will reimburse you for lost earnings if your business is forced to shut down due to fire, a windstorm, explosion, or other insured causes of loss.
- Error & Omissions - This coverage protects your business from lawsuits for making a mistake or forgetting to do something while performing professional services.
Workers' Compensation Definitions
As soon as you hire your first employee state law requires you to provide your employees coverage with workers' compensation insurance. Not only do many state laws require it, but the financial security of your business also depends on it.
- Audit - An examination of the books or records of a policyholder (insured) to determine the accuracy of the estimated policy premium. The actual premium bases and exposure are reconciled after policy expiration against the estimates to establish the actual earned premium for the policy.
- Employers Liability - A policy that covers employers who may be liable, if, through their negligence, employees have been injured. Workers Compensation pays the worker whether the employer has been negligent or not. Injury must be incurred in the course of employment.
- Experience Modification Factor "Mod" - In computing insurance premiums, experience modification factor refers to a provision for premium adjustment that recognized the merits or demerits of individual risks. The "mod" is a factor calculated from actual case loss experience, as reported on the unit statistical reports, used to adjust an insured's manual premiums (up or down). It compares the insured's experience to average class experience.
Life Insurance Definitions
Life Insurance offers you the peace of mind that comes with knowing your family's needs are covered. Insurance carriers have more types of policies than you can count. However, all these policies are just variations of two basic types of life insurance; term and permanent.
- Term Life - This is coverage provided for a specific face amount, for a specific time period. If the death of the insured occurs within the time period the death benefit is paid to the beneficiary. Term insurance is the most affordable type of insurance.
- Whole Life - This policy has a specified face amount, but unlike term insurance, the policy has no specified time period. As long as the policy premium is paid the policy is in force. Permanent insurance offers extra features such as flexible face amounts and cash accumulation accounts. This policy is more expensive than term insurance.
- Face Amount - This is the amount of policy that will be paid to the beneficiary in the case the insured has passed away.
