My Insurance Policy

My Insurance Policy - What is Insurance?

We have all heard of it, we all know that it many scenarios it is required and/or desired, and we think we know what it is for.  But how many times have people said, what exactly is insurance and what does my insurance policy cover?

Whether it’s for a automobile accident, hail damage to our roof, offsetting medical bills, or in the event of death - insurance is one of those abstract services that many despise dealing with and paying for, but are relieved and glad they were carrying it.

An insurance policy is simply an agreement between you and an insurance company that states that they will pay for your losses or damages up to a certain amount as long as:
a) the damages are listed as covered in the policy
b) the loss occurred during the coverage dates and
c) the cost for your coverage is paid

Let’s break down just a few of the terms you’ll find when discussing insurance.  These should help you in understanding an agent when they are telling you about the product you might be purchasing.

• Policy - legal agreement or contract between 2 or more parties usually pertaining to insurance
• Insurer - the insurance company providing coverage
• Policyholder - the responsible party for the policy, whether individual or group
• Insured - the persons or property that is actually covered under the policy
• Indemnify - bring back to status or financial condition prior to loss
• Loss - damage, loss, or financial detriment
• Peril - exposure to loss or damage
• Premium - cost of coverage; usually paid monthly, semi-annually, or annually
• Policy Period - specified dates that coverage is effective

I hope this information, albeit simplistic, provides you a general grasp of the basics of insurance.  We’ll discuss various terms and coverages later in the site.

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