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Wren Insurance Agency Blog

All You Ever Wanted to Know About Insurance

My New Year's Resolution Is...To Learn Something New!

                                   


As 2020 completes its second week, I wonder how many of us are sticking to our resolutions…Well, if your resolution was to learn something new this year then you are in luck, because Team Wren is going to help you out with that ;) Now I know what you’re thinking - what could be more exciting than to learn some insurance lingo right?? Well…maybe you weren’t thinking that exactly…but I promise you, learning some of these terms will not only help you stick to your resolution, but will also help you stay more abreast to your insurance policies and what to look out for when reading that fine print. Besides, you might already know more than you think 😉                        

                                                      

                                                                                                   Premium

  • Like most good things, insurance doesn’t come free. An insurance premium is the payment that you make to the insurance company, or carrier, in exchange for their services. This amount of money varies based upon a great many factors; however, it will always be significantly less than the value that you are receiving from your insurance policy.

                                                                                                  Deductible

  • This term refers to the amount of money that you will be required to pay, as the insured, before the coverage available on your specific policy will be paid to you. The amount varies based upon your policy and the claim you are filing, so this would be something important to clarify when meeting with your agent over a claim.
                                              


                                                                                                   Total Loss

  • This term is used to describe an asset that is so far damaged following an accident of some kind, that the repairs would cost more than the ACV of the asset itself; in other words, the asset is essentially not worth fixing following the damage inflicted. This is generally determined by thorough inspections and results in a payout from your insurance company to put towards the replacement of your asset. 

                                                                                    Uninsured Motorist Coverage

  • This coverage protects you in the unfortunate circumstance that you suffer a loss on the road caused by an uninsured driver. This is of course not a circumstance that we can expect or specifically plan for; however, this form of coverage allows you to prepare and be protected just in case. This form of coverage can provide protection to your personal injury, loss wages, and pain and suffering. 
                                                   
                                                               

                                                                                                  HO3 vs. HO6

  • When inquiring about homeowner’s insurance, you may or may not have heard of these two terms. While they differ on a few different levels, the biggest difference between an HO3 and an HO6 homeowner’s policy is the very nature of the policies themselves. An HO3 policy is specifically written for homeowners looking to insure a house, while an HO6 policy is specifically written for homeowners looking to insure a condo. Another large difference found between the two is that while an HO6 policy is typically a named peril policy, an HO3 policy can be a combination of both a named peril and an all peril (confusing I know, keep reading).  

                                                                     Replacement Cost vs. Actual Cash Value (ACV)

  • When considering which insurance policies to purchase in order to compensate you following a loss, there are two main types of claim payments. Replacement Cost Coverage is the preferred, as this coverage will give you a payout sufficient to cover the cost of replacement on items that were lost when you file a claim. Actual Cash Value (ACV), on the other hand, will give you a payout equal to the depreciated value of your loss at the time that you file a claim. In other words, Replacement Cost will put you in a position to fully replace your lost items, while ACV will only give you a settlement that will require you to use personal funds to fully replace your lost items.
                                                                

                                                                                                Declarations Page

  • This is the most important piece of your policy that your agent will often times refer to as a “dec page”. Your declarations page is the top page(s) of your policy, that is essentially an overview of the key points found within your policy. This includes such things as your policy number, your personal contact information, your coverages, your policy limits, your carrier, the effective/expiration dates, and the premium.

                                                                                            Named Peril vs. All Peril

  • The term peril refers to what damages are covered on your insurance policy. When shopping for homeowner’s insurance there are both named peril and all peril policies for you to choose from. Named peril insurance policies will only provide coverage for specific claims that are listed and clearly defined within the policy itself. Although these are often more cost effective, they are providing less available coverage and place the responsibility on the insured persons to prove that the specified peril is the root cause of the loss when filing a claim; however, when shopping for highly specific types of coverages this policy can be very effective. This differs from the coverage of an all peril policy. This type of homeowner’s insurance policy will provide coverage for all eligible claims unless it is specifically excluded within your policy. This form of coverage is obviously much broader and holding such a comprehensive policy places you in a much safer position following a loss of some kind. 
                                                      

                                                                    Primary Beneficiary vs. Contingent Beneficiary

  • When it comes to life insurance, many people get confused about the difference between the primary beneficiary and contingent beneficiary; or simply do not understand the need to assign both. Well, let us clarify any confusion for you. The primary beneficiary is the person that your life insurance benefits will immediately be given to. The contingent beneficiary is the person that your life insurance benefits will be given to if the primary beneficiary is no longer able to accept.

So, how did you do? Some of these terms you may have heard before, while others you may still not fully understand – and that’s okay! At Wren, we want you to feel fully informed as well as comfortable with the information you are being given. If you have any questions about the terms mentioned here, other insurance terms you have been confused with, or have any other insurance inquiries please feel free to contact us any time! We promise, there is no such thing as a “dumb question” ;)


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