You've been waiting for it and it's finally here!
Below is the list of the final five insurance terms that you need to know.
This is the maximum amount the insurance company will pay out in case of a loss. The limits are usually found on the first page of your policy, this page is also referred to as the declarations/dec. page.
7. Comprehensive and Collision Coverage (aka "Full Coverage")
To begin, there is no such thing as "Full Coverage". It is a phrase that gets thrown around a lot, but it holds no real meaning in the insurance world. BUT! If you want to really impress your insurance agent and you are looking for this elusive "Full Coverage", ask him/her about comprehensive and collision coverages. Both of these coverages are associated with physical damage done to your vehicle.
Comprehensive: This covers auto damage that occurs by an act of nature, theft, or an UNINTENTIONAL act of stupidity. I.e. Say you are practicing your golf swing in your front yard. If you hit your car that is parked in your driveway with a kamikaze golf ball, comprehensive insurance will help you pay to have the dent removed.
Collision: Collision coverage helps you pay for damage to your vehicle when you run into (or collide with) something.
An endorsement is a form added to any basic insurance policy. These forms ensure that the policy meets state insurance requirements and they modify coverage based on your exposures or changes you have requested. In other words, endorsements make sure you have the specific coverages you need.
A binder is the temporary version of your permanent policy. When you apply for a new insurance policy, there is a small amount of down-time (approximately 30 days) before you receive your actual policy. The binder provides proof of coverage until that point.
10. Actual Cash Value (ACV) VS Replacement Cost
Actual Cash Value (ACV): this is what an item costs to replace MINUS depreciation.
Replacement Cost: As you might except, this is how much it costs to replace your property with new materials.
You can think about it like this: Let's say you have a six-year old, big-screen TV. One afternoon there is a terrible lightening storm that strikes your house. Your TV blows up! The first thing you do is call your insurance agent at Cardinal and file a claim. After going through the necessary process, you will receive a check for the actual cash value of your TV. If, however, the cost of an equivalent TV is more than the ACV, just send your insurance company the receipt and they will reimburse you (the sum of that purchase is your replacement cost).
If these definitions are a little too vague for you, feel free to click on the link for the National Association of Insurance Commissioners website (NAIC).
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My name is Anna and I just started working at Cardinal. I am new to the insurance business, but I have already learned so much. I have many questions about insurance, as I'm sure is the case with many of you. While I may not have the answers - I will be picking the brains of the Cardinal Insurance Team. Shoot me an email with your questions - and I will get the answers! mailto:firstname.lastname@example.org