One of the challenges for this week is to review your auto and homeowner’s/renter’s insurance. Insurance terminology can be confusing so here are few key terms to know.
Premium — the price an insurer charges a policyholder for insurance.
Insurance policy — a contract between an insured and an insurer in which the insured agrees to pay a premium in return for the insurer’s promise to pay for certain covered losses during the policy period.
Exclusion — a potential loss that is expressly excluded from coverage by an insurance policy.
Rider — addendum to an insurance policy that requires payment of additional premium in return for additional specified insurance coverage.
Deductible — the amount of loss that must be paid by an insured before the insurance company will pay any insurance benefit.
As you review your policies, make a note of what disasters are covered as well as any types of disasters that you are not insured for. Learn more about reviewing your insurance coverage in Get Financially Prepared: Take Steps Ahead of Disaster
Definitions from: Bajtelsmit, V. (2006). Personal Finance: Skills for Life. Hoboken, NJ: Jonh Wiley & Sons, Inc.
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