Insurance Terms and Phrases

Many insurance terms and phrases are unique to the insurance industry. There are a myriad of definitions within insurance policy defining what the words and terms mean within insurance policy. Terms and words that are not defined within the contract usually take on their ordinary meaning within society. That means the everyday common language; it’s ordinary and culturally relevant meaning. Any phrases or terms that are of a technical nature would be defined within that industry, such as technology, legal, or the medical field. Sometimes words have been defined within the community, court cases, and common law. Some words have even been established by law. Insurance carriers that are regional in nature tend to have regional nomenclature within their definitions terms and words in order to be culturally relevant to their geographical areas that they’re providing coverage for.

Most of the terms and verbiage within insurance policies throughout the nation is usually designed by the nonprofit company called Insurance Services Office. That way we do not have 2,000 different insurance companies defining the same word for accident. Most of the insurance companies subscribe to the Insurance Services Office in order to obtain their forms and contracts and definitions of insurance terminology.

The most important definition within the insurance contract is what is called the insuring agreement. Usually this is a broad statement whereby the insurance company agrees to pay claims for the insured and the insured agrees to pay the premium when due. There can be multiple insuring agreements within the contract if there are multiple coverages within the policy that are being purchased. Typically the insuring agreement clause states that the insurable pays the premium and insurance company pays claims based upon the coverages they have purchased. If it is a workers compensation policy, then you would have to go to that particular states insurance codes and regulations which could be hundreds of pages long to see what kind coverages are being provided by law.

Over the past 25+ years changes to the most common terms of all risk and comprehensive coverage have been redefined primarily based upon case law. Since technically it is really an oxymoron to say that a policy is all risk because there are always exclusions and limitations. There is never has been a policy that covers everything. Usually in today’s insurance policies the three basic terms that are used to defined property coverages are basic, broad, and special. We will define these terms in a later article.

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