We have all had a conversation where a lot of things are said that you just don’t understand or comprehend.  And we have all had that conversation with our insurance agent.  Not understanding some of the most commonly used terms in insurance can affect you trying to rebuild to be whole again.  Some of the most commonly misunderstood terms are but not limited to:


  1. Deductible:   A deductible is an amount the insured is responsible for paying before the insurance begins to pay for a covered loss.  Most property insurance policies contain a per-occurrence deductible provision that stipulates that the deductible amount specified in the policy declarations will be subtracted from each covered loss in determining the amount of the insured’s loss recovery.
  2. Replacement Cost: Replacement cost is the actual cost to repair or replace an item or structure with one of the same kind and quality, at current market prices.  An example would be looking at the cost of rebuilding your property with different materials, but the same quality of property.
  3. Endorsement: An endorsement is how a change is made to your existing insurance policy.  By endorsing a policy coverage can be enhanced or restricted.  Endorsements can consist of but are not limited to increasing coverage, deleting coverage, adding coverage or simply amending the mortgagee.  The endorsement is attached to the existing policy as an added provision.
  4. Peril and named peril: A peril is a possible cause of loss.  Perils can included and are not limited to hail, fire, theft, vandalism, frozen pipes, etc.  Named perils only provide coverage for those perils listed as covered.  This is also known as board form.
  5. Co-Insurance: Co-insurance might just be the most confusing term in insurance and is found in many insurance policies like homeowners and commercial property.  This is a percentage that is set by the insurance company to determine what percentage of the value of your property must be insured so you can be fully reimbursed for a covered loss.

Stephanie Carter, Commercial Account Manager

Posted in: annapolis insurance agency, business insurance policies, commercial insurance, personal insurance

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