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Understanding Insurance Policy Basics: Key Terms and Concepts
When you purchase an insurance policy, you expect the insurance company to cover the losses you suffer. In practice, it does not always work that way. You are currently involved in a complex contractual relationship with the insurance company. It helps to be familiar with the essential terms and concepts surrounding insurance so you can make the best decisions when purchasing coverage and filing a claim.
Coverage
Your insurance policy will cover certain losses within the language of the policy. Your policy may cover you against a named loss, such as a flood. Alternatively, you could have a general policy like homeowners or property insurance.
The exact language of the policy matters. If a certain loss does not fall into the language of your policy, it is not covered.
Exclusions
The insurance company will also specifically take certain events out of the policy’s coverage through exclusions. One major thing that is typically excluded from insurance coverage is flooding. Now, you need specific insurance that just covers flooding. Often, there is a dispute over the origin of water.
The insurance company may claim that your claim is specifically excluded from the terms of your coverage, setting the stage for potential litigation.
Endorsements
You pay for the basic coverage with your policy. Your insurance coverage can also be customized to meet your needs. You can add certain types of coverage to your policy by paying more. For example, you can add insurance for valuable jewelry to your homeowner’s insurance policy. The insurance company would give you a specific quote for how much it will cost to add the endorsement.
Adjuster
The adjuster is perhaps one of the most important people you will deal with as part of your claim. The adjuster is the gatekeeper the insurance company designates to handle your claim. They will be the ones who make the initial investigation as to what happened and whether you may be entitled to a check. Then, they will assess the damage and determine the amount you should receive. Insurance adjusters can work directly for the insurance company or on a contract basis.
Policy Limits
The insurance company is not obligated to cover an unlimited amount of damage. You will decide how much coverage you want when you purchase the policy. The insurance company is only obligated to cover up to the amount of the policy limit. Of course, you can usually purchase more coverage if needed, although insurance companies sometimes have maximums that they will write for certain policies.
Litigation
The insurance company is legally obligated to pay you for losses covered by the policy up to the policy limit. However, you may have disputes about whether a certain loss is covered or the value of the damage.
An insurance policy is a contract between you and the insurance company. If they do not honor their side of the bargain, you can file a lawsuit against them. Then, a court may interpret the language of your policy to determine whether the loss is covered. A court may force them to pay what they owe. Alternatively, you could reach a settlement agreement before your case goes to trial.
If your claim has been denied, or the insurance company will not offer you enough money, you may have no choice but to litigate.
We Can Help You With Coverage
Herold Law, P.A. frequently utilizes risk management specialists and national brokers with many markets available to secure better and more economical coverages for mid-range corporations and high-net-worth individuals. Many brokers renew policies without informing the policyholder what the changes to the policy are and avenues to reduce mounting policy premiums. We can help you understand your coverage and secure a policy that fits your needs.
Reach Out to Our New Jersey Insurance Attorneys at Herold Law, P.A. With Insurance Coverage Questions
Contact our New Jersey insurance attorneys at Herold Law, P.A. today if you need help understanding your rights under your policy or in litigation. Call us at 908-679-5011 or contact us online to schedule a consultation. Located in Warren, New Jersey, we serve clients in Somerville, Morristown, and across the state.
