Basic Insurance Terms

Policy:

The contract between the insured and the insurer that establishes the conditions, coverages, exclusions and obligations of both parties.

Premium:

It is the cost paid by the insured to the insurer to obtain insurance coverage. It may be monthly, quarterly, semi-annually or annually.

Insured:

The person or entity that contracts the insurance and is protected by the policy.

Insurer:

The company that issues the policy and assumes the risk covered in the contract.

Coverage:

The specific risks or situations that the insurance protects, such as accidents, theft, fire, etc.

Deductible:

The amount the insured must pay out of pocket before the insurer covers the remainder of the cost of a claim.

Loss:

The event or occurrence covered by the policy, such as an accident, damage or loss.

Beneficiary:

The person or entity that will receive the insurance payment in the event of a loss, as in life insurance.

Exclusions:

Situations or risks that are not covered by the policy, established in the contract.

Endorsement:

Modification or extension of the original policy that changes the conditions or coverages of the insurance.

Indemnity:

The economic compensation paid by the insurer to the insured or beneficiary for damages suffered or losses

covered.

Waiting Period:

Time that must elapse from the contracting of the insurance until some coverages begin to apply.

Risk:

The possibility of the occurrence of an event causing damage or loss, which may be covered by the insurance.

Coinsurance:

Percentage of the cost of the loss that the insured must pay, shared with the insurer after covering the

deductible.