If you are buying property insurance through any broker, it doesn’t mean that he will tell you all the pros and cons associated with it. Your insurance company and broker will tell you common meaning of the critical definition involved in the policy but they will not tell you the relevant and legal importance of the word. Reading following list of expressions will help you to recognize their true and applicable meanings.
• Accident frequency: Actuaries predict the number of accidents that may occur. This is to figure out the losses associated with accident and base premiums required for sufficient coverage.
• Assigned risk: Sometimes, the vehicle owner or driver cannot qualify for insurance coverage in regular market. In that case he can seek insurance coverage in state assigned risk plan in which he can share his insurance risk with multiple companies.
• Lapse in coverage: It is a time when the policy has been terminated because of failure to pay premium or the policy has been cancelled on the request of policyholder.
• Loss payee: these are mainly financial institutions or loan lenders who have legally secured insurable interest in borrower’s property and in case of claim, the loss payments are paid to the loss payee.
• Malicious Mischief: It is the deliberative damage done by someone to his personal property with an intention to get the damaged claims.
• Motorcycle Safety Foundation (MSF): It is an international non-profit organization completely dedicated to motor cycle and car safety research, training and awareness. Person who completes the training under MSF consequently qualifies for discount on his vehicle insurance.
• No-fault Insurance: It is the rare case insurance given by few companies in some states when someone requires medical treatment and has lost wages as an outcome of some accident.
• Non-owned auto: Any vehicle that is not borrowed, leased or owned by the policyholder and it is mainly used for business purpose.
• Reinsurance: It is form of insurance protection that many insurance companies obtain for their shield. It is generally used in extreme cases and at the time of major insurance claim.
• Replacement value: It is the cost to replace or repair the damaged property with no depreciation but confined according to the policy limits and contract conditions.
• Umbrella Insurance: It allows anyone to take extra limits on liability coverage, which is excluded in other liability policies.
Knowing the above critical terms prior to buying car insurance policy will definitely help you in unravel the reality behind the car insurance policy. This will surely help you to avoid any misunderstandings and you will not even need car insurance broker to decide which policy matches best to your needs.