Insurance Definitions: Basic Insurance Terms

Sometimes the insurance buying process can be a bit confusing, especially when you shop for coverage online. Make sure you know the basics before you buy your next insurance policy. With the help of our easy to follow basic terminology guide, you’ll be able to start comparing quotes from multiple national providers online in just minutes!

Online Insurance Shopping Basics: Insurance Definitions

Auto
Auto insurance is the most common type of insurance purchased in the United States. All drivers in the U.S. are required by law to carry at least their state minimum level of coverage. While, additional coverage options are available in order to cover any possible outcome of an auto accident. 

A policy is purchased by the vehicle owner/operator in order to help reduce the costs associated with getting in an auto accident. Policy holders pay an annual premium to their insurance provider and in turn, their insurance provider will pay all or some of the costs associated with an accident or damage to the covered vehicle.

Home
To shield your home and assets from the unexpected, there is no better protection than homeowners insurance. This form of property insurance is often required to be obtained by new homeowners before the sale of their house can be finalized. It is designed to help protect the home itself, the homeowner and in some cases the possessions contained in the home, in the event of an accident. Premiums are paid by the policy holder annually, while the insurance provider pays out all or a portion of the costs associated with an accident or other damages.

Life
Life insurance coverage works in the same way that the other types of insurance listed here do. When an annual premium is paid out over time, policy providers make a promise to pay for any costs related to the insured’s death. This lump-sum payment is known as a death benefit and is paid out to beneficiaries of the policy holder’s choosing.

There are 2 main types of life insurance available in the US. Term life insurance provides financial protection for beneficiaries over a predetermined period of time, typically 10 to 20 years. While whole life insurance is designed to be a lifetime coverage for beneficiaries.

Get the Coverage You Need Today!

Don’t get caught without the right level of coverage when you need it the most. Instead, visit your team of independent agents online today to start comparing quotes from multiple national providers in just minutes and save on your next policy.