I thought it would be good to go back to basics today. Most people hear insurance terms and just assume they know what those words mean. But a lot of words have a special meaning in the insurance context. So, here are 10 common terms and what they mean.
1.THIRD PARTY CLAIMANT
A third party claimant is someone who presents a claimagainst another person’s insurance policy. For example, if you are injured in acar crash and make a claim, the other person’s insurance company calls you athird party claimant.
2. TOTAL LOSS
When the repair cost of the vehicle is more than 75% of the value of thevehicle, a car is declared a total loss. The insurance company will not pay torepair this vehicle.
3. ATTORNEY-REPRESENTED
A third party claimant who has retained an attorney. Third partyclaimants who are attorney-represented usually have their claims handled bymore experienced adjusters.
4. COLOSSUS
A computer program that insurance companies use to determinethe value of a bodily injury claim. Insurance companies claim this allows themto make sure that every claim is evaluated in the same way.
5. FIRST PARTY COVERAGE
The coverage provided by your insurance company to protectyour home or car from damage. Collision and comprehensive coverage are examplesof first party coverages.
6. LIABILITY COVERAGE
The coverage provided by your insurance company to protect you if you aresued by another person and protect your assets if a claim is filed against you. Car insurance and homeowners insurancepolicies have liability coverage.
7. PREMIUM
The amount of money you pay to your insurance company in exchange for themagreeing to pay you when you file a first party claim or defend you whensomeone files a claim against your liability insurance policy.
8. UNINSURED MOTORIST COVERAGE
A special first party coverage that will pay you for damagecaused by another person when the other person does not have insurance or whenthe other person does not have auto liability limits that are the same asyours. If you are in an accident with someone who has no insurance, youruninsured motorist coverage pays for your damages.
9. SPECIAL INVESTIGATIONS UNIT (“SIU”)
A special department of the insurance company claims departmentthat investigates questionable or fraudulent claims. The SIU adjusters areusually retired police officers. They use private investigators to conduct sub rosa,also known as surveillance, on people who have filed claims that the insurancecompany thinks are fraudulent.
10. MINIMUM LIMITS POLICY
A policy that provides the bare minimum amount of insurancerequired by law. In California,a minimum limits policy is called a 15/30 policy because the insurance companywill pay $15,000 per person and $30,000 per accident for injuries sustained asa result of a car crash.
If you have a term that you are unsure of, make sure you ask an insurance professional. You can always email me at insurance@jonathangstein.com to ask!