Basic Insurance Terminology
In insurance terminology, a “loss” is the basis for an insurance claim, such as damage to a vehicle. The term loss is also used by insurance companies when referring to their payment of a legal liability on behalf of an insured person. Every insurance policy is meant to protect the policyholder from having to pay for a loss on his or her own. When a loss does occur, the policyholder will make a “claim” to the insurance company requesting that the company pay for the loss.
The insurance company will not automatically pay a claim. It first investigates to determine whether the type of loss suffered is included, or “covered,” under the policy, and if so, to what extent. The maximum amount that an insurance company will pay for a covered loss is known as the “policy limit.”
Insurance policies are complicated documents, and it can be very difficult for a consumer to determine exactly what the insurance company is obligated to do. Further, it is not uncommon for people to lose, misplace or accidentally destroy all or part of their policy. An experienced attorney can quickly resolve these issues by obtaining a complete copy of the policy and all attachments. He or she can then review the policy with you and explain the various provisions in easily understandable language.