• Policy: Contract between you and the insurance company
• Premium: Amount paid (monthly, quarterly, or annually)
• Deductible: Out-of-pocket amount before coverage starts
• Coverage Limit: Maximum payout by insurer for a claim
• Policy Term: Duration policy is active (typically 6–12 months for auto/home)
• Declaration Page ("Dec Page"): Summary of policy details

• Claim: Request for payment under the policy
• Claimant: Person making the claim
• Liability: Legal responsibility for damages or injuries
• Comprehensive Coverage: Protection against non-collision damage (theft, weather, vandalism)
• Collision Coverage: Protection for damage from accidents with objects or vehicles
• Peril: Specific cause of loss (fire, theft, windstorm)
• Exclusion: What is NOT covered by the policy
• Rider/Endorsement: Addition or modification to standard policy

• Insured: Person(s) covered by the policy
• Beneficiary: Person who receives policy benefits
• Policyholder: Person who owns the policy
• Underwriter: Professional who evaluates risk
• Adjuster: Representative who assesses claim damages

Insurance operates on the principle of risk pooling:

• Many people pay premiums into a pool
• The pool funds claims for those who experience losses
• Financial risk is spread across multiple policyholders

For Auto Insurance:

• Driving record and claims history
• Vehicle make, model, and year
• Annual mileage and primary use
• Location (urban vs. rural)
• Age, gender, and marital status
• Credit-based insurance score (in most states)

For Homeowners/Renters Insurance:

• Home’s age, construction type, and condition
• Location (crime rate, weather risk, fire station proximity)
• Coverage amounts and deductible chosen
• Security systems and safety features
• Claims history

Example: $1,000 deductible and a $5,000 claim:

• You pay: $1,000
• Insurance pays: $4,000

Tip: Higher deductibles = lower premiums, but more out-of-pocket when claiming

• Actual Cash Value (ACV): Replacement cost minus depreciation
• Replacement Cost: Cost to replace or repair with similar quality without depreciation deduction

Consider filing a claim if:

• Damage exceeds your deductible significantly
• Someone is injured
• It’s a major loss (fire, theft, or significant damage)

Consider paying out-of-pocket if:

• Damage is slightly above or near your deductible
• It's a minor incident with no injuries
• You have multiple recent claims (risk of policy non-renewal)

• Time after premium due date when coverage continues
• Typically 10–30 days depending on policy type/state
• Policy may lapse if payment isn't made by grace period end

• Bodily Injury Liability: Injuries you cause to others
• Property Damage Liability: Damage you cause to others’ property
• Personal Injury Protection (PIP)/Medical Payments: Medical expenses for you/passengers
• Uninsured/Underinsured Motorist: Protection if hit by driver with no/insufficient insurance
• Comprehensive: Non-collision damage (theft, weather, vandalism)
• Collision: Accident-related damage to your vehicle
• Gap Insurance: Pays difference between vehicle value and loan balance if totaled

• Dwelling: Structure of your home
• Other Structures: Detached garage, shed, fence
• Personal Property: Belongings inside home
• Loss of Use: Additional living expenses if home is uninhabitable
• Personal Liability: Injuries/damage you cause to others
• Medical Payments: Minor medical costs for others injured on your property

• Covers personal property and liability
• Does NOT cover building structure (landlord’s responsibility)
• Affordable, typically $15–30/month

Steps in filing a claim:

1. Report incident to your insurer ASAP
2. Collect documentation (photos, videos, evidence)
3. Claim assignment: adjuster assigned to case
4. Assessment of damage/loss
5. Estimate repair/replacement cost
6. Payment according to policy terms and deductible
7. Resolution: repairs completed and claim closed

• Bundle policies (auto + home) for discounts
• Increase deductibles if you have emergency savings
• Ask about all discounts (safe driver, good student, security system, loyalty)
• Review coverage annually and shop around every 2–3 years
• Maintain good credit (where state law allows)
• Consider usage-based auto insurance for safe driving habits

• Underinsuring to save money
• Not updating policies after major life events
• Assuming everything is covered (read exclusions!)
• Overlooking umbrella insurance if you have significant assets
• Not documenting possessions (video home inventory)
• Letting policies lapse (coverage gaps, higher future rates)

• Annually at renewal time
• After major life events (marriage, divorce, new baby)
• When purchasing new home or vehicle
• After significant home renovations
• When starting/stopping a business from home
• If laws or regulations change in your state