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Insurance terms can be very confusing. Use this guide to help you understand the basics:

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Basic Concepts:

Deductible:  The amount of money that is not covered by the insurance policy.  You may see this in Auto, Home or Medical Policies.  Typically the deductible is shown as a fixed amount such as $500,  $1,000 or $2,000.  The total cost of the insurance or Premium will depend on the deductible that you choose.  The higher the deductible, the lower the premium and vice versa.

For Example: You have a car insurance policy with a $500 deductible.  You are involved in a car accident that will cost $2,000 to fix.  The Deductible means that you have to pay the first $500, then the insurance company pays the rest or $1,500.  If the damage is less than $500, then you have to pay the full cost.

Premium:  The amount of money that you pay to the insurance company in return for covering a risk for a pre-determined period of time.

Negligence: To be negligent is to fail to do what a reasonable and prudent person would do (or to do what such a person would not do); this can result in property damage, injury or death.

Riders: These are supplemental (or additional) insurance policies that can cover risks that are not fully protected under the main insurance policy.   These "riders" or "floater" policies provide all-risk coverage for specific items - often fragile and/or valuable - subject to certain exclusions. Coverage can be world-wide and there's usually no deductible.

Risk:  a chance event that is unexpected and accidental as you, far as the policy holder is concerned. For example, if your dog's tail sweeps an ornament off a table and onto the floor where it breaks, that is due to a "risk"; the ornament would not otherwise have broken. The gradual wearing out of clothes, however, or the rotting of fruit, are quite natural and expected... and therefore are not insurable "risks".

Note:  These descriptions are for information purposes only.  InsQuote.ca accepts no liability for these descriptions.   Insurance Policies can be complex and vary in the terms and conditions that will apply to your individual situation.  Speak to your insurance professional for complete details on your particular policy.

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