Understanding Your Insurance Policy: Key Terms Tennessee Policyholders Should Know

Like many other industries, the insurance industry uses certain terms and phrases that are unique to it. With all that insurance jargon, it can be hard for policyholders to understand the information in their policies. Whether you are dealing with a car accident, property damage, or another insurance claim in Tennessee, it is vital to understand the key terms in your policy. Often, insurance disputes come from misunderstanding the wording in policies. In this article, we share some of the key terms you need to know as a Tennessee policyholder.

What Is an Insurance Policy?

Before going into the key terms you should know as a policyholder, let us first discuss the meaning of “insurance policy.” This is a legal document between a policyholder and the insurance company. In return for your premiums, the insurance company promises to cover certain damages or losses, as long as the claim is in line with the policy’s terms and exclusions.

There are many types of insurance policies in Tennessee, including;

• Auto insurance
• Homeowners insurance
• Life insurance
• Workers’ compensation
• Business insurance
• Health insurance

Auto insurance, for instance, is mandatory in Tennessee.

Key Terms Policyholders Should Understand

Below, we define some of the most vital terms and phrases Tennessee policyholders should know.

Policyholder

This is you, the individual or business that holds the insurance policy. As the policyholder, you are responsible for paying the premiums. You also have the right to file claims and receive benefits from your policy.

Premium

A premium is the amount you pay as the policyholder to obtain or maintain your policy. Premiums can be paid monthly, quarterly, or annually, depending on the terms of your policy.

Insurer

Your insurance company is known as the insurer. Your insurance company offers you financial protection. In return for your premiums, your insurer commits to cover certain losses and damages specified in the insurance policy.

Exclusions or Limitations

These are specific conditions, events, losses, or damages that are not covered under the insurance policy. Understanding your policy’s exclusions or limitations can ensure you are adequately informed about the extent of your coverage. It can ensure you make informed decisions about additional protection that you might need. Additionally, it can help prevent denied claims.

Beneficiary

This is the person or entity designated to receive insurance benefits when the covered event occurs, for example, death in a life insurance policy.

Deductible

A deductible is the amount you must pay out-of-pocket before the insurance company covers the remaining cost.

Lapse

A lapse arises when an insurance policy is no longer active because the policyholder failed to make timely premium payments. If your insurance policy lapses, the insurance company is not obligated to cover any losses.

Liability

Liability refers to an individual’s legal responsibility for damages or injury caused to another. Liability coverage helps protect you by paying for covered claims or lawsuits against you.

First-party Claim

This is a claim that you, the policyholder, make directly with your insurance company.

Third-party claim

This is a claim filed against another person’s insurance policy.

Contact Us for Legal Help

If you need help interpreting your insurance policy, contact our Knoxville civil litigation lawyer at Reynolds, Atkins, Brezina, & Stewart, PLLC.