Learning about property insurance can quickly become overwhelming. To help clarify what you are reading, here are the meanings of a few terms that appear in “Uncovered”, a joint investigation of the South Florida Sun Sentinel and Orlando Sentinel.
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Affiliates – Sibling companies created by insurers to provide services like claims handling, accounting, sales, and information technology. Their ownership structure overlaps with the insurer itself.
Adjusting — The act of responding to claims by policyholders, including inspecting homes, interviewing, determining if or what to pay for the claim, and ensuring the check arrives.
Claim — When you report damage to your insurer and sign an affidavit that the damage occurred as you said it did.
Coverage — Refers to an insurer’s commitment to pay for damages caused during a policy term.
Policy — The insurance contract between an insurer and its customer. Typically lasts between six months and a year.
Rates — The multiplier approved by authorities that insurers apply to the value of what’s being covered, determining the premium you pay.
Premium — Your total cost for insurance – the product of a rate multiplied by the value of what’s being covered. Can be paid all at once or in installments. Rates can decline while premiums increase if the value of what’s being covered rises disproportionately.
Read more About our investigation, ‘Uncovered’
Direct or gross written premiums — The total amount of money collected by an insurer before distributing it to affiliates and other entities.
Managing General Agent (MGA) — An entity paid by an insurer to conduct business on its behalf.
Reinsurance — Insurance that insurers must buy, typically from foreign financiers, to ensure they have the ability to pay for all damages that can occur in a catastrophe.
Reciprocal exchange — A newly popular form of insurer that creators tout as owned by policyholders. Reciprocals farm out their operations to agents-in-fact (AIF) and other affiliates.
Subsidiary — A company owned by another company. Insurance subsidiaries are typically formed to conduct an insurer’s duties or to sell separate insurance products.
Regulators — Authorities, usually from states, with power to approve insurers’ rates, propose and enforce laws intended to guarantee fairness, and punish wrongdoing by insurers. Florida’s insurance market is regulated by the Office of Insurance Regulation. It is overseen by the Department of Finance.
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