Basic insurance coverage terms include actual cash value, beneficiary, premium, deductible and policy limits or limits of liability, according to Farmers Insurance. Actual cash value, or ACV, is the amount of money for which the insured could have sold the insured property on the day someone or something damaged or destroyed the property. Insurance companies calculate the amount based on the replacement value of the property minus its depreciation due to typical wear or the extent of obsolescence.Continue Reading
When an insured or annuity owner dies, a beneficiary is a person or entity entitled to receive the money from the life insurance policy or annuity policy, explains Farmers Insurance. There are several classifications of beneficiaries, such as primary beneficiary, contingent beneficiary and revocable beneficiary. A premium is the amount of money that an insured pays to an insurance company periodically to maintain insurance coverage.
A deductible is a specific dollar amount that an insured is responsible to pay before the insurance protection starts, notes Farmers Insurance. The insured pays for the loss up to the limit of the deductible, and then the insurance company pays the remainder until the amount reaches the policy limit. Policy limits, or limits of liability, are the maximum amounts of money that an insurance company contracts to pay if a loss occurs for a covered loss.Learn more about Insurance