Producer, Agency, Carrier and Other Basic Insurance Terms

5.08.2021
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What is an insurance producer?

An Insurance producer also called an insurance agent is an individual that works as a salesperson for any insurance agency. An insurance producer must be licensed by a State’s Insurance Division or Department to sell insurance in that State. The insurance sector is divided into various categories and hence an insurance producer must be licensed for each category in which he/she wants to transact business. Most of the time, producers provide service to the policies that they have written but the main intention of the producer is to sell the insurances.

An insurance producer may be appointed by one or more insurance companies to transact their business. He/she helps customers to choose their insurance plans by providing complete information and also assists them in submitting applications.

What is the difference between the insured and the insurer?

A person or an entity who buys an insurance policy for the compensation of any kind of loss mentioned in the policy is known as a policyholder or the insured.
An entity or an organization that provides insurance is known as an insurer. The insurer is responsible for the coverage of the damage that is covered under a policy.

What is an insurance agency?

An insurance agency is an independent agency that writes and binds policies through many different insurance companies. It is not directly employed by any insurance carrier or insurance company. Also known as an insurance brokerage, an independent insurance agency is unlike any captive agency that is bind to a specific insurance company and sells the insurance products of that company only. An insurance agency provides access to multiple insurance companies and advises its customers about which insurance policy is best suitable for them. It is like a retail shop where multiple brands of goods are sold. In a similar way, Insurance agencies are free to choose the insurance services that they want to sell to their customers.

What do you mean by the insurance carrier?

The insurance carrier may be a confusing term for many people. The insurance carrier is an insurance company that makes insurance services. The goal of the insurance carrier is to offer these services to another entity to cover the damages written in the policy.

In simple words, there are three main bodies in any insurance coverage: An insurance carrier(insurer), an insurance agency, and an insured. An insurance carrier provides insurance policies to individuals or entities against the risk of any financial losses in return for regular payments of premiums. An insurance agency act as a middle man and an insured is that person or entity who buys an insurance policy.

What is the meaning of additional interest in terms of insurance?

In the context of Insurance, an additional interest refers to an uninsured third party named in an insurance policy that will be notified of any changes to your policy. This party is only made aware of if the policy is ever cancelled or modified but didn’t receive any insurance coverage.

What do you understand by the term ‘additional insured’?

An additional insured is a person or entity who is a third-person insured under the policy at the request of the named insured. Additional insured takes advantage of being insured in addition to whoever originally purchased the insurance policy.

What is the meaning of coverage? Write different types of coverages.

Insurance coverage is the amount of risk that is covered by the insurance companies when an individual agrees to pay money for an insurance policy. There are five types of insurance coverages provided by insurance companies. Customers can buy different types of coverage policies according to their needs.

  1. Liability Coverage
    In most states, auto liability coverage is obligatory. Drivers are legally bound to buy at least the minimum amount of liability coverage set by state law. It helps to pay for the other driver’s expenses if you cause a car accident. However, it is not covered your own damages. This coverage has two components:

    • Bodily injury: It helps to pay for the medical bills, lost income, and emergency aid of a third person if anybody is hurt in a car accident due to their fault.
    • Property damage: It helps to pay for repairs if you damage someone’s property(eg. car or fence).
  2. Collision Coverage
    If collision coverage is included in your policy, it covers the bills for the repairs to your car. Collision coverage has to pay the value of your car(where the cost to repair exceeds the value of the vehicle).
    Collision coverage is optional but it is required for lienholders.
  3. Comprehensive Coverage
    Comprehensive Coverage pays for the damages that are unrelated to any accident like theft, fire, hail, or vandalism. Liability and collision coverages do not cover these damages. Carrying this coverage in your policy can be costly. This coverage is also optional but is required for lienholders.
  4. Personal Injury Protection
    Personal injury protection also known as PIP is mandatory in some states and optional in other states. Further, it is not available in all states. This protection helps you to pay your medical bills after an accident. PIP also helps to cover other expenses incurred— for example, child care expenses or lost income due to your injuries.
  5. Medical Payments Coverage
    This coverage helps you to pay the medical bills associated with the injuries to your passengers, family, and friends who are injured in an accident in your insured vehicles. It includes the costs for hospital visits, surgery, X-rays, and more.
    In some states, medical payments coverage is mandatory but in others it is optional.
  6. Uninsured /Underinsured Motorist Protection
    If you’re hit by an underinsured driver that means his/her liability limits aren’t enough to cover your resulting medical bills and repairing of your vehicle. In that case, uninsured motorist coverage helps you to pay for your medical expenses or, repairs to your vehicle.

What are workers’ compensation and employer’s liability policy?

Workers’ compensation and employer’s liability coverage policies are generally bought together by a company to cover the overall business insurance policy. Workers’ compensation provides coverage for workers that are injured while performing operations, without regard to fault. In this policy, the employee must show that they were hurt while performing his/her duty and they do not have to prove that the negligence of the employer. Both Workers’ compensation and employers’ liability insurance cover the injury of workers in the workplace. Employer’s liability provides coverage for an employer in situations where an employee feels that his/her injury is happened due to the negligence of the employer.

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