Let’s be honest. Most people don’t hate insurance. They hate the language.
Limits. Deductibles. Premiums. Oh my!
Then you hit words like coinsurance, out-of-pocket, endorsements, riders, and limits. Suddenly, it feels less like a policy and more like a foreign language that no one ever really taught us.
So, before we build on last week’s big idea that insurance is for what you can’t afford to lose, let’s slow down and make sure we understand the basics.
Premium
What it really means: The amount you pay to keep the policy active.
Think of it like a gym membership. You’re paying to have access, not because you’re using it every day. If you stop paying, coverage stops.
Deductible
What it really means: The amount you agree to pay before insurance steps in.
If your deductible is $2,500, that’s your share of the risk.
Higher deductible = lower premium
Lower deductible = higher premium
This is one of the clearest examples of insurance doing its real job:
Sharing risk you can’t afford to carry alone.
Coverage/Policy Limit
What it really means: The maximum amount the insurance company will pay.
If your policy has a $300,000 limit, that’s the ceiling. Anything above that is on you.
This matters more than most people realize, especially with liability coverage.
Cheap insurance with low limits can be very expensive later.
Liability
What it really means: Coverage for damage or injury you cause to someone else.
This is the “lawsuit protection” part of insurance. And for most people, it’s the most important part.
You can replace stuff. You can’t easily replace your future income if a lawsuit wipes you out.
Comprehensive and Collision
What they really mean:
Hail, theft, animals, falling objects, broken glass, storms.
That’s comprehensive.
If your car is older and you could replace it with cash, this is where self-insuring starts to make sense.
Coinsurance
What it really means: You and the insurance company split the bill.
Common in health insurance and commercial policies.
Example:
Insurance pays 80 percent. You pay 20 percent.
Until you hit your out-of-pocket max.
Out-of-Pocket Maximum
What it really means: The most you’ll pay in a year before insurance covers 100%.
This is the safety net inside the safety net. Once you hit this number, the financial bleeding stops.
Endorsement or Rider
What it really means: An add-on to the policy.
Extra coverage for jewelry.
Special equipment.
Home businesses.
Unique risks.
This is where a lot of gaps happen if no one explains it.
Replacement Cost vs Actual Cash Value
What it really means:
One replaces your stuff.
The other replaces what your stuff is “worth.”
Big difference.
The Bigger Picture: Why This Matters
Insurance is not about winning claims or getting your money back. It is about covering what could financially devastate you, not inconvenience you.
That’s why at Glidewell, we talk about insuring what matters most.
The goal is simple: insure what would financially wreck you, and self-insure the things you can handle. As you build savings, reduce debt, and grow assets, your need for insurance changes. That’s the goal.
Not more insurance…Just the right insurance for where you are right now.
Final Thought
If insurance has ever felt confusing, intimidating, or intentionally complicated, you’re not alone.
It doesn’t need to be dramatic. It doesn’t need to be scary. And it definitely doesn’t need to sound like a law textbook.
It just needs to make sense.
And if it doesn’t, that’s on us, not you.
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If you want help understanding what you actually need or figuring out where you might be over-insured or under-insured, that’s a conversation worth having. Please shoot me an email; I’d be honored to bring some clarity to your situation.