Coverage

What Does Coverage Mean?

Insurance coverage refers to the amount of financial protection provided by an insurance company to an insured individual. In the event of an insured risk, such as death or an accident, the policyholder or a designated beneficiary will receive compensation or payment up to the value of the loss.

Insuranceopedia Explains Coverage

Coverage can apply to life, property, or health insurance. For instance, a life insurance policy with $500,000 in coverage would provide the beneficiary with a death benefit of $500,000 if the insured person passes away. The amount you buy directly sets the payout your beneficiary receives, which is why it helps to compare life insurance quotes at different coverage levels before deciding. In the case of automobile insurance, $5,000 in coverage may represent the current value of the car when the insurer accepts it for coverage. If the car is stolen and covered for theft, the insured owner would receive $5,000 as the replacement value. The coverage amount on an auto policy also depends on whether you carry liability only or full coverage car insurance, which combines collision and comprehensive into one policy. On the property side, the policy contract spells out which perils and structures fall inside the coverage limit, so it is worth reading what homeowners insurance covers before assuming a loss will be paid. For health insurance, coverage typically refers to the entitlement to reimbursement or payment for specific medical services, as outlined in the policy contract.