Insurance Term Glossary
We understand you may need a primer on the insurance terms/jargon we often use here in the insurance industry. Here's a helpful list that will assist you either in reading your policy, content on our website, and our blog.
A
- Actual Cash Value (ACV): The value of your property, considering the age and wear. It's what your property is worth today, not what you paid for it.
- Adjuster: An insurance professional who evaluates the damage and determines how much the insurance company should pay for the loss.
- Beneficiary: The person or entity you choose to receive the payout from your life insurance policy.
- Binder: A temporary insurance contract that provides coverage until your formal policy is issued.
- Claim: A request you make to your insurance company for payment based on the terms of your policy.
- Comprehensive Coverage: Insurance that pays for damage to your car caused by something other than a collision, like theft, hail, or vandalism.
- Deductible: The amount you agree to pay out of pocket before your insurance covers the rest of a claim.
- Depreciation: The decrease in value of your property over time due to wear and tear or age.
- Exclusion: Specific conditions or circumstances that your insurance policy does not cover.
- Endorsement: A change or addition to your insurance policy that can alter coverage, terms, or conditions.
- Flood Insurance: A separate policy that covers damage to your home and belongings caused by flooding, not covered by standard homeowners insurance.
- Full Coverage: A term often used to describe a combination of coverages that protect your vehicle, but there's no standard definition. It typically includes liability, comprehensive, and collision coverage.
- Gap Insurance: Covers the difference between what you owe on your car loan and the car's ACV if it's totaled or stolen.
- General Liability Insurance: Protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations, or employees.
- Homeowners Insurance: Protects your home and belongings from damage or theft, and you from liability if someone is injured on your property.
- Health Insurance: Covers medical expenses that arise from illness or injury.
- Indemnity: A principle of insurance that ensures you are compensated for your loss, aiming to restore you to your financial position before the loss occurred.
- Insurance Score: A score derived from your credit history that insurers use to determine your premiums.
- Liability Coverage: Insurance that pays for bodily injury and property damage to others for which you are responsible.
- Life Insurance: A contract that pays out a sum of money to your designated beneficiaries upon your death.
- Mortgage Insurance: Insurance that protects the lender if you default on your home loan. Often required if your down payment is less than 20%.
- Market Value: The current value of your property if you were to sell it in the open market.
- Premium: The amount you pay for your insurance policy.
- Personal Property Coverage: Part of homeowners insurance that covers the cost to repair or replace your personal belongings.
- Rider: Another term for an endorsement. It's an addition to your insurance policy that alters coverage or terms.
- Replacement Cost: The cost to replace your property with new items of similar kind and quality without deducting for depreciation.
- Subrogation: The process by which an insurance company seeks reimbursement from the responsible party for a claim they have already paid.
- Surety Bond: A contract among at least three parties that guarantees the performance of a contract or obligation.
- Underwriting: The process by which insurers evaluate the risk of insuring a home, car, or individual and decide the terms and cost of the coverage.
- Uninsured/Underinsured Motorist Coverage: Pays for your injuries or damages if you're hit by a driver with no insurance or not enough insurance.