A
Actual Cash Value (ACV)
The current value of an item after depreciation. Related: Valued Policy, Replacement Cost
Aggregate Limit
The max amount your insurer will pay for all claims during your policy period. Often used in Liability Insurance.
Actuary
A math/statistics expert who helps insurers predict Risk and price policies. Related: Underwriting
Adjuster
The person who evaluates your Claim and determines payout. Related: Subrogation
Agent
A licensed rep who helps you get insured. Related: Captive Agent, Independent Agent
Annuity
A financial product that pays regular income. Often used in retirement. Related: Variable Annuity
Application
The form used to apply for coverage. Related: Policy, Underwriting
Appraisal
An expert valuation, often required to insure high-value items. Related: Scheduled Personal Property
B
Beneficiary
The person who receives the payout from your Life Insurance policy.
Binding
Temporary coverage granted before a policy is finalized. Related: Underwriting, Quote
Broker
A professional who compares policies across insurers for you. Not tied to a single company.
Business Interruption Insurance
Covers lost income when your business can’t operate due to a covered event. Related: Property Insurance
C
Captive Agent
Works exclusively with one insurance company. Related: Agent, Independent Agent
Catastrophic Coverage
Protects against major financial losses from serious events like disasters or severe illness.
Claim
A formal request for your insurer to pay for a covered loss. Related: Adjuster, Subrogation
Coinsurance
You split the cost with your insurer after your Deductible is met, often 80/20 in health plans.
Collision Coverage
Covers your car if you hit another car or object. Part of Full Coverage.
Comprehensive Coverage
Covers non-collision damage like theft or hail. Also part of Full Coverage.
Conditions
Rules in your Policy you must follow for coverage to remain active.
Coverage
The protection you’re buying. Related: Full Coverage, Policy
D
Declarations Page
The summary sheet at the start of your Policy, listing coverages, limits, and insured parties.
Deductible
What you pay before your insurer begins to cover a claim. Related: Premium, Limit
Disability Insurance
Provides income if you’re unable to work due to injury or illness. Related: Short-Term Disability Insurance
Dividend
A refund paid by a Mutual Insurance Company if it had fewer claims than expected.
E
Endorsement
A written change to your Policy that adjusts coverage or conditions. Also called a Rider.
Errors and Omissions Insurance
Coverage for professionals accused of making a mistake or failing to deliver promised services. Common for insurance agents and consultants.
Exclusion
A condition or risk not covered by your Policy. Related: Named Perils, Peril
Expiration Date
The final date of your policy’s term unless it’s Renewed.
F
Face Value
The amount your Life Insurance policy will pay upon death of the insured.
Flood Insurance
Protects against damage from rising water and flash floods. Not included in standard Homeowners Insurance. Related: FEMA.gov
Free Look Period
A set number of days to cancel a new Life Insurance policy for a full refund, usually 10–30 days.
Full Coverage
Refers to a mix of Liability, Collision, and Comprehensive auto insurance. Not a formal policy name.
G
Gap Insurance
Pays the difference between your car’s actual value and what you still owe on your loan if it’s totaled. Often bundled with Full Coverage.
Grace Period
The extra time you have to pay your Premium after the due date without losing coverage. Related: Lapse
Guaranteed Insurability
Lets you increase your Life Insurance or Disability coverage later without a medical exam.
Guaranteed Replacement Cost
Pays to fully rebuild your home even if it costs more than your policy’s stated Limit. Related: Replacement Cost
H
Hazard
A condition that increases the chance of a loss. Example: old wiring increases fire risk. Related: Risk
Homeowners Insurance
Covers your home, belongings, and liability. May also pay for temporary housing after a disaster. Related: Property Insurance, Flood Insurance
I
Independent Agent
An agent who works with multiple insurance companies and offers various policy options. Related: Agent, Captive Agent
Insurable Interest
You must have a financial or legal connection to the insured person or item to take out a policy. Related: Insured
Insurance Score
A score used to help determine your Premium. Often based on your credit report and driving history. Related: Underwriting
Insured
The person, property, or entity protected by a Policy. Related: Policyholder
Insurer
The company that issues the insurance policy and pays claims. Also called the carrier.
L
Lapse
When a policy ends because you didn’t pay your Premium on time. Related: Grace Period
Liability Insurance
Covers injury or damage you cause to others. Includes legal defense. Related: Umbrella Policy
Life Insurance
Pays a Beneficiary when the insured person dies. Related: Term Life, Whole Life, Free Look
Limit
The most your policy will pay for a covered loss. Related: Deductible, Guaranteed Replacement Cost
Long-Term Care Insurance
Pays for services like assisted living, home health care, or nursing home care for chronic conditions.
Loss
Damage, injury, or other financial harm that results in a Claim. Related: Risk, Subrogation
M
Medical Payments Coverage
Pays for medical costs if someone is hurt in your car, regardless of fault. Related: PIP, No-Fault Insurance
Mortgage Insurance
Pays your mortgage lender if you die or become disabled. Related: Homeowners Insurance, Property Insurance
Multi-Policy Discount
A discount for bundling two or more policies (like home + auto) with the same insurer.
N
Named Insured
The individual or business listed on the policy who has full rights and coverage.
Named Perils
Specific risks listed in your policy that are covered. Anything not named is excluded. Related: Exclusion, Peril
No-Fault Insurance
Your own insurer pays your medical bills, regardless of who caused the accident. Related: Medical Payments, PIP
Non-Renewal
When your insurer chooses not to renew your policy when it expires.
P
Peril
A cause of loss, such as fire, theft, or hail. Related: Named Perils, Exclusion
Personal Injury Protection (PIP)
A type of Auto Insurance that covers medical costs and lost wages no matter who caused the accident. Related: No-Fault Insurance, Medical Payments
Pet Insurance
Covers veterinary costs if your dog, cat, or other pet gets sick or injured. Some plans include wellness visits too.
Policy
The legal contract between you and your insurer. It explains your Coverage, Deductible, Exclusions, and more.
Policyholder
The person or entity who owns the Policy and is responsible for paying the Premium.
Premium
The price you pay (monthly or annually) to keep your policy active. Related: Deductible, Quote, Grace Period
Property Insurance
Covers your physical assets, like a house, building, or business contents. Related: Homeowners Insurance, Mortgage Insurance
Q
Quote
An estimate of how much a policy will cost based on your personal and risk information. Related: Premium, Binding, Policy
R
Rate
The cost per unit of insurance used to calculate your Premium.
Renewal
The continuation of your policy for a new term. You may receive an updated Premium or changes to your Limit.
Renters Insurance
Covers your belongings and liability while renting. Related: Property Insurance
Replacement Cost
The amount it would take to replace damaged property with new property of similar kind and quality. Related: Actual Cash Value, Guaranteed Replacement Cost
Rider
An optional add-on to a policy that modifies coverage. Related: Endorsement
Risk
The chance of experiencing a loss. Related: Hazard, Risk Assessment
Risk Assessment
The process insurers use to evaluate your likelihood of a claim. Related: Underwriting, Insurance Score
S
Scheduled Personal Property
Extra protection for valuable items like jewelry or artwork. Often requires an Appraisal.
Short-Term Disability Insurance
Covers part of your income for a limited time if you can’t work. Related: Disability Insurance
Subrogation
When your insurer pays your Claim and then seeks reimbursement from the party at fault. Related: Loss
Surcharge
An additional charge added to your Premium because of increased risk — like accidents or violations.
Surrender Charge
A fee for early withdrawal from certain life insurance or annuity policies. Related: Viatical Settlement
T
Term Life Insurance
Covers you for a set period like 10 or 20 years. Related: Life Insurance
Total Loss
When repairing something costs more than it’s worth. Applies to vehicles and homes.
U
Umbrella Policy
Provides extra liability protection that kicks in after your other limits are maxed out. Often applies to Homeowners, Auto, and Renters.
Underinsured Motorist Coverage
Helps when another driver causes damage but doesn’t have enough insurance. Related: Uninsured Motorist
Underwriting
The insurer’s process for evaluating your risk and deciding your Premium. Related: Risk Assessment
Uninsured Motorist Coverage
Helps pay for your injuries or damages if you’re hit by someone who has no insurance.
Universal Life Insurance
A flexible Life Insurance policy with adjustable premiums and a cash value component.
V
Valued Policy
Pays the face value of the policy in a total loss, regardless of actual cost. Related: ACV, Replacement Cost
Vanishing Premium
When Life Insurance dividends are large enough to cover future premiums.
Variable Annuity
An annuity with investment options that fluctuate based on market performance.
Variable Life Insurance
A policy with investment-linked cash value that changes based on fund performance. Related: Universal Life Insurance
Viatical Settlement
The sale of a life policy by someone terminally ill to a third party for less than the death benefit.
Void
A policy that’s invalid, usually because of fraud or misrepresentation during the application.
W
Waiting Period
The time you must wait before certain coverages start. Often used in health or Life Insurance policies.
Waiver of Premium
A feature that pauses your Premium payments if you become disabled but keeps your policy active.
Whole Life Insurance
Permanent coverage with a savings component that builds cash value. Related: Life Insurance
Workers’ Compensation Insurance
Covers wage loss and medical bills for employees hurt on the job. Often required for businesses.