Insurance Glossary

Plain-English definitions of the insurance terms you'll see on policies, quotes, and claims paperwork.

• Actual Cash Value (ACV)
  Replacement cost minus depreciation.
• Replacement Cost
  What it costs to replace property with new of like kind and quality.
• Deductible
  What you pay out of pocket before insurance pays.
• Premium
  What you pay for insurance, usually monthly or annually.
• Liability Coverage
  Pays for harm you cause to others.
• Umbrella Insurance
  Extra liability that sits on top of underlying policies.
• Uninsured Motorist (UM)
  Covers you if an at-fault driver has no insurance.
• Collision Coverage
  Pays for damage to your car from a crash.
• Comprehensive Coverage
  Pays for non-crash damage like theft, hail, fire.
• Personal Injury Protection (PIP)
  No-fault medical coverage in your auto policy.
• Medical Payments (MedPay)
  Optional medical coverage in your auto policy.
• Endorsement (Rider)
  An add-on that modifies your policy.
• Rider
  Another word for endorsement.
• Claim
  A request for payment under your policy.
• Underwriting
  How insurers decide whether to insure you and at what price.
• Exclusion
  Something a policy specifically does not cover.
• Peril
  A cause of loss that may be covered or excluded.
• Term Life Insurance
  Life insurance for a fixed period.
• Whole Life Insurance
  Permanent insurance with cash value.
• Beneficiary
  The person or entity who receives the death benefit.
• HMO
  Health plan that uses a primary care gatekeeper.
• PPO
  Health plan with broad provider choice.
• Health Savings Account (HSA)
  Tax-advantaged account paired with a high-deductible plan.
• General Liability (GL)
  Foundational small business liability coverage.
• Workers' Compensation
  Mandatory coverage for employee work injuries.
• Business Owner's Policy (BOP)
  Bundles GL, property, and business interruption.
• Copay
  Flat fee for a covered health service.
• Coinsurance
  The percentage of a bill you pay after the deductible.
• Out-of-Pocket Maximum
  The annual cap on what you pay for covered care.
• Subrogation
  Insurer's right to recover from the at-fault party.
• Actuary
  A risk-pricing professional.
• Binder
  Temporary proof of coverage.
• Declarations Page
  The summary front page of your policy.
• Policy
  The contract between you and the insurer.
• Loss Ratio
  Claims paid divided by premiums collected.
• Disability Income Rider
  Waives premiums or pays income if disabled.
• Elimination Period
  Waiting period before disability benefits start.
• Rate
  Price per unit of insurance.
• Named Insured
  The person or entity listed on the policy.
• Insurable Interest
  A financial stake in what is being insured.
• Moral Hazard
  Risk that insurance changes behavior.
• Loss of Use (ALE)
  Pays extra living costs after a covered loss.
• Scheduled Personal Property
  Itemized coverage for valuables.
• Actual Loss Sustained
  Reimbursement based on real, documented losses.
• Excess Liability
  Adds limits over a single underlying policy.
• No-Fault Insurance
  Each driver's insurer pays for their own injuries.
• Stacking
  Combining UM/UIM limits across vehicles.
• Gap Insurance
  Pays the difference between car value and loan balance.
• Accelerated Death Benefit
  Early payout if terminally ill.
• Guaranteed Issue
  No medical exam required.
• Occurrence vs Claims-Made
  Two ways liability policies trigger.
• Tail Coverage
  Extends claims-made policy after cancellation.
• Exposure
  The amount at risk.