Insurance Guide Glossary
A complete reference of key terms, concepts, and industry jargon to help you understand estimates, quotes, and contracts. 40 terms defined in plain English.
A
- Adjuster
- An insurance professional who investigates claims, assesses damage, and determines how much the insurer will pay.
- Actual Cash Value
- A claims settlement method that pays the depreciated current market value of damaged property, not what it would cost to replace it new.
- Additional Living Expenses
- Coverage that pays for hotel, meals, and other costs when a covered loss forces you to temporarily leave your home.
- Agreed Value
- An insurance settlement basis where the insurer and policyholder agree upfront on the value of the insured item, with no depreciation deducted at claim time.
- Appraisal Clause
- A policy provision that provides a binding resolution process when the insured and insurer disagree on the value of a loss.
B
- Binder
- A temporary insurance agreement that provides coverage immediately while the formal policy is being issued.
- Beneficiary
- The person or entity named to receive the death benefit from a life insurance policy when the insured dies.
C
- Claim
- A formal request submitted to an insurance company for payment of a covered loss under a policy.
- Collision Coverage
- Auto insurance that pays to repair or replace your vehicle after a collision, regardless of fault.
- Comprehensive Coverage
- Auto insurance that pays for vehicle damage caused by events other than collisions, such as theft, fire, weather, and animal strikes.
- Copay
- A fixed dollar amount you pay for a covered health care service at the time of service, regardless of the total cost.
- Coinsurance
- The percentage of covered health care costs you pay after meeting your deductible, with the insurer paying the rest.
- COBRA
- A federal law that allows employees to continue their employer-sponsored health coverage for a limited period after leaving a job.
- Cash Value
- The savings component within a permanent life insurance policy that accumulates over time and can be borrowed against or withdrawn.
D
- Deductible
- The amount you pay out-of-pocket on a covered claim before your insurance begins paying.
- Declarations Page
- The summary page at the front of an insurance policy listing the policyholder, coverage types, limits, deductibles, and premium.
- Depreciation
- The reduction in an item's value over time due to age, wear, and obsolescence, used by insurers to calculate actual cash value.
- Dwelling Coverage
- The portion of a homeowners policy that pays to repair or rebuild the physical structure of your home after a covered loss.
E
- Exclusion
- A specific condition, cause, or type of loss that a policy explicitly does not cover.
- Endorsement
- An addition or amendment to an existing insurance policy that changes, expands, or restricts the original coverage.
F
- Flood Insurance
- A separate policy that covers physical damage caused by flooding—not included in standard homeowners policies.
G
- GAP Insurance
- Coverage that pays the difference between what you owe on a car loan and the vehicle's actual cash value if it is totaled or stolen.
H
- HSA
- A Health Savings Account—a tax-advantaged account for people with high-deductible health plans to save for qualified medical expenses.
I
- In-Network
- Providers who have contracted with your health insurer to provide services at pre-negotiated rates, resulting in lower out-of-pocket costs.
L
- Liability Coverage
- Insurance that pays for bodily injury or property damage you legally cause to others.
O
- Out-of-Pocket Maximum
- The most you will pay for covered health care services in a policy year before the insurer pays 100% of further costs.
P
- Premium
- The amount you pay—monthly, quarterly, or annually—to keep an insurance policy in force.
- Policy Period
- The duration—typically six months or one year—during which an insurance policy is in effect.
- Personal Injury Protection
- Auto insurance coverage that pays medical expenses and lost wages for you and your passengers regardless of fault.
- Personal Property Coverage
- The portion of a homeowners or renters policy that covers your belongings—furniture, electronics, clothing—against covered losses.
- Proof of Loss
- A formal sworn statement submitted by a policyholder to the insurer documenting the details and value of a claimed loss.
R
- Rider
- An optional add-on provision to a life or health insurance policy that provides additional benefits or modifies base coverage.
- Replacement Cost Value
- A claims settlement method that pays the cost to replace damaged property with new equivalent materials, without deducting for depreciation.
- Reservation of Rights
- A notice from an insurer that it is investigating a claim while reserving the right to deny coverage if the claim proves not to be covered.
S
- Subrogation
- The legal right of an insurer to pursue a third party responsible for a loss after paying the policyholder's claim.
- SR-22
- A certificate filed by your insurer with the state certifying that you carry the minimum required auto liability insurance.
T
- Term Life Insurance
- Life insurance that provides a death benefit for a specified period—typically 10, 20, or 30 years—with no cash value accumulation.
U
- Uninsured Motorist Coverage
- Auto coverage that pays your medical bills and vehicle damage when you are hit by a driver with no insurance or insufficient insurance.
- Umbrella Policy
- Excess liability insurance that provides additional coverage beyond the limits of your auto and homeowners policies.
W
- Whole Life Insurance
- Permanent life insurance that provides lifetime coverage and builds a cash value component alongside the death benefit.
40 terms · Updated March 2026