Insurance glossary
Insurance terms, in plain English
We'd rather you understand your coverage than just buy it. Here are the words you'll run into most — explained simply, without the jargon.
A
- Actual Cash Value (ACV)
- What your property is worth at the time of a loss — the replacement cost minus depreciation for age and wear. It usually pays less than buying the item brand new.
- Adjuster
- The person who reviews your claim, inspects the damage, and determines what your policy will pay.
B
- Beneficiary
- The person (or people) you name to receive your life insurance payout.Life insurance
- Binder
- A temporary agreement that puts your coverage in place before the full policy is issued. If coverage is “bound,” it's active.
- Bodily Injury Liability
- The part of your auto policy that helps pay for injuries you cause to other people in an at-fault accident.Auto insurance
C
- Claim
- A formal request asking your insurance company to pay for a covered loss.
- Collision Coverage
- Pays to repair or replace your vehicle after a crash, no matter who was at fault.Auto insurance
- Comprehensive Coverage
- Covers vehicle damage from things other than a crash — hail, theft, fire, vandalism, or hitting an animal.Auto insurance
- Coverage A (Dwelling)
- On a home policy, the part that pays to repair or rebuild the physical structure of your house.What is Coverage A?
D
- Declarations Page (Dec Page)
- The summary page of your policy showing what's covered, your coverage limits, deductibles, and premium.
- Deductible
- The amount you pay out of pocket on a claim before your insurance starts paying.
- Depreciation
- The drop in an item's value over time from age and wear.
E
- Endorsement (Rider)
- An add-on that changes or adds to your standard policy — for example, extra coverage for jewelry or a home business.
- Exclusion
- Something your policy specifically does not cover. Knowing your exclusions up front prevents surprises at claim time.
G
- Grace Period
- A short window after your due date when you can still pay without losing coverage.
L
- Lapse
- When a policy ends because the premium wasn't paid. A lapse can leave you unprotected and may raise your future rates.
- Liability Coverage
- Pays for injuries or damage you're responsible for causing to others. It protects your finances — not your own property.
- Lienholder / Mortgagee
- A lender with a financial interest in your car (lienholder) or home (mortgagee). They're listed on your policy and notified of changes.
- Limit
- The most your policy will pay for a covered loss. Higher limits mean more protection.
N
- Named Insured
- The person (or people) actually listed on the policy.
P
- Peril
- A specific cause of loss — like fire, wind, hail, or theft.
- Personal Property (Coverage C)
- On a home policy, coverage for your belongings — furniture, clothing, electronics, and more.Home insurance
- Policyholder
- The person who owns the insurance policy.
- Premium
- The amount you pay for your insurance — usually monthly, every six months, or yearly.
R
- Replacement Cost
- Pays to repair or replace property with new materials of similar kind and quality, without subtracting for depreciation. It typically pays more than actual cash value.
S
- Subrogation
- When your insurer pays your claim, then seeks repayment from the at-fault party's insurer.
T
- Term Life Insurance
- Life insurance that covers you for a set period, such as 20 years. Affordable, straightforward protection for your family's key years.Life insurance
U
- Umbrella Policy
- Extra liability coverage that kicks in above the limits of your auto and home policies for an added layer of protection.
- Underwriting
- The process an insurer uses to evaluate risk and decide your coverage and price.
- Uninsured / Underinsured Motorist
- Protects you when the other driver is at fault but has no insurance, or not enough to cover the damage.Auto insurance
W
- Whole Life Insurance
- Permanent life insurance that lasts your whole life and builds cash value over time.Life insurance
- Wind / Hail Deductible
- A separate deductible on many home policies that applies specifically to wind or hail damage — often a percentage of your home's insured value rather than a flat dollar amount.Wind & hail deductibles, explained
Still have a question about a term?
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