Insurance Glossary & Insurance Definitions

Insurance Glossary. Learn Best Insurance Definitions Here.

A  |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  K  |  L  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  X  |  Y  |  Z

A

Actual Cash Value

The market value of a good or property at the time it is damage or lost. This value is used to determine the fair amount a person is entitled to have to replace their lost or damaged belongings under insurance. For example, a five-year-old car may have a different value than time of purchase due to depreciation. To determine actual cash value, the replacement cost is based on the going rate for other five-year-old cars on the market.

Additional Insured

Persons or organizations covered by an insurance policy, even if they are not the policyholder. For example, in most car insurance policies, anyone who drives your vehicle with your permission is an additional insured. In a home insurance policy, a mortgage company may request to be listed as an additional insured. In a general liability insurance policy, a small business may be listed as an additional insured to protect against work-related lawsuits.

Additional Living Expense

Portion of an insurance policy that covers added cost of living if the insured is temporarily unable to live at their residence. Coverage may refer to a clause in insurance for a home, condominium, or rented apartment so that the insured’s basic living expenses are covered while a claim is processed.

Appraisal

An assessment by an authorized individual to estimate damages and determine cost of repair. In most cases, a claims professional is authorized by the jurisdiction to evaluate what is likely owed in an insurance claim.

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B

Basic/State Minimum Financial Responsibility Limit

Based on the laws of the state or jurisdiction in which you reside, the minimum financial responsibility limit is the lowest amount of coverage that a person can have in an insurance policy. This is to ensure that each person has minimum sufficient coverage according to state law.

Bodily Injury

Insurance coverage for physical injury to a person. This is also known as bodily injury liability insurance. As a policyholder, if an accident for which you are responsible causes bodily harm to another person, this insurance is designed to cover medical and other costs for that injured person. This policy acts as a buffer against the risks of lawsuits.

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C

Catastrophe

Sudden, usually unexpected disaster. This term refers to natural disasters such as hurricanes or earthquakes, or human-caused disasters such as terrorist attacks. Catastrophes are not normally included under hazard insurance policies due to low probability but severe cost, so catastrophe insurance is a separate category of its own.

Claim

A formal request for payment from an insurance policy, due to accident, loss, or injury.

Conditions

Terms, requirements, rights, and responsibilities of each party named in an insurance policy.

Collision Insurance

An automotive insurance policy that covers most forms of impact, from collision with another vehicle to unexpected objects due to weather. This coverage often comes as an add-on to basic coverage.

Comprehensive Coverage

Type of plan that covers major loss or damage, excluding auto collision or theft. These plans are typically for those who paid more than $5,000 for property or vehicle, or are on financing plans.

Compulsory Auto Financial Responsibility Laws

Laws that require drivers to show proof of insurance or other financial requirements before legally operating a car in that state or jurisdiction.

Covered Auto(s)

The automotive listed in the insurance policy, whether primary or temporarily used due to repairs on the primary vehicle(s).

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D

Damages

Amount of money legally owed to compensate for loss or injury.

Declaration

Statement of insured persons with a policy, insurer information, and coverage included in the policy.

Deductible

The amount the insured person agree to pay before the insurance company fulfills its part of the claim. The insured person usually agrees to this amount at the time of signing the policy.

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E

Effective Date

Date in which an insurance policy begins. Changes to insurance policies also incur an effective date.

Endorsement

A change, modification, or an amendment attached to an insurance policy that the policyholder has agreed upon.

Exclusion

Portion of an insurance policy that states the persons, risks, or coverage excluded from the policy.

Expiration Date

Date in which an insurance policy ends.

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F

Fire Insurance

Part of insurance coverage, usually home insurance, designed to insure property against loss or damage due to fire or fire-related causes.

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G

Glass insurance

Portion of a policy that insures breakage of glass due to accident, burglary, or vandalism. Some states do not provide glass insurance coverage. In these states, glass insurance is considered part of comprehensive coverage instead.

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H

Hazard

Circumstances or objects that increase the likelihood of accident, damage, or loss, such as a facility that stores toxic chemicals or property located in a hurricane-prone state.

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I

Insuring Agreements

Statement within an insurance document that lists the coverage included in the policy.

Insurance to Value

The amount of insurance offered in a given policy compared with the market or cash value of the property.

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J

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K

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L

Liability Insurance

Coverage for accidental damage to another person or property. Typically, this form of coverage can insured payment for medical bills and replacement of property damaged in an accident for which you are held responsible.

Limit of Liability

The maximum amount in your plan that can cover liability costs. The remainder may come out of pocket or from other resources.

Loss

Accident, injury, or damage for which the insurance holder can seek a claim through an insurance policy. The term partial loss refers to damage that has occurred to less than the total value of your property.

Loss of Use Insurance

Coverage in the event you are unable to use your property due to loss or damage.

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M

Mortgage or Loss Payee Clause

A statement ensuring that claim compensation can be paid to both you and your lender.

Medical Payments Insurance

Coverage for expenses an insurance company agrees to pay, no matter which party is liable. This is typically a capped amount listed in the insurance policy. This type of insurance coverage is typical in certain states.

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N

Named Insured

The primary person or persons that the insurance policy covers.

No Fault Insurance or Personal Injury Protection

Policy active in some states that allows car accident victims to get receive compensation for medical expenses even at the expense of their insurance company, irrespective which party is fault for the accident. Depending on the state, personal injury protection (PIP) can cover medical bills, lost employment earnings, and funeral expenses. Some states provide base PIP at a capped amount; other states allow you to purchase an amount of PIP at your own discretion.

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O

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P

Peril

Circumstances that may put property or persons at risk, or the cause of a claim (for example, hurricane, earthquake, or fire).

Policy

An insurance statement or contract between an insurance company and the insured parties named in the document.

Policyholder

The primary insured person named in an insurance policy. The policyholder is legally responsible to pay premiums to the insurer in exchange for insurance coverage stated in the policy.

Premium

A recurring amount the insured person agrees to pay in order to have an insurance policy.

Property Damage

Injury or harm to the belongings of self or others.

Property Insurance

Coverage for policyholder’s belongings such as in an apartment or home.

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Q

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R

Replacement Cost

Type of coverage that replaces or reimburses the value of a damage item once a claim is approved.

Rental Reimbursement

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S

Scheduled Property

Itemized coverage for property in a given. This generally refers to valuable items listed because they are not normally included in basic coverage plans.

Subrogation

Based on state’s law, the right of an insurance company to receive reimbursement of its claim from the party who is legally at fault for the damage or accident.

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T

Towing/Labor

Paid coverage to cover expenses in the event that you use a tow service for you vehicle.

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U

Uninsured or Underinsured Motorists Coverage

In some states, this is a required fee to cover accident expenses in the event that a driver does not have auto insurance. This type of “coverage” is gradually being phased out or limited to specialty vehicle as most jurisdictions require insurance to legally operate a motor vehicle.

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V

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W

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X

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Y

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Z

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