Sure! Here’s a comprehensive blog post listing common insurance terms along with their definitions, designed to help readers better understand insurance policies, coverage, and the claims process.
📘 Insurance Glossary: Common Insurance Terms & Their Definitions
Insurance can be a confusing topic, filled with unfamiliar jargon. Whether you’re shopping for a policy or trying to understand the fine print in your coverage, knowing key insurance terms is essential. Here’s a helpful glossary of common insurance terms and what they mean.
A
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Actual Cash Value (ACV)
The value of property at the time of loss, calculated as the replacement cost minus depreciation. -
Adjuster
A representative of the insurance company who investigates and settles insurance claims. -
Agent
A person licensed to sell insurance policies and represent the insurance company or companies. -
Application
A form used to apply for insurance coverage.
B
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Beneficiary
The person or entity designated to receive benefits from an insurance policy. -
Binder
A temporary contract that provides proof of coverage until a formal policy is issued. -
Bodily Injury Liability
Coverage that pays for injuries you cause to another person in an auto accident.
C
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Claim
A request made by the policyholder to the insurance company for payment based on the terms of the policy. -
Coinsurance
A percentage of costs the insured shares with the insurer after the deductible is met (commonly used in health insurance). -
Collision Coverage
Pays for damage to your vehicle resulting from a collision, regardless of fault. -
Comprehensive Coverage
Covers damage to your car not caused by a collision (e.g., theft, fire, hail). -
Coverage
The protection provided under an insurance policy.
D
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Declarations Page
A summary of your policy, including coverage limits, deductibles, and premiums. -
Deductible
The amount the policyholder must pay out of pocket before the insurance company pays. -
Depreciation
The decrease in value of property due to age, wear and tear, or obsolescence.
E
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Endorsement (or Rider)
A written amendment that alters the coverage or terms of an insurance policy. -
Exclusion
A provision that eliminates coverage for certain risks or conditions. -
Effective Date
The date when coverage begins under an insurance policy.
F
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Face Amount
The amount stated on a life insurance policy that will be paid upon death. -
Flood Insurance
A separate policy that covers damage from flooding, not typically included in standard homeowners insurance.
G
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Grace Period
A time period after the premium due date during which coverage remains in force even if the premium hasn’t been paid. -
Group Insurance
A policy that covers a group of people, often provided by employers to employees.
H
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Hazard
A condition that increases the likelihood or severity of a loss (e.g., faulty wiring). -
Health Maintenance Organization (HMO)
A type of health insurance plan that limits coverage to care provided by doctors who work for or contract with the HMO.
I
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Insurable Interest
A legitimate financial interest in the person or property being insured. -
Insured
The individual or entity covered by an insurance policy. -
Insurer
The company providing the insurance coverage.
L
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Liability Insurance
Provides coverage for legal responsibility for bodily injury or property damage to others. -
Limit of Liability
The maximum amount an insurance company will pay for a covered loss. -
Loss
The amount of damage or injury sustained.
M
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Medical Payments Coverage (MedPay)
Pays medical expenses for you and your passengers after a car accident, regardless of fault. -
Mortgagee
The lender or institution holding the mortgage on insured property.
P
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Peril
A specific risk or cause of loss covered by an insurance policy (e.g., fire, theft). -
Policy
The written contract stating the terms of the insurance coverage. -
Policyholder
The person who owns the insurance policy. -
Premium
The amount paid for an insurance policy, usually monthly or annually. -
Property Damage Liability
Coverage for damage you cause to someone else’s property in an accident.
R
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Replacement Cost
The cost to replace damaged or destroyed property with new property of like kind and quality, without deduction for depreciation. -
Rider
Another term for an endorsement; an addition to a policy that modifies coverage.
S
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Subrogation
The insurer’s right to recover costs from a third party responsible for a loss after paying out a claim. -
Surcharge
An extra charge added to your premium due to accidents or violations.
T
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Term Insurance
Life insurance that provides coverage for a specific time period. -
Total Loss
A loss so extensive that the cost of repair exceeds the value of the property.
U
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Underwriting
The process insurers use to evaluate the risk and determine premium pricing for applicants. -
Uninsured Motorist Coverage
Pays for injuries or damages caused by a driver with no insurance.
W
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Whole Life Insurance
A permanent life insurance policy with coverage for the insured’s entire life and a cash value component. -
Waiver
A provision that voluntarily gives up a known right, often related to premium payments or exclusions.
Final Thoughts
Understanding insurance terminology helps you make more informed decisions, whether you’re buying a new policy, reviewing coverage, or filing a claim. Save this glossary for future reference, and if you’re ever in doubt, ask your agent or broker to explain unfamiliar terms.
