Insurance terms, in plain English.
Policies come with their own vocabulary. Here’s a quick guide to the words you’re most likely to see on your paperwork.
A
Actual Cash Value (ACV)
The replacement cost of damaged property minus depreciation for age and wear.
Additional Insured
A person or business added to a policy who receives some of the policy’s protection.
Agent
A licensed professional who sells insurance and helps you choose coverage. As independent agents, we represent multiple companies.
At-Fault Accident
A collision in which you are determined to be primarily responsible for the damage or injuries.
B
Bodily Injury Liability
Pays for injuries you cause to other people in an accident, including medical bills and legal costs.
Bundling
Placing more than one policy (such as home and auto) with the same company, usually for a discount.
C
Claim
Your formal request to the insurance company for payment after a covered loss.
Collision Coverage
Pays to repair or replace your vehicle after it hits another vehicle or object, regardless of fault.
Comprehensive Coverage
Covers damage to your car from non-collision events like theft, fire, hail, flooding or hitting a deer.
D
Declarations Page
The summary page of your policy listing who and what is covered, coverage limits, deductibles and premium.
Deductible
The amount you pay out of pocket on a claim before your insurance pays the rest.
Dwelling Coverage
The part of a homeowners policy that pays to repair or rebuild the structure of your home.
E
Endorsement
A change or addition to a policy that adds, removes or modifies coverage. Also called a rider.
Exclusion
A specific situation, cause of loss or property that a policy does not cover.
F
Flood Insurance
Separate coverage for damage caused by rising water — standard homeowners policies typically exclude it.
Full Coverage
A common term for an auto policy that includes liability plus collision and comprehensive.
G
Grace Period
A short time after a premium due date during which a payment can be made without the policy lapsing.
H
High-Risk Driver
A driver insurers consider more likely to file claims, often due to violations, accidents or a lapse in coverage.
I
Insured
The person or business covered by an insurance policy.
L
Lapse
When a policy ends because the premium wasn’t paid. A lapse can raise future rates.
Liability
Your legal responsibility for injuries or damage you cause to others.
Lienholder
A bank or lender that has a financial interest in your vehicle until the loan is paid off.
Loss of Use
Pays extra living expenses if a covered loss makes your home unlivable.
M
Medical Payments
Pays medical expenses for you and your passengers after an accident, regardless of fault.
Mortgagee
The lender that holds the mortgage on your home and is listed on your homeowners policy.
N
Named Insured
The person or people specifically listed on the declarations page as policyholders.
Non-Owner Policy
Liability coverage for people who drive but don’t own a vehicle — often used to satisfy an SR-22.
P
Personal Property
Your belongings — furniture, clothing, electronics — covered under a home or renters policy.
Policy
The written contract between you and the insurance company describing your coverage.
Premium
The amount you pay for your insurance coverage, monthly or for the full term.
Property Damage Liability
Pays for damage you cause to someone else’s property, such as their car or fence.
R
Replacement Cost
Pays to replace damaged property with new items of similar kind and quality, without deducting depreciation.
Rider
Another name for an endorsement that adds or changes coverage.
S
SR-22
A certificate filed with the state proving you carry the required minimum liability insurance.
U
Underwriting
The process insurers use to evaluate risk and decide whether to offer coverage and at what price.
Umbrella Policy
Extra liability coverage that kicks in after your home or auto liability limits are used up.
Underinsured Motorist
Covers your injuries when the at-fault driver’s insurance isn’t enough to pay your costs.
Uninsured Motorist
Covers your injuries when the at-fault driver has no insurance at all.
V
VIN
Vehicle Identification Number — the unique 17-character code used to identify your vehicle.
W
Waiting Period
Time that must pass before certain coverage, such as flood insurance, takes effect.
Still have questions?
Our team is happy to walk you through your policy line by line.