Glossary
Coverage Glossary
43+ insurance terms in plain English.
- Actual Cash ValueProperty
- Replacement cost of property minus depreciation.
- Replacement CostProperty
- Amount needed to rebuild or replace property at current prices without deducting for depreciation.
- DeductibleGeneral
- The amount you pay out of pocket before insurance coverage kicks in.
- PremiumGeneral
- The amount you pay (monthly or annually) for an insurance policy.
- Liability CoverageAuto
- Pays for bodily injury or property damage you cause to others.
- Collision CoverageAuto
- Pays for damage to your vehicle from a collision regardless of fault.
- Comprehensive CoverageAuto
- Covers damage to your vehicle from non-collision events (theft, weather, vandalism).
- Uninsured MotoristAuto
- Pays your bills if you're hit by a driver with no insurance.
- Underinsured MotoristAuto
- Covers costs above the other driver's policy limits when their coverage is insufficient.
- PIP (Personal Injury Protection)Auto
- Covers medical expenses for you and your passengers regardless of fault — required in no-fault states.
- Bodily Injury LiabilityAuto
- Pays for injuries you cause to others in an at-fault accident.
- Property Damage LiabilityAuto
- Pays for damage you cause to another person's property.
- SR-22Auto
- A certificate of financial responsibility filed with the state proving you carry the required minimum auto insurance.
- FR-44Auto
- A higher-liability filing required in Florida and Virginia for serious violations.
- Term Life InsuranceLife
- Life insurance that provides coverage for a specific number of years (e.g. 10, 20, 30).
- Whole Life InsuranceLife
- Permanent life insurance that builds cash value and lasts your lifetime.
- Universal LifeLife
- Flexible permanent life insurance with adjustable premiums and death benefit.
- BeneficiaryLife
- The person or entity who receives the death benefit from a life insurance policy.
- Death BenefitLife
- The amount paid to beneficiaries upon the insured's death.
- UnderwritingGeneral
- The process insurers use to evaluate risk and determine premium.
- RiderGeneral
- An add-on to a policy that provides additional coverage or modifies the base policy.
- Dwelling CoverageHome
- Home insurance that pays to repair or rebuild the physical structure of your home.
- Personal Property CoverageHome
- Covers belongings inside your home — furniture, electronics, clothing.
- Loss of UseHome
- Pays for temporary living expenses if your home is uninhabitable after a covered loss.
- Other StructuresHome
- Coverage for detached structures like garages, sheds, and fences.
- Medical Payments (Med Pay)Home
- Pays small medical bills for guests injured on your property.
- Umbrella PolicyUmbrella
- Extra liability coverage above the limits of your auto or home policy.
- Renters InsuranceRenters
- Covers a renter's personal property and liability inside a rented dwelling.
- EndorsementGeneral
- An amendment that adds, removes, or changes coverage on an existing policy.
- ExclusionGeneral
- Specific events or losses that a policy does not cover.
- ClaimGeneral
- A formal request to your insurer to pay for a covered loss.
- Policy LimitGeneral
- The maximum amount your insurer will pay for a covered loss.
- LapseGeneral
- When a policy expires due to non-payment, leaving you uninsured.
- No-Fault StateAuto
- A state where your own insurance pays your injuries regardless of who caused the accident.
- At-Fault StateAuto
- A state where the driver responsible for the accident pays for damages.
- Gap InsuranceAuto
- Pays the difference between what you owe on your car loan and the vehicle's actual cash value.
- Hazard InsuranceHome
- Often used interchangeably with home insurance; specifically refers to dwelling damage protection.
- Flood InsuranceHome
- Separate policy for flood damage, typically not covered by standard home insurance.
- Earthquake CoverageHome
- Optional endorsement or separate policy for earthquake damage.
- HO-3 PolicyHome
- The most common home insurance policy form, covering most perils except specific exclusions.
- HO-6 PolicyHome
- Home insurance for condominium owners.
- Convertible TermLife
- A term life policy that can be converted to permanent insurance without a new medical exam.
- Cash ValueLife
- The savings component in permanent life insurance that grows tax-deferred.