Insurance Terms

List of common insurance terms

1. Accident Forgiveness - provides forgiveness for your first accident from premium surcharge. This is carrier specific and customarily has a qualification period.
2. Automobile Liability Insurance - Coverage for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.
3. Beneficiary - The person or entity designated to receive the benefits from an insurance policy, such as in a life insurance policy.
4. Building Ordinance or Law Coverage - Coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings and undamaged property that is required to be demolished and rebuilt.
5. Claim - A formal request to your insurance company to pay for a covered loss or event.
6. Claim Adjuster - A representative of the insurance company who assesses and processes insurance claims.
7. Claims-Free Cash Back - Get % of the total policy premium back every renewal you are loss free. This is carrier specific.
8. Co-Insurance - A requirement to insure your property to a certain percentage of its value, usually 80%, 90%, or 100%. If you insure it for less than required, the insurance company may reduce the amount it pays on a claim.
9. Collision Coverage - Coverage for damage to your car regardless of who caused the accident, less the policy deductible.
10. Comprehensive Coverage (other than collision) - Pays for damage to or loss of your automobile from causes other than collision. These include hail, vandalism, flood, fire, and theft.
11. Coverage - The specific protection or benefits provided by an insurance policy.
12. Coverage Limit - The maximum amount your insurance policy will pay for a covered loss or event.
13. Deductible - A specified amount of money that the insured must pay before an insurance company will pay a claim of loss paid by the policyholder. This may be a specified dollar amount, a percentage, or a period of time that must elapse before benefits are paid.
14. Diminishing Deductible – Deductible that goes down over time due to being loss-free.
15. Dwelling - The physical structure of a home, attached structures (garage, fence, deck), and permanent fixtures inside.
16. Equipment Breakdown Coverage - Optional coverage that protects a variety of appliances and devices in your home when they break down due to a covered claim.
17. Exclusion - Specific conditions or events that are not covered by an insurance policy.
18. Extended Dwelling Coverage/Extended Replacement Cost - An additional amount of dwelling coverage that may be purchased to cover potential inflation or coverage deficit.
19. Flood - A general and temporary condition of partial or complete inundation of normally dry land from: (1) The overflow of inland or tidal waters; (2) the unusual or rapid accumulation or runoff of surface waters from any source (3) Landslides.
20. Glass Coverage - Coverage for glass on the vehicle needs repair or replacement.
21. Grace Period - A specified time period after a premium due date during which the policy remains in force without penalty.
22. Identity Theft Coverage - Coverage for expenses, including helpline assistance and case management services, to assist a customer with the recovery of their identity following a covered ID Theft loss.
23. In-force Policy - A policy that is active and has not expired or been canceled.
24. Indemnity - The principle that insurance is meant to restore the policyholder to the same financial position they were in before a covered loss.
25. Insurance Agent - A representative of an insurance company who sells and services insurance policies.
26. Insurance Broker - A professional who helps individuals and businesses find suitable insurance policies from various insurers.
27. Liability - Legal responsibility for an event or damage that results in injury or loss to another party.
28. Loss - The financial setback or damage that triggers an insurance claim.
29. Loss of Use - Reimburses policyholders for any extra living expenses due to having to live elsewhere while their home is being restored following a covered claim.
30. Medical Payments - This is supplemental coverage to auto insurance, covering expenses related to vehicular accidents.
31. OBEL (Optional Basic Economic Loss) - An extension of PIP offering an additional $25,000 to be used with any one PIP coverage.
32. Other Structures - Additional structures on the residence premises that are separated from the dwelling by a clear space. Examples may include fences, detached garages, sheds, and pools.
33. Peril - Covered events in which damage may occur, often offered as broad named perils, special perils, or comprehensive perils.
34. Personal Injury Coverage - Liability coverage for injury arising out of personal offenses, including but not limited to, false arrest, detention, libel, slander or defamation of character and invasion of privacy.
35. Personal Injury Protection (PIP) - Also known as “no fault” - PIP provides primary coverage for the driver and occupants in your vehicle in the event of an accident with injury, regardless of fault. Coverage is for injury, ongoing medical expenses, and loss of wages.
36. Personal Liability - Bodily injury or property damage to other people or their property as a result of your actions, at your home and anywhere else.
37. Personal Property/Contents - Personal belongings that are on your premises, vehicle, or storage facility. Examples of personal property include furniture, electronics, appliances, and clothes.
38. Policy - The formal written contract between the insured (policyholder) and the insurer (insurance company).
39. Policy Term - The duration for which an insurance policy is in effect.
40. Policyholder - The person or entity who owns an insurance policy.
41. Policyholder's Obligation - The responsibilities and requirements of the policyholder, such as paying premiums on time.
42. Premium - The amount you pay for your insurance policy, typically on a regular basis (e.g., monthly or annually).
43. Premium Rate - The cost of insurance per unit of coverage, often calculated on a per-month or per-year basis.
44. Property Damage (PD) - coverage designed to pay for damages you cause to a person's vehicle or property.
45. Rental Reimbursement Coverage - Pays a set daily amount for a rental car while your car is being repaired due to a covered claim.
46. Renewal - The process of extending or continuing an insurance policy beyond its original term.
47. Rider - An optional addition to an insurance policy that provides extra coverage for specific circumstances.
48. Risk Assessment - The process of evaluating the potential risks associated with insuring a person, property, or entity.
49. Roadside Assistance/Towing and Labor - covers you for towing and may include other emergency coverages.
50. Service Line Coverage - Optional coverage for common causes of service line failure. Examples may include: Exterior underground sewer, water service, drainage, and electrical lines.
51. Sewer and Water Backup for Building and Contents - Optional coverage for building and/or personal property caused by water which backs up through, or overflows from, a sewer, drain, sump, sump pump, or any system on the residence premises designated to remove subsurface water from the foundation area. This coverage does not apply if the loss is caused by a flood.
52. Subrogation - The process by which an insurer seeks reimbursement from a third party for a claim they have already paid.
53. Supplemental Spousal Liability - a supplementary coverage that allows one spouse to sue the driver's spouse in the event of an accident for injuries and suffering.
54. Term Life Insurance - A type of life insurance that provides coverage for a specified term (e.g., 10, 20, or 30 years).
55. Umbrella Insurance - Extra liability insurance that provides additional coverage beyond the limits of your primary policies.
56. Underwriting - The process insurers use to evaluate and determine the risk associated with insuring a person or entity.
57. Uninsured/Underinsured Motorist (UM/UIM) Coverage (SUM) - Covers your injuries and property damage caused by a hit-and-run driver, a motorist without liability insurance, or a motorist without sufficient liability insurance to cover your injuries/damage.
58. Valuable Articles Coverage - Optional Coverage that may provide 'all perils' coverage for certain classes of property. Coverage is available on a blanket (grouped) basis or an itemized (scheduled) basis. Examples include: jewelry, watches, art, chinaware.