Insurance terms glossary
Understanding insurance lingo doesn't have to be hard. Browse through our handy insurance terms glossary to brush up on key definitions.
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Terms by letter
- AAdditional insuredA person or organization who can be added to an insurance contract, but who is not the insurance contract’s named insured.Additional interestA person or entity that has a financial interest in your property but who is not an owner.Agreed value insuranceA type of coverage that’s based on a previously agreed-upon value of your vehicle.Auto insurance coverageCoverage for damage to other vehicles or property caused by you and damage to your vehicle.
- BBlanket insuranceA policy that covers more than one type of property at the same location or the same kind of property at multiple locations as well as possessions.Bodily injury liabilityCoverage for third-party bodily injury resulting from an accident, including death.Broker feeThe fee that an insurance broker charges carriers for bringing in new customers.
- CCar rental and travel expensesCoverage for the cost of rental cars and other travel expenses accrued after an accident renders your vehicle unusable.CarrierA company that sells insurance policies and fulfills the terms of the contracts.Collateral protection insurance (CPI)Insures property held as collateral for loans made by lending institutions.Collision coverageProtection against damage to your vehicle resulting from a collision.Comprehensive coverageAuto insurance coverage for non-collision damage to a vehicle caused by events such as vandalism, natural disasters and vehicle theft.Contents insuranceCoverage for repair and replacement of personal property that is damaged by a covered peril.Co-op insuranceCoverage for owners of co-op apartments for their individual units.CoverageThe extent of loss or liability damages which can be reimbursed by your insurance policy.Coverages and limitsAll the protection included in an insurance policy and the maximum amount an insurer will pay out for a claim.
- DDeductibleThe amount of money you pay out-of-pocket towards an expense covered by your insurance.DepreciationA decrease in an asset's value over time.Dwelling coverageA type of coverage for your home’s physical structure in the event that it needs to be repaired or replaced.Dwelling limitThe maximum amount of money that your homeowners insurance policy will cover to rebuild your home.
- EEffective dateThe date that an insurance policy officially becomes active.
- HHazard insuranceA type of coverage that protects your home's structure, other structures on your property and your personal belongings from hazards.HO-2 vs HO-3HO-2 provides coverage for named perils whereas HO-3 provides open peril coverage.HO-4 policyA policy also known as renters insurance, which provides coverage for personal belongings in the event of damage.HO-5 insuranceA type of homeowners insurance that is written on an open-perils basis.Home replacement costThe price of rebuilding your home based on its location, construction type and structural features.
- IInsurance binderTemporary proof of insurance until your formal policy is issued.Insurance brokerAn insurance professional that helps you choose the best policies for your unique needs.The amount of money you pay for your insurance coverage.Insured driverA driver that is insured under a personal auto policy or listed under another’s auto policy.Insured locationAll the land, buildings and residences that the insured uses.Insured vehicleA car owned by the policyholder.
- LLiability insuranceProtection against damages or injuries that happen on your property or that you are responsible for in the event of an accident.Limit of liabilityThe maximum amount of money your insurance company is responsible for in the event an accident, unexpected hazard or theft.Loss of use coverageLoss of use coverage pays for temporary additional living expenses you incur if your home is not suitable to live in due to a covered loss.
- MMedical payment limitThe maximum amount of money that your insurance will pay towards medical bills in the event of an accident covered under your policy.Medical payments coverageCoverage for medical bills resulting from an accident, regardless of who is at fault.Medical payments to othersThe amount of money a policy covers for medical payments to others in the event of an insured incident.Moral hazardThis occurs when someone with insurance takes more risks than they would otherwise because they assume their losses will be covered.
- NNamed perilA specific type of hazard that is listed by name on your insurance policy.Negligence insuranceCoverage for damages and losses that are brought on by the carelessness of you or someone insured under your policy.
- OOpen perilA policy that covers all hazards, with the exception of perils that are specifically excluded.Other structuresStructures associated with a home, such as a fence, detached garage or gazebo, that are covered under a homeowners policy.Other structures limitThe maximum amount of money an insurer will pay out for other structures covered by your policy.
- PPermissive useUse of your vehicle by infrequent drivers that are not already named as drivers in your auto policy.Personal injury protectionMedical costs and lost wages expense coverage in states that have no-fault auto insurance laws.Personal liability coverageProtection against damages and injuries you may cause to another person or to another person’s property.Personal property coverage limitThe maximum amount of money an insurer will pay out for loss or damage to your personal property.Policy numberA unique identifier that insurance companies assign to policies.Pre-releaseThe termination of an insurance contract prior to the insurer's assumption of obligation.Property damage liabilityA type of coverage against damage you may cause to another person’s vehicle or property.Property protection insurance (PPI)A type of auto insurance that covers damages to other’s property if you’re at fault in an accident.
- RReconstruction cost estimate (RCE) insuranceThe cost to rebuild your house in the current market.
- SStated value insuranceA type of coverage that allows you to insure assets for a specified amount.Structure limitThe maximum amount an insurer will pay out to repair or replace an insured structure.
- TTheft insuranceA type of coverage that replaces items stolen from your home or vehicle.
- UUninsured motorist coverageProtection against accidents involving an uninsured, at-fault driver.
- WWind and hail coverageCoverage that can be added to homeowners policies to cover damage caused by wind and hail.
All insurance coverage is subject to the terms and conditions of the insurance policy as applicable to the claim made. This glossary is intended for your general reference and does not make legal statements about any of your insurance policies.