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

  • A
    Additional insured
    A person or organization who can be added to an insurance contract, but who is not the insurance contract’s named insured.
    Additional interest
    A person or entity that has a financial interest in your property but who is not an owner.
    Agreed value insurance
    A type of coverage that’s based on a previously agreed-upon value of your vehicle.
    Auto insurance coverage
    Coverage for damage to other vehicles or property caused by you and damage to your vehicle.
  • B
    Blanket insurance
    A 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 liability
    Coverage for third-party bodily injury resulting from an accident, including death.
    Broker fee
    The fee that an insurance broker charges carriers for bringing in new customers.
  • C
    Car rental and travel expenses
    Coverage for the cost of rental cars and other travel expenses accrued after an accident renders your vehicle unusable.
    A 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 coverage
    Protection against damage to your vehicle resulting from a collision.
    Comprehensive coverage
    Auto insurance coverage for non-collision damage to a vehicle caused by events such as vandalism, natural disasters and vehicle theft.
    Contents insurance
    Coverage for repair and replacement of personal property that is damaged by a covered peril.
    Co-op insurance
    Coverage for owners of co-op apartments for their individual units.
    The extent of loss or liability damages which can be reimbursed by your insurance policy.
    Coverages and limits
    All the protection included in an insurance policy and the maximum amount an insurer will pay out for a claim.
  • D
    The amount of money you pay out-of-pocket towards an expense covered by your insurance.
    A decrease in an asset's value over time.
    Dwelling coverage
    A type of coverage for your home’s physical structure in the event that it needs to be repaired or replaced.
    Dwelling limit
    The maximum amount of money that your homeowners insurance policy will cover to rebuild your home.
  • E
    Effective date
    The date that an insurance policy officially becomes active.
  • H
    Hazard insurance
    A type of coverage that protects your home's structure, other structures on your property and your personal belongings from hazards.
    HO-2 vs HO-3
    HO-2 provides coverage for named perils whereas HO-3 provides open peril coverage.
    HO-4 policy
    A policy also known as renters insurance, which provides coverage for personal belongings in the event of damage.
    HO-5 insurance
    A type of homeowners insurance that is written on an open-perils basis.
    Home replacement cost
    The price of rebuilding your home based on its location, construction type and structural features.
  • I
    Insurance binder
    Temporary proof of insurance until your formal policy is issued.
    Insurance broker
    An insurance professional that helps you choose the best policies for your unique needs.
    Insurance premium
    The amount of money you pay for your insurance coverage.
    Insured driver
    A driver that is insured under a personal auto policy or listed under another’s auto policy.
    Insured location
    All the land, buildings and residences that the insured uses.
    Insured vehicle
    A car owned by the policyholder.
  • L
    Liability insurance
    Protection against damages or injuries that happen on your property or that you are responsible for in the event of an accident.
    Limit of liability
    The maximum amount of money your insurance company is responsible for in the event an accident, unexpected hazard or theft.
    Loss of use coverage
    Loss 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.
  • M
    Medical payment limit
    The maximum amount of money that your insurance will pay towards medical bills in the event of an accident covered under your policy.
    Medical payments coverage
    Coverage for medical bills resulting from an accident, regardless of who is at fault.
    Medical payments to others
    The amount of money a policy covers for medical payments to others in the event of an insured incident.
    Moral hazard
    This occurs when someone with insurance takes more risks than they would otherwise because they assume their losses will be covered.
  • N
    Named peril
    A specific type of hazard that is listed by name on your insurance policy.
    Negligence insurance
    Coverage for damages and losses that are brought on by the carelessness of you or someone insured under your policy.
  • O
    Open peril
    A policy that covers all hazards, with the exception of perils that are specifically excluded.
    Other structures
    Structures associated with a home, such as a fence, detached garage or gazebo, that are covered under a homeowners policy.
    Other structures limit
    The maximum amount of money an insurer will pay out for other structures covered by your policy.
  • P
    Permissive use
    Use of your vehicle by infrequent drivers that are not already named as drivers in your auto policy.
    Personal injury protection
    Medical costs and lost wages expense coverage in states that have no-fault auto insurance laws.
    Personal liability coverage
    Protection against damages and injuries you may cause to another person or to another person’s property.
    Personal property coverage limit
    The maximum amount of money an insurer will pay out for loss or damage to your personal property.
    Policy number
    A unique identifier that insurance companies assign to policies.
    The termination of an insurance contract prior to the insurer's assumption of obligation.
    Property damage liability
    A 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.
  • R
    Reconstruction cost estimate (RCE) insurance
    The cost to rebuild your house in the current market.
  • S
    Stated value insurance
    A type of coverage that allows you to insure assets for a specified amount.
    Structure limit
    The maximum amount an insurer will pay out to repair or replace an insured structure.
  • T
    Theft insurance
    A type of coverage that replaces items stolen from your home or vehicle.

  • U
    Uninsured motorist coverage
    Protection against accidents involving an uninsured, at-fault driver.
  • W
    Wind and hail coverage
    Coverage 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.