Plain-English definitions for terms you will encounter in your policy.
The value of property at the time of loss, accounting for depreciation. A five-year-old laptop covered at ACV pays what that laptop is worth today, not what it would cost to buy a new one.
Coverage that pays for temporary housing, meals, and other costs when your home becomes uninhabitable due to a covered loss. Usually listed as Coverage D in homeowners policies.
A licensed professional who sells insurance on behalf of one or more insurance companies. A captive agent represents one company exclusively; an independent agent works with multiple insurers.
The person or entity designated to receive the death benefit from a life insurance policy.
A temporary document that serves as proof of insurance coverage while the formal policy is being issued.
Coverage that pays for injuries to other people when you are at fault in an auto accident. Usually expressed as a per-person and per-accident limit (e.g., 100/300).
The savings component of permanent life insurance policies that accumulates over time and can be borrowed against or surrendered.
A formal request to your insurer for payment or coverage under the terms of your policy.
Auto insurance coverage that pays to repair or replace your car after an accident with another vehicle or object, regardless of fault.
Auto insurance coverage for non-collision damage including theft, weather events, fire, and animal strikes.
A fixed dollar amount you pay for a covered service. More common in health insurance than property and casualty insurance.
The amount paid to beneficiaries upon the insured person's death under a life insurance policy.
The first page of your insurance policy, summarizing coverage types, limits, premium, insured parties, and policy period. Often called the "dec page."
The amount you pay out of pocket before your insurance coverage kicks in on a claim. Higher deductibles mean lower premiums.
The reduction in value of property over time due to age, wear, and obsolescence. Affects actual cash value calculations.
The portion of a homeowners policy that covers the structure of your home itself, listed as Coverage A.
An addition or modification to an existing insurance policy that changes its coverage. Also called a rider.
A specific condition, event, or circumstance that is not covered by an insurance policy.
A separate policy covering damage caused by flooding. Not included in standard homeowners insurance.
An endorsement that provides broader coverage for specific valuable items such as jewelry, art, or instruments beyond standard policy sub-limits.
Auto coverage that pays the difference between your car's actual cash value and the amount you still owe on your loan if the car is totaled. Important for new vehicles.
The time after a premium payment is due during which coverage remains in force. If payment is made within the grace period, the policy is not cancelled.
The most common homeowners insurance form in the US. Covers the dwelling on an open-perils basis and personal property on a named-perils basis.
A comprehensive homeowners form that covers both the dwelling and personal property on an open-perils basis. Fewer exclusions than HO-3.
The principle that insurance is meant to restore the insured to the same financial position they were in before a loss, not to profit from it.
The person or entity covered by an insurance policy.
The insurance company that issues and backs the policy.
Coverage that protects you when you are legally responsible for causing injury to another person or damage to their property.
A legal claim on a property, such as a mortgage. Lienholders are often listed on insurance policies and may receive payment directly in the event of a total loss.
Coverage that pays for additional living expenses when your home becomes uninhabitable due to a covered event.
What a property would sell for on the open market. For homes, this includes the value of the land, which is not insurable.
Coverage that pays medical expenses for guests injured on your property or passengers in your vehicle, regardless of fault.
A coverage approach where only the specific risks listed in the policy are covered. If a peril is not named, it is not covered.
When an insurer decides not to renew your policy at the end of its term. Different from cancellation, which occurs mid-policy.
A coverage approach where all risks are covered except those specifically excluded. Also called "all-risk" coverage. More comprehensive than named-peril.
No-fault auto coverage that pays medical expenses and lost wages for you and your passengers, regardless of who caused the accident. Required in some states.
Coverage for your belongings inside your home, listed as Coverage C in homeowners policies.
The amount you pay for insurance coverage, usually expressed monthly or annually.
Auto coverage that pays for damage you cause to someone else's property in an accident.
The cost to replace damaged property with a new item of similar kind and quality, without deducting for depreciation. Preferable to actual cash value coverage.
Another term for an endorsement. An add-on to an existing policy that modifies or extends coverage.
An endorsement that covers specific high-value items such as jewelry, art, or instruments separately from standard policy sub-limits.
A coverage cap within a broader coverage category. For example, a policy may cover personal property up to $100,000 but impose a $2,000 sub-limit on jewelry specifically.
The right of an insurer to pursue a third party that caused an insurance loss in order to recover the amount paid to the insured.
Life insurance coverage for a specified period. If you die during the term, the death benefit is paid. If you outlive the term, coverage ends with no payment.
When the cost to repair a vehicle or property exceeds its actual cash value. The insurer pays the ACV rather than repair costs.
A supplemental liability policy that provides coverage beyond the limits of your home and auto policies. Usually available in $1 million increments.
The process insurers use to evaluate risk and determine whether to offer coverage and at what premium.
Auto coverage that protects you when the at-fault driver in an accident has no insurance. Also covers hit-and-run scenarios.
Auto coverage that protects you when the at-fault driver's liability limits are too low to cover your damages.
A unique 17-character code identifying your specific vehicle, required when purchasing auto insurance.
Permanent life insurance that never expires and includes a cash value component that grows over time.
A provision in some life and disability insurance policies that waives premium payments if the insured becomes disabled.