Interactive Glossary
Insurance terms, in plain English
Search or filter by letter to find a clear definition of any common insurance term used across this site.
Glossary results
- Accelerated Death Benefit
- A life insurance rider that lets a policyholder access part of their death benefit early if diagnosed with a qualifying terminal or serious illness.
- Actual Cash Value (ACV)
- The value of an item today after depreciation is subtracted, rather than the cost to replace it new.
- Adjuster
- The person who investigates a claim on behalf of the insurer and determines how much the insurer should pay.
- Agent
- A licensed professional who sells insurance policies, representing either one insurer (captive) or multiple insurers (independent).
- Beneficiary
- The person or entity named to receive the payout from a life insurance policy.
- Benefit Period
- In disability insurance, how long benefits are paid once a claim is approved -- anywhere from a few months to several years, or until retirement age.
- Bodily Injury Liability
- Auto coverage that pays for injuries you cause to other people while at fault in an accident.
- Broker
- A licensed professional who shops policies from multiple insurers on a client's behalf.
- Cancel For Any Reason (CFAR)
- An optional travel insurance upgrade that allows cancellation for any reason, typically reimbursing 50–75% of insured trip costs instead of the higher rate paid for a standard covered reason.
- Cash Value
- The savings-like component that builds inside certain permanent life insurance policies over time.
- Claim
- A formal request to an insurer for payment after a covered loss.
- Coinsurance
- A percentage of covered costs the policyholder pays after the deductible is met, common in health-related coverage.
- Copay
- A fixed dollar amount owed for a specific health care service, like $30 for a doctor visit, regardless of that visit's total cost.
- Collision Coverage
- Auto coverage that pays to repair or replace your own car after a crash, regardless of fault.
- Credit-Based Insurance Score
- A score, derived from credit report data, that many insurers use as one rating factor. A few states prohibit its use in auto insurance pricing.
- Comprehensive Coverage
- Auto coverage for damage to your car from causes other than a collision, like theft, fire, or hail.
- Contestability Period
- A window, often the first two years of a life policy, during which an insurer can investigate and contest a claim.
- Declarations Page
- The summary page of a policy listing who's covered, coverage limits, deductibles, and premium.
- Deductible
- The amount a policyholder pays out of pocket before insurance coverage begins paying for a claim.
- Depreciation
- The reduction in an item's value over time due to age, wear, or use.
- Dwelling Coverage
- The part of a homeowners policy that pays to repair or rebuild the physical structure of the home itself, separate from belongings inside it.
- Endorsement
- A written change or addition to a policy that modifies its original terms.
- Elimination Period
- In disability insurance, the waiting period between a disabling event and when benefits begin -- similar in spirit to a deductible, but measured in time rather than money.
- Exclusion
- A specific situation, cause, or type of loss that a policy explicitly does not cover.
- Explanation of Benefits (EOB)
- A summary an insurer sends after processing a health care claim, showing what was billed, what the plan paid, and what the patient owes. It is not a bill itself.
- Face Amount
- The death benefit amount stated in a life insurance policy, typically the amount paid to beneficiaries.
- Full Coverage
- A common (non-official) term for carrying liability plus collision and comprehensive auto coverage.
- Gap Insurance
- Coverage that pays the difference between a totaled car's value and the remaining loan or lease balance.
- Grace Period
- A set number of days after a missed premium payment during which coverage typically stays active.
- HDHP (High-Deductible Health Plan)
- A health plan with a lower premium and a higher deductible than typical plans, often paired with a Health Savings Account (HSA) for tax-advantaged saving toward medical costs.
- HMO (Health Maintenance Organization)
- A health plan type that requires choosing a primary care physician and getting referrals to see specialists, generally in exchange for a lower premium and a narrower provider network.
- Liability Coverage
- Coverage that pays for injury or damage you cause to other people or their property.
- Lapse
- When a policy ends because premiums were not paid, resulting in no active coverage.
- Loss of Use
- Renters or home coverage that helps pay for temporary living costs if your home becomes unlivable after a covered loss.
- Medical Payments Coverage (MedPay)
- Coverage that pays medical bills for you and passengers after an accident, regardless of fault.
- Named Perils Policy
- A policy that only covers losses caused by specific events listed in the contract.
- Open Perils Policy
- A policy that covers all causes of loss except those specifically excluded, generally broader than named perils.
- Out-of-Pocket Maximum
- The most a policyholder has to pay for covered services in a plan year; once reached, the health plan generally pays 100% of covered costs for the rest of that year.
- Own-Occupation Definition
- A disability insurance policy term that pays out if you can't perform the specific duties of your own occupation, even if you could still do other work -- generally broader and costlier than an any-occupation definition.
- Peril
- A specific event or cause of loss, such as fire, theft, or windstorm.
- Personal Injury Protection (PIP)
- No-fault auto coverage for medical expenses and sometimes lost wages, required in some states.
- Personal Property Coverage
- Renters or homeowners coverage for belongings like furniture, electronics, and clothing.
- Personal Property Inventory
- A documented list of your belongings, ideally with photos, receipts, and serial numbers, used to support a claim and help decide how much coverage you need.
- PPO (Preferred Provider Organization)
- A health plan type that doesn't require referrals and generally covers out-of-network care at a reduced rate, offering more flexibility than an HMO, usually at a higher premium.
- Pre-Existing Condition
- A health issue that existed, or showed symptoms, before a policy's coverage began. In pet insurance, these are typically excluded permanently once identified.
- Policy Limit
- The maximum amount an insurer will pay for a covered loss or over the life of a policy.
- Policyholder
- The person who owns the insurance policy.
- Premium
- The amount paid, usually monthly or annually, to keep an insurance policy active.
- Premium Tax Credit
- An income-based subsidy that lowers the monthly premium for eligible ACA health insurance marketplace enrollees.
- Rating Factor
- A characteristic (such as age, location, or driving record) that insurers use to help calculate a premium.
- Reimbursement Rate
- In pet insurance, the percentage of an eligible vet bill the insurer pays back to the policyholder after the deductible is met, commonly 70–90%.
- Rental Reimbursement Coverage
- Optional auto coverage that pays for a rental car while your own vehicle is being repaired after a covered claim.
- Replacement Cost
- Coverage that pays what it costs to replace a damaged item new, without subtracting depreciation.
- Rider
- An optional add-on to a policy that provides extra or modified coverage.
- Risk Pool
- The group of policyholders whose premiums collectively fund the claims paid out by an insurer.
- Subrogation
- The process by which your insurer seeks reimbursement from the at-fault party's insurer after paying your claim.
- Term Life Insurance
- Life insurance that provides coverage for a fixed period, such as 10, 20, or 30 years, with no cash value.
- Total Loss
- When the cost to repair a vehicle or property exceeds a set threshold relative to its value, leading the insurer to pay out its value instead of repairing it.
- Trip Cancellation Coverage
- Travel insurance coverage that reimburses prepaid, nonrefundable trip costs if a trip is canceled before departure for a covered reason.
- Trip Interruption Coverage
- Travel insurance coverage that reimburses unused trip costs and reasonable extra expenses if a covered reason cuts a trip short after it has begun.
- Umbrella Policy
- Extra liability coverage that extends beyond the limits of an underlying auto, renters, or home policy.
- Underinsured Motorist Coverage
- Coverage that helps pay for your losses when the at-fault driver has insurance, but not enough to cover the damage.
- Underlying Limit
- The liability limit on an existing auto, renters, or homeowners policy that must be met before an umbrella policy's coverage begins.
- Underwriting
- The process an insurer uses to evaluate risk and set a price before issuing a policy.
- Uninsured Motorist Coverage
- Coverage that helps pay for your losses when the at-fault driver has no insurance at all.
- Universal Life Insurance
- Permanent life insurance with flexible premiums and a cash value component tied to interest rates.
- Wellness Rider
- An optional pet insurance add-on that reimburses routine, preventive care like annual exams and vaccines, which a standard accident-and-illness policy typically doesn't cover.
- Whole Life Insurance
- Permanent life insurance that lasts a lifetime and builds cash value at a guaranteed rate, with fixed premiums.
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