Understand Key Insurance Terms
Here’s a list of important insurance terms to help you navigate policies and coverage options with confidence.
A
Adjuster – A professional who evaluates insurance claims to determine the amount an insurance company should pay.
Agent – A licensed individual or company that sells and services insurance policies.
Annual Deductible – The amount you must pay for covered services before your insurance begins to pay.
B
Beneficiary – The person or entity designated to receive benefits from a life insurance policy.
Binder – A temporary insurance contract that provides proof of coverage until the official policy is issued.
Bodily Injury Liability – A type of auto insurance that covers medical expenses for injuries you cause to others in an accident.
C
Claim – A formal request to an insurance company for payment under an insurance policy.
Collision Coverage – Auto insurance that pays for damage to your car caused by a collision, regardless of fault.
Comprehensive Coverage – Auto insurance that covers damage to your car from non-collision events, such as theft or natural disasters.
D
Deductible – The amount you must pay out of pocket before your insurance policy covers a claim.
Dependent – A person, such as a spouse or child, who is covered under your health or life insurance policy.
Disability Insurance – A type of coverage that provides income if you are unable to work due to illness or injury.
E
Exclusion – A condition or circumstance that is not covered by an insurance policy.
Endorsement – A modification to an insurance policy that adds or removes coverage.
Emergency Room Copay – A fixed amount you pay for emergency room visits under a health insurance plan.
F
Face Value – The amount of money a life insurance policy will pay out upon the insured’s death.
Flood Insurance – A separate policy that covers flood-related damages, not typically included in standard home insurance.
Full Coverage – A term often used to describe a combination of liability, comprehensive, and collision auto insurance.
G
Grace Period – The time after a premium is due during which a policyholder can still make a payment without coverage lapsing.
Group Health Insurance – A health insurance plan offered to employees by an employer or organization.
Guaranteed Issue – A type of policy that must be issued to applicants regardless of health status.
H
Hazard – A condition that increases the likelihood of a loss occurring.
Health Maintenance Organization (HMO) – A type of health insurance that requires members to use a network of doctors and obtain referrals for specialists.
Homeowners Insurance – A policy that protects a home and its contents against damage and liability.
L
Liability Coverage – Insurance that covers damages or injuries you cause to others.
Loss – Financial damage covered by an insurance policy.
Long-Term Care Insurance – A policy that helps cover the cost of extended nursing or personal care.
P
Personal Injury Protection (PIP) – Auto insurance that covers medical expenses for the policyholder and passengers, regardless of fault.
Premium – The amount you pay for insurance coverage, typically monthly or annually.
Property Damage Liability – Auto insurance that covers damages you cause to another person’s property.
T
Term Life Insurance – A life insurance policy that provides coverage for a set period, such as 10 or 20 years.
Total Loss – When the cost to repair damaged property exceeds its value.
Travel Insurance – A policy that covers trip cancellations, medical emergencies, and lost luggage.
U
Underwriting – The process insurers use to evaluate risk and determine policy terms.
Umbrella Insurance – Additional liability coverage that extends beyond the limits of other policies.
Uninsured Motorist Coverage – Protection if you’re involved in an accident with a driver who has no insurance.
V
Variable Life Insurance – A life insurance policy with investment options that can affect cash value and benefits.
Void Policy – A policy that is considered null and has no legal effect.
Voluntary Benefits – Additional insurance options offered by employers but paid for by employees.
W
Whole Life Insurance – A permanent life insurance policy that builds cash value over time.
Waiting Period – The time before certain benefits of an insurance policy become active.
Workers’ Compensation – Insurance that covers medical costs and lost wages for employees injured at work.
Z
Zero Depreciation Cover – An auto insurance add-on that ensures full claim payment without factoring in depreciation.
Zoning Ordinance Insurance – Coverage for additional costs due to updated building codes after a property loss.
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