Insurance glossary

General insurance terms

Premium — What you pay, monthly or annually, to keep your policy active.

Deductible — The amount you pay out of pocket before your insurer starts paying on a claim.

Claim — A formal request to your insurer to pay for a covered loss.

Coverage limit — The maximum amount your policy will pay for a covered claim.

Liability — Coverage for damage or injury you’re legally responsible for causing to others.

Policy — The contract between you and your insurer that spells out what’s covered and what isn’t.

Insured — The person or business protected by the policy.

Insurer (carrier) — The company that provides the insurance and pays claims.

Coinsurance — The percentage of a covered cost you share with your insurer after the deductible is met.

Copay — A fixed amount you pay for a specific service, common in health insurance.

Exclusion — Something your policy specifically does not cover.

Endorsement (rider) — An add-on that changes or extends your policy’s coverage.

Underwriting — The process insurers use to assess risk and set your price.

Quote — An estimate of what a policy will cost, based on your details.

Beneficiary — The person who receives a policy’s payout, most often in life insurance.

Peril — A specific cause of loss, such as fire, theft, or a storm.

Indemnity — Compensation that restores you to your financial position before a loss.

Grace period — Extra time after a missed payment before your policy lapses.

Lapse — When a policy ends because the premium wasn’t paid.

Bundling — Combining multiple policies with one insurer, usually for a discount.

Auto insurance terms

Bodily injury liability — Covers injuries you cause to other people in an at-fault accident.

Property damage liability — Covers damage you cause to other people’s property or vehicles.

Collision coverage — Pays for damage to your own vehicle from a crash, regardless of fault.

Comprehensive coverage — Pays for non-crash damage like theft, fire, vandalism, or weather.

Uninsured / underinsured motorist — Covers you if an at-fault driver has no insurance or too little.

Full coverage — Common shorthand for liability plus collision and comprehensive.

SR-22 — A form some states require to prove you’re carrying the minimum coverage.

Home & renters insurance terms

Dwelling coverage — Pays to repair or rebuild the physical structure of your home.

Personal property coverage — Covers your belongings against covered losses, at home or away.

Loss of use — Pays extra living costs if a covered loss makes your home unlivable.

Replacement cost — Pays to replace damaged items at today’s prices, without subtracting for wear.

Actual cash value — Pays replacement cost minus depreciation for age and wear.

Flood insurance — Separate coverage for flood damage; it’s not included in a standard home policy.

Life insurance terms

Term life — Coverage for a set period, such as 20 years; the most affordable option.

Whole life — Permanent coverage that lasts your whole life and builds cash value.

Death benefit — The amount paid to your beneficiaries when you pass away.

Cash value — A savings component in permanent policies that you can borrow against.

Face amount — The death benefit amount stated in the policy.

Convertible term — A term policy you can switch to permanent coverage without a new medical exam.

Health insurance terms

Out-of-pocket maximum — The most you’ll pay in a year; after that, the plan covers 100% of covered costs.

Premium tax credit (subsidy) — Income-based help that lowers your marketplace premium.

Network — The doctors, hospitals, and providers your plan has contracted with.

In-network / out-of-network — Providers inside your plan’s network cost less; out-of-network costs more.

Open enrollment — The annual window to buy or change marketplace coverage.

Special enrollment period — A window opened by a life event to enroll outside open enrollment.

Metal tiers — Bronze, Silver, Gold, and Platinum categories that balance premium against out-of-pocket costs.

Medicare Advantage (Part C) — An all-in-one alternative to Original Medicare offered by private insurers.

Medigap (Medicare Supplement) — Coverage that fills the gaps in Original Medicare.

HSA (Health Savings Account) — A tax-advantaged account paired with a high-deductible health plan.

Business insurance terms

General liability — Covers third-party bodily injury, property damage, and advertising claims.

Professional liability (E&O) — Covers claims of mistakes, negligence, or bad advice in your work.

Workers’ compensation — Covers employees’ medical costs and lost wages for on-the-job injuries.

Business Owner’s Policy (BOP) — Bundles general liability and commercial property at a discount.

Commercial auto — Covers vehicles owned or used by your business.

Certificate of insurance (COI) — A document proving you carry coverage, often required by clients and landlords.