Understanding insurance terminology helps you make informed decisions about your coverage needs.
A
- Actual Cash Value (ACV)
- The replacement cost of property minus depreciation. Used to determine claim payouts for damaged property.
- Actuary
- A professional who analyzes risk and uncertainty using mathematics, statistics, and financial theory to assess insurance risks and set premiums.
- Agent
- A licensed insurance professional who sells insurance policies and provides customer service on behalf of insurance companies.
- Annuity
- A financial product that provides regular payments over a specified period, often used for retirement income.
B
- Beneficiary
- The person or entity designated to receive benefits from an insurance policy, typically in life insurance or annuities.
- Binder
- Temporary insurance coverage that provides protection while the formal policy is being processed and issued.
- Broker
- An independent insurance professional who represents the customer rather than a specific insurance company.
C
- Claim
- A formal request to an insurance company for payment of benefits under an insurance policy.
- Coverage
- The protection provided by an insurance policy against specified risks or perils.
- Copayment (Copay)
- A fixed amount paid by the insured for covered services, typically in health insurance plans.
D
- Deductible
- The amount the policyholder must pay out-of-pocket before insurance coverage begins to pay for covered expenses.
- Declarations Page
- The page in an insurance policy that summarizes the key information about your coverage, including limits, deductibles, and premiums.
- Dependent
- A person covered under someone else’s insurance policy, typically a spouse or child.
E
- Endorsement
- An amendment to an insurance policy that modifies the terms, coverage, or conditions of the original policy.
- Exclusion
- Specific situations, conditions, or types of damage that are not covered by an insurance policy.
- Excess Insurance
- Coverage that pays only after other applicable insurance policies have been exhausted.
L
- Liability
- Legal responsibility for damages or injuries caused to another person or their property.
- Limits
- The maximum amount an insurance company will pay for covered losses under a policy.
- Loss
- Damage to or destruction of property, or injury to a person, that is covered by an insurance policy.
P
- Policy
- The written contract between the insurance company and the policyholder that outlines coverage terms and conditions.
- Premium
- The amount paid by the policyholder to the insurance company for coverage, typically paid monthly, quarterly, or annually.
- Proof of Loss
- Documentation required by the insurance company to process a claim, detailing the circumstances and extent of the loss.
U
- Umbrella Policy
- Additional liability coverage that extends beyond the limits of other insurance policies.
- Underwriting
- The process by which insurance companies evaluate risk and determine whether to provide coverage and at what premium.
- Uninsured Motorist Coverage
- Protection against damages caused by drivers who don’t have insurance or don’t have adequate coverage.
Still Have Questions?
If you don’t find the term you’re looking for or need clarification on any insurance concept, contact Vallie Insurance. Our experienced agents are here to help explain insurance terms in plain language.