Insurance Glossary

Knowing what the terms on a quote actually mean makes it far easier to weigh your coverage options.

A B C D E F G H IJKL M N O P Q R S T UVWXYZ

A

Accelerated Death Benefit: A life insurance provision that pays part of the death benefit to the insured while they are still living, on proof of a qualifying condition such as a terminal illness. Qualifying conditions vary by policy and commonly include a life expectancy below a stated number of months, a listed critical illness, or confinement to a nursing home. Whatever is drawn early reduces what beneficiaries receive later, and a payment can affect eligibility for income-based government programs or carry tax consequences depending on the circumstances.
Accident Forgiveness: A feature offered by some insurers that waives the premium surcharge normally applied after a policyholder's first at-fault accident. It is usually earned by going a set number of years without an at-fault claim or added for an extra charge, and it typically applies once per policy rather than to every driver or every accident. The accident still appears on the driving record and in claims history reports, so a different insurer can still rate for it, and availability varies by state.
Accidental Death Benefit: A life insurance benefit paid only when death results from an accident, either built into a policy or added as a rider. Policies define accident narrowly and commonly exclude deaths tied to illness, intoxication, aviation outside commercial flights and certain hazardous activities, and many require the death to occur within a set number of days of the accident. On final expense policies that carry a waiting period, accidental death is usually the exception that pays the full benefit from the first day.
Actual Cash Value (ACV): A method of settling a claim that pays the cost to replace damaged property minus depreciation for its age, wear and condition. A ten year old roof settled at actual cash value pays less than what a new roof costs to install, and the difference is the policyholder's to cover. Policies written on an actual cash value basis generally cost less than replacement cost policies, and some insurers apply it only to specific items such as roof surfaces or older personal property.
Adjuster: The person an insurer assigns to investigate a claim, determine what the policy covers, and estimate the amount of the loss. Staff adjusters are employees of the insurer and independent adjusters are contracted by it, but both represent the insurer's interest. A public adjuster is a separate role, hired and paid by the policyholder to handle a claim on their behalf, and licensed by the state.
Admitted Carrier: An insurer licensed by a state insurance department to write business in that state, with its rates and policy forms filed with the department. Policyholders of an admitted carrier are backed by the state guaranty association, which pays covered claims up to statutory limits if the insurer becomes insolvent. Most personal auto and homeowners policies are written by admitted carriers, and complaints about them can be taken to the state regulator.
Agreed Value: A settlement basis under which the insurer and the owner fix the amount payable for a total loss when the policy is written, instead of calculating depreciation after the loss. It is used mainly for classic, collector and specialty vehicles, whose worth does not track the standard valuation guides insurers use for ordinary cars. Insurers generally require photographs, an appraisal or documentation of condition, and may attach mileage limits or storage requirements.
Allowed Amount: The maximum a health plan will pay for a covered service, set by contract with in-network providers and by plan rules for everyone else. Patient cost sharing is calculated from this figure rather than from the amount the provider bills, so a deductible or a coinsurance percentage applies to the allowed amount. It is also called the eligible expense, the payment allowance or the negotiated rate, and the gap between it and a billed charge is where balance billing arises.
Appraisal Clause: A provision in most property and auto policies that lets either side resolve a disagreement about the amount of a loss without going to court. Each party hires its own appraiser, the two appraisers choose an umpire, and an agreement between any two of the three sets the amount. It decides how much the loss is worth, not whether the policy covers it, and who may invoke it, who pays for it and whether the result is binding vary by policy and by state.

B

Bad Faith: A legal claim that an insurer failed its duty to handle a claim honestly and fairly, through conduct such as an unreasonable denial, unexplained delay, or refusal to investigate. What qualifies is defined by state law and court decisions, and most states also have unfair claims settlement practices rules that regulators enforce separately from any lawsuit. Available remedies vary widely by state, and a denied claim is not by itself evidence of bad faith.
Balance Billing: A provider billing a patient for the difference between what it charged and what the health plan allowed, on top of any deductible, copay or coinsurance. In-network providers agree by contract not to do it, so it generally arises with out-of-network care. The federal No Surprises Act bars it in several situations, including emergency care and treatment by out-of-network providers working at in-network facilities, and a number of states add their own protections.
Beneficiary: The person, people, trust or organization named in a life insurance policy to receive the death benefit. A primary beneficiary is first in line, and a contingent beneficiary receives the proceeds if no primary is living when the insured dies. The designation on file with the insurer controls who is paid and overrides what a will says, so it needs updating after a marriage, a divorce or a death in the family.
Binder: A temporary contract that puts coverage in force before the full policy is issued, stating the coverages, the limits and the effective date. Lenders commonly accept one as proof of insurance at a closing, since the policy documents can take days or weeks to arrive. It expires on a stated date or when the policy is issued, and an insurer can still decline to issue the policy if underwriting turns up something the application did not disclose.
Bodily Injury Liability: The part of an auto policy that pays for other people's medical costs, lost wages and related expenses when the insured driver is at fault in a crash. It also pays the cost of legal defense if the injured party sues. Limits are usually written as a per person amount and a per accident amount, and nearly every state sets a minimum that drivers must carry.

C

Cancellation: The termination of a policy before the end of its term, by either the insurer or the policyholder. State law limits when an insurer may cancel, commonly restricting it after the first 30 or 60 days to reasons such as non-payment, fraud, or a material misrepresentation on the application. A policyholder who cancels early is usually refunded the unused premium, sometimes reduced by a short rate penalty.
Cash Value: The savings component that builds inside a permanent life insurance policy such as whole or universal life. It is funded by the part of each premium not consumed by insurance costs and expenses, grows tax deferred and can usually be borrowed against or withdrawn, and surrendering the policy pays out its cash surrender value in place of the death benefit. Term life has no cash value, growth is slow in the early policy years, and an unpaid loan reduces the death benefit that beneficiaries receive.
C.L.U.E. Report (Comprehensive Loss Underwriting Exchange): A claims history database insurers check when quoting, holding up to seven years of auto and property claims reported by participating insurers. Each entry lists the date, the type of loss and the amount paid, and a property report follows the address rather than the owner, so claims filed by a previous owner can appear. Consumers may request a free copy of their own report each year under federal law and dispute entries they believe are wrong.
COBRA Continuation Coverage: A federal right to keep an employer health plan temporarily after a job loss, a cut in hours or another qualifying event, with the former employee paying the entire cost. Coverage generally runs up to 18 months, extended to 36 months for events such as divorce or the death of the covered employee, and the law applies to private employers with 20 or more employees along with state and local governments. Because the employer no longer contributes, the price is the full group rate plus an administrative charge, and many states have similar continuation rules covering smaller employers.
Coinsurance: A property policy condition requiring the building to be insured for at least a stated percentage of its replacement cost, commonly 80 percent, or claim payments are cut proportionally. A home insured well below that threshold can have a partial loss settled for less than the repair cost even when the claim is far below the policy limit. It is one reason insurers periodically recalculate rebuild cost, and the word means something different in health insurance, where it is the share of a bill the patient pays.
Coinsurance (Health Insurance): The percentage of a covered medical bill a patient pays after meeting the deductible, such as 20 percent of the allowed amount with the plan paying the remaining 80. It differs from a copay, which is a fixed dollar amount rather than a share, and it continues until the out-of-pocket maximum is reached, after which the plan pays covered care in full. The same word means something different in property insurance, where it is a condition requiring a building to be insured to a stated percentage of its replacement cost.
Collision Coverage: Coverage that pays to repair or replace the insured vehicle after it hits another vehicle or an object, or rolls over, regardless of who was at fault. A deductible applies to each collision claim, and the payment is capped at the value of the vehicle rather than the cost of the repairs. Lenders and leasing companies normally require it for as long as there is a loan on the car.
Combined Single Limit (CSL): Auto liability written as one maximum covering bodily injury and property damage together, rather than the three separate caps used in split limits. A single limit can be applied entirely to one seriously injured person or spread across several claims from the same crash, whichever the loss requires. That flexibility removes the per person cap that can leave a gap under split limits, and it appears more often on commercial and umbrella policies than on personal auto.
Comprehensive Coverage: Auto coverage for damage to the insured vehicle from causes other than a collision, such as theft, fire, hail, vandalism and animal strikes. Many policies call it other than collision coverage, and it carries its own deductible separate from the collision deductible. Glass claims are sometimes handled under a lower or waived deductible depending on the state and the policy.
Contestability Period: The first two years of a life insurance policy in most states, during which the insurer may investigate a claim and void the policy for a material misstatement on the application. If the insured dies during it, the insurer can request medical records and other history before deciding, which lengthens the time a claim takes to pay. Once the period ends the incontestability clause takes over and the insurer can no longer void the policy for an innocent misstatement, and the clock generally restarts if a lapsed policy is reinstated.
Contingent Beneficiary: The person or entity named to receive a life insurance death benefit if no primary beneficiary is living when the insured dies. Also called a secondary beneficiary, the designation keeps the proceeds from falling into the estate, where they would go through probate and could be exposed to creditors. A policy can name more than one, each with a stated percentage share.
Copayment (Copay): A fixed dollar amount a patient pays for a covered health service, such as a set charge for an office visit or a prescription fill. It differs from coinsurance, which is a percentage of the bill rather than a flat amount, and plans commonly apply copays to routine care while running larger expenses through the deductible and coinsurance. Copays generally count toward the out-of-pocket maximum, and whether one applies before or after the deductible is met depends on the plan.
Credit-Based Insurance Score: A rating factor built from information in a consumer credit report, used to help predict how likely a policyholder is to file a claim. It is not the same as a lending credit score, and it is not a judgment about whether someone can afford the policy. A few states prohibit or sharply restrict its use, and the rules differ by state and by line of insurance, so whether it affects a quote depends on where the policy is written.

D

Death Benefit: The amount a life insurance policy pays to the named beneficiaries when the insured dies, also called the face amount on a term or whole life policy. Beneficiaries generally receive it free of federal income tax, though it can be counted in the estate for estate tax purposes depending on how the policy is owned. Outstanding policy loans, unpaid premiums and any accelerated benefit already taken are subtracted from what is actually paid.
Declarations Page: The page at the front of a policy that lists the named insured, the covered property, each coverage with its limits and deductibles, and the premium charged. It also shows the policy number, the policy period and any endorsements attached to the contract. Often shortened to dec page, it is the quickest way to confirm what a policy actually covers before a claim happens.
Deductible: The amount a policyholder pays out of pocket on a covered claim before the insurer pays the rest. Raising a deductible lowers the premium and lowers what the insurer owes on each claim. Auto policies usually apply a flat dollar deductible per claim, while home policies may apply a percentage of the dwelling limit for wind, hail or hurricane losses.
Diminished Value: The resale value a vehicle loses because an accident appears on its history, even after repairs restore it to working condition. Insurers call this inherent diminished value, and a claim for it is separate from the cost of the repairs themselves. Nearly every state allows a claim against the at-fault driver's insurer, claims against a policyholder's own insurer are permitted in only a few, and deadlines and proof requirements vary.
Dwelling Coverage (Coverage A): The part of a homeowners policy that covers the house itself, including structures attached to it such as a garage, deck or porch. The limit is meant to reflect what it would cost to rebuild at current construction prices, which is not the same as the market value or the purchase price. Several other coverages are set as a percentage of it, so the Coverage A limit drives much of the rest of the policy.
Dwelling Fire Policy (DP-3): A property form used for homes the owner does not live in, such as rental houses, seasonal properties and homes between occupants. It covers the structure on an open perils basis like a homeowners policy, but personal property coverage is limited and settled at actual cash value, and liability and loss of rents are normally added by endorsement rather than included. DP-1 and DP-2 are narrower forms in the same family that cover only listed perils.

E

Earthquake Insurance: Coverage for damage caused by earth movement, which standard homeowners policies exclude everywhere, sold either as a separate policy or as an endorsement depending on the state and the insurer. Deductibles are set as a percentage of the coverage limit rather than a flat dollar amount, commonly in the range of 5 to 25 percent, so a large share of a loss stays with the homeowner. In California most of this coverage is written through the California Earthquake Authority by participating insurers, and insurers writing homeowners policies in the state are required to offer it.
Endorsement: A written amendment attached to a policy that adds, removes or changes coverage from the standard form. Water backup, scheduled jewelry, ordinance or law and named driver exclusions are all typically added by endorsement. Some carry an extra premium and some do not, and which endorsements are offered varies by insurer and by state.
Essential Health Benefits: The ten categories of care that individual and small group health plans must cover under the Affordable Care Act. They include hospitalization, emergency services, prescription drugs, maternity and newborn care, mental health and substance use treatment, and preventive services, and plans sold through the Marketplace must include all ten while short term plans and certain other arrangements are not required to. The specific services inside each category come from a benchmark plan that each state selects, so the details differ from state to state.
Exclusion: A provision that states what a policy does not cover, whether a cause of loss, a type of property or a specific circumstance. Standard homeowners policies exclude flood, earthquake, ordinary wear and tear, and damage caused by lack of maintenance. Certain exclusions can be bought back by endorsement or covered by a separate policy, while others cannot.
Exclusive Provider Organization (EPO): A health plan that covers care only from providers inside its network, except in an emergency, but does not usually require a referral to see a specialist. It sits between an HMO, which typically requires a primary care physician and referrals, and a PPO, which pays something toward out-of-network care. Because there is no out-of-network benefit, a visit to a provider outside the network is generally the patient's responsibility in full.
Explanation of Benefits (EOB): The statement a health plan sends after processing a claim, showing what the provider charged, what the plan allowed, what the plan paid, and what the patient may owe. It is not a bill, and the patient responsibility line should match what the provider bills separately. It also gives the reason for any denial and explains how to appeal, which is why the deadlines printed on it matter.
Extended Replacement Cost: An option that pays a stated percentage above the dwelling limit when a home costs more to rebuild than the policy anticipated, commonly in the range of 20 to 50 percent. It exists for situations where construction prices have risen since the limit was set, or where a regional disaster drives up labor and material costs after a widespread loss. It is a cushion with a ceiling, which is what separates it from guaranteed replacement cost, and the percentage offered varies by insurer and by state.

F

Face Amount: The amount of life insurance stated on the policy, which is the death benefit before any adjustments are applied. Policy loans, unpaid premiums and accelerated benefits already drawn are subtracted from it, so the amount a beneficiary receives can be less than the figure on the contract. On some permanent policies the amount payable is the face amount plus accumulated cash value rather than the face amount alone, depending on which death benefit option was selected.
FAIR Plan: A state-created insurance pool that sells property coverage to owners who cannot obtain it in the regular market, often because of wildfire or storm exposure. FAIR stands for Fair Access to Insurance Requirements, and the plans are funded by assessments on the insurers licensed in that state rather than by taxpayers. Coverage is usually narrower than a standard homeowners policy and sometimes limited to fire and a few other perils, and many states run one under varying names.
Final Expense Insurance: A small whole life policy meant to cover funeral, burial and other end-of-life costs, sold in face amounts well below those of a standard life policy. Underwriting is limited to a short health questionnaire or skipped altogether, no medical exam is required, and the premium stays level for life once the policy is issued. Issue ages generally start around 50, and policies written with limited or no underwriting commonly carry a graded or modified benefit for the first two or three years.
First Notice of Loss (FNOL): The first report a policyholder makes to an insurer that a loss has occurred, which opens the claim and starts the process. It can be given by phone, app or website, and usually captures the date, the location and the basic circumstances of the loss. Policies require notice within a reasonable time or within a stated period, and a long delay can complicate or jeopardize the claim.
Flood Insurance: A separate policy covering damage from rising water, which standard homeowners and renters policies exclude everywhere. It responds to overflowing rivers, storm surge, heavy rainfall and similar surface water events, while interior plumbing leaks and sewer backup are handled by other coverages. Policies are available through the federal National Flood Insurance Program and from private insurers, and most carry a waiting period before coverage takes effect.
Force-Placed Insurance: A property policy a mortgage servicer buys on a borrower's behalf when the required homeowners coverage lapses or proof of it is not supplied, with the cost charged to the borrower. It protects the lender's interest in the building only, so it does not cover the owner's belongings, liability or living expenses, and it generally costs more than a policy the owner would buy directly. Federal mortgage servicing rules require advance notices before it is charged and prompt cancellation and refund once acceptable coverage is shown.
Formulary: The list of prescription drugs a health plan covers, arranged in tiers that set what the patient pays for each one. Generic drugs usually sit in the lowest cost tier and specialty drugs in the highest, and some drugs require prior authorization or a documented trial of a cheaper alternative first. Plans can change a formulary during the plan year, and a drug that is not on it is generally not covered unless the plan grants an exception.
Four Point Inspection: A short inspection of a home's roof, electrical, plumbing and heating and cooling systems that insurers use to decide whether to write or renew a policy on an older house. Age thresholds vary by insurer and state, with many requesting one on homes past roughly 20 to 30 years old, and it is most common in storm exposed states. An aging roof, older wiring types or certain plumbing materials can lead to conditions on the policy, a higher price or a declination.
Free Look Period: A window after a life insurance policy is delivered during which the buyer can cancel it and get back every premium paid. The length is set by state law and commonly runs from 10 to 30 days, with longer windows often required for buyers above a certain age or for policies replacing existing coverage. The clock starts when the policy is delivered rather than when the application was signed, and cancelling inside it leaves the policy as though it never took effect.
Full Coverage: An informal shopping term rather than an actual coverage, generally meaning liability plus collision and comprehensive on the same auto policy. No policy is labeled full coverage and the phrase appears nowhere on a declarations page, so two people who describe themselves as fully covered may carry very different limits. It does not imply unlimited protection, and it says nothing about whether uninsured motorist, medical payments or rental reimbursement are included.

G

Gap Insurance: Coverage that pays the difference between what is still owed on a vehicle loan or lease and the actual cash value the insurer pays after a total loss. Vehicles usually depreciate faster than loans are paid down, so a borrower whose car is totaled early in the term can still owe the lender after the claim settles. It is sold by insurers as an endorsement and by dealers and lenders as a separate product, and whether it also covers the deductible depends on the form.
Grace Period: A stretch of time after a premium due date during which a policy stays in force even though the payment has not arrived. Life policies commonly allow around 30 days, with state law setting the minimum, while health and property policies run their own and often shorter periods. If the premium is still unpaid when the grace period ends the policy lapses, and restoring it means going through reinstatement, which can require new evidence of insurability.
Graded Death Benefit: A life insurance structure that pays only part of the death benefit if the insured dies of natural causes during an initial waiting period. That period usually runs two or three years, the reduced payment is commonly a stated percentage of the face amount that rises with each policy year, and accidental death is normally excepted and paid in full from the start. It appears on final expense and other policies issued with limited underwriting, and the length, the percentages and the exclusions vary by insurer.
Guaranteed Issue Life Insurance: Life insurance issued with no health questions and no medical exam, so an applicant inside the eligible age range cannot be turned down for medical reasons. Because the insurer takes on unknown health risk, face amounts are capped well below fully underwritten policies, the cost per thousand dollars of coverage is the highest of any life product, and the policy carries a waiting period, typically two years, during which death from natural causes returns the premiums paid with interest rather than the death benefit. Accidental death is generally covered in full from the first day.
Guaranteed Replacement Cost: An option that pays the full cost of rebuilding a home after a covered total loss, even when that cost runs past the dwelling limit shown on the policy. It differs from extended replacement cost, which caps the overage at a stated percentage above the limit. Availability is limited, insurers commonly require the dwelling limit to reflect a current rebuild estimate and the home to meet age and condition standards, and some forms still exclude code upgrade costs unless ordinance or law coverage is added.

H

Health Insurance Marketplace: The government-run exchange where individuals and families shop for Affordable Care Act health plans and apply for income-based subsidies. Most states use the federal HealthCare.gov platform while others run their own exchange with a separate website and its own enrollment dates. Plans sold there must cover the essential health benefits and cannot deny coverage or charge more for a pre-existing condition, and premium tax credits and cost-sharing reductions are available only through the exchange.
Health Maintenance Organization (HMO): A health plan that covers care only inside its network and usually requires members to name a primary care physician. A referral from that physician is typically needed before seeing a specialist, and care from outside the network is generally not covered except in an emergency, which is part of why premiums tend to run below a comparable PPO. Network size, referral rules and how the emergency exception is applied vary by plan and by state.
Health Savings Account (HSA): A tax-advantaged account for medical expenses that a person may contribute to only while covered by a qualifying high deductible health plan. Contributions are deductible or made pre-tax, growth and qualified withdrawals are untaxed, unused balances roll over year to year, and the account stays with the owner after a change of job or plan. The IRS sets the annual contribution limits and adjusts them for inflation, withdrawals for non-qualified expenses are taxed and can carry a penalty, and contributions have to stop once the owner enrolls in Medicare.
High Deductible Health Plan (HDHP): A health plan whose deductible meets or exceeds a minimum the IRS sets each year and whose out-of-pocket costs stay under a stated cap. It covers little beyond preventive care until the deductible is met, and being enrolled in one is what makes a person eligible to contribute to a health savings account. The qualifying thresholds are adjusted annually for inflation and a merely large deductible does not automatically qualify, so the plan documents state whether the plan is HSA eligible.
HO-3 Policy: The most widely issued homeowners insurance form, covering the house on an open perils basis and personal belongings on a named perils basis. That split means damage to the structure is covered unless the policy excludes the cause, while belongings are covered only for causes specifically listed. Insurers may use the standard industry form or their own version of it, so exact wording and the list of covered perils vary.
HO-4 Policy (Renters Insurance): The standard renters insurance form, covering a tenant's belongings and personal liability but not the building itself, which the landlord insures separately. Personal property is typically written on a named perils basis, and the form includes loss of use if the unit becomes uninhabitable after a covered loss. The contents limit is chosen by the tenant rather than derived from a dwelling limit, and leases sometimes require the coverage.
HO-5 Policy: A homeowners form that covers both the house and personal belongings on an open perils basis, so a cause of loss is covered unless the policy excludes it. That is broader than the widely used HO-3, which covers belongings only for perils specifically listed, and it puts the burden on the insurer to point to an exclusion in order to deny a contents claim. Insurers generally reserve it for newer or well maintained homes and charge more for it, and the usual sublimits on categories such as jewelry and cash still apply.
HO-6 Policy (Condo Insurance): The standard condominium form, covering the interior of a unit, the owner's belongings and personal liability, while the association insures the building. How much interior coverage an owner needs depends on the association master policy, which may cover the unit only to the bare walls or may include the original fixtures. It commonly includes a small amount of loss assessment coverage, which can usually be increased by endorsement.
HO-8 Policy: A modified homeowners form for older homes whose cost to rebuild with original materials runs far above their market value. It covers a short list of named perils and settles losses on an actual cash value or functional replacement cost basis, meaning repairs may be priced using modern materials rather than matching the originals. It is written far less often than the standard forms, and availability depends on the insurer and the state.
Hurricane Deductible: A separate deductible that applies only to hurricane damage, usually stated as a percentage of the dwelling limit rather than as a flat dollar amount. It takes effect only when conditions written into the policy are met, commonly tied to a storm being named by the National Hurricane Center or to a hurricane watch or warning, along with a time window before and after the storm. Coastal and Gulf states are where these appear, and both the trigger and the percentage vary by state and by insurer.

I

Inflation Guard: A policy feature that raises the dwelling limit and the coverages tied to it automatically to keep pace with construction costs. It applies a percentage increase at each renewal, or in some forms during the policy term, so a limit set years ago does not quietly fall behind what rebuilding actually costs. The adjustment is an estimate rather than a new appraisal, so a home that has been remodeled or added onto can still end up underinsured.
Insurable Interest: The requirement that the person buying a policy would suffer a real financial loss if the insured person died or the insured property were damaged. In life insurance it has to exist when the policy is issued but not necessarily when the claim is paid, and it is what prevents anyone from insuring the life of a stranger. Family relationships, marriage, business partnerships and creditor relationships commonly satisfy it, and the specifics are set by state law.

L

Lapse in Coverage: A period during which a driver or homeowner had no active policy, whether from cancellation, non-payment or simply letting the term expire. Insurers commonly ask about prior coverage and treat a lapse as a rating factor, which can raise the price of the next policy. In states with mandatory auto insurance a lapse can also trigger registration or license penalties separate from anything the insurer does.
Loss Assessment Coverage: Coverage that pays an association member's share of a special assessment charged to all owners after a covered loss to common property. It applies when damage to shared areas exceeds the association policy limits, and many forms also cover an assessed share of the association deductible. Standard condo and homeowners policies include only a small default limit, which is commonly raised by endorsement.
Loss of Use Coverage (Coverage D): The part of a homeowners policy that pays added living costs when a covered loss makes the home unfit to live in, such as hotel bills and restaurant meals. It reimburses the difference between normal household expenses and the higher costs during repairs, not the entire bill. Also called additional living expense, it is usually limited to a percentage of the dwelling limit, to a set number of months, or to both.

M

Medical Payments Coverage (MedPay): Auto coverage that pays medical expenses for the policyholder and passengers after a crash regardless of fault, usually in relatively small limits. It sits alongside health insurance and can absorb deductibles and copays, and unlike personal injury protection it generally does not pay lost wages or replacement services. Availability varies by state, and in some places it is offered alongside personal injury protection rather than instead of it.
Medical Payments to Others (Coverage F): The part of a homeowners policy that pays medical bills for guests injured on the property, regardless of whether the homeowner was at fault. Limits are small next to personal liability coverage, and the purpose is to settle minor injuries quickly and reduce the chance that one turns into a lawsuit. It does not cover the homeowner or other regular residents of the household, whose own injuries fall to health insurance.
Medicare Supplement Insurance (Medigap): A private policy that pays cost sharing Original Medicare leaves behind, such as the Part A and Part B deductibles, coinsurance and hospital costs beyond what Medicare covers. Plans are standardized by letter, so the benefits of a given letter are the same from one insurer to the next and only price and service differ, with Massachusetts, Minnesota and Wisconsin standardizing their plans differently. It cannot be paired with a Medicare Advantage plan, and outside the initial open enrollment window insurers in most states may apply medical underwriting.
Metal Tiers: The four categories that sort Affordable Care Act health plans by how costs are split between the plan and the member: Bronze, Silver, Gold and Platinum. They correspond to actuarial values of roughly 60, 70, 80 and 90 percent, which is the share of total covered costs the plan pays on average across everyone enrolled rather than for any one person. A higher tier means a higher premium and lower costs at the point of care, the tier says nothing about network or care quality, and cost-sharing reductions are available only on Silver plans.
Modified Benefit Whole Life: A life insurance structure that returns premiums plus interest instead of paying the death benefit during an initial waiting period. The period usually runs two or three years and applies to death from natural causes, which distinguishes it from a graded death benefit, where a rising percentage of the face amount is paid instead. It is issued to applicants whose health does not qualify them for immediate full coverage, and the length of the period and the interest rate credited vary by insurer.
Mortgagee Clause: A provision naming the mortgage lender on a homeowners policy and giving it rights of its own, including payment for damage to the building and advance notice before the policy is cancelled or not renewed. Claim checks for structural damage are commonly written to the homeowner and the lender together, and the lender may release the money in stages as repairs are completed. Selling or refinancing a loan changes the mortgagee, so the policy has to be updated for notices and payments to reach the right party.
Motor Vehicle Record (MVR): The driving history a state keeps for each licensed driver, listing violations, accidents reported to the state, license suspensions and any points assessed. Insurers order it during underwriting and again at renewal, and it is the main source of the violations that affect an auto quote. How long an entry stays on the record and how far back an insurer may look are set separately by state law, so an item can remain visible after it stops affecting the price.

N

Named Driver Exclusion: An endorsement that removes one specific person from an auto policy, so there is no coverage at all when that person is driving the insured vehicle. Households use it to keep a driver with a poor record or a suspended license from raising the price of the policy. Not every state permits it, some require the excluded driver to sign the form, and a crash while the excluded person is driving can leave the vehicle owner personally responsible for the damages.
Named Insured: The person or people listed by name on the declarations page as the policyholder, who hold the rights and obligations under the contract. Only a named insured can change coverage, cancel the policy or receive the claim payment, though others such as household residents may still be covered. Adding or removing a spouse, a driver or a co-owner changes who is named, and can change the price.
Named Perils: A coverage basis under which only the causes of loss specifically listed in the policy are covered, and anything not on the list is not. Standard homeowners forms use it for personal property, listing causes such as fire, lightning, windstorm, theft and vandalism. Under this basis the policyholder has to show the loss came from a listed cause, which is the reverse of how an open perils basis works.
National Flood Insurance Program (NFIP): The federal flood insurance program run by FEMA, which offers flood policies through participating insurers in communities that adopt floodplain management rules. For one to four family homes it caps building coverage at $250,000 and contents coverage at $100,000, and contents are settled at actual cash value rather than replacement cost. Homeowners who need more than those limits can look to private flood insurers or to excess flood policies.
No-Fault Insurance: An auto insurance system in which each driver's own policy pays their medical costs after a crash, regardless of who caused it. It is paid through personal injury protection, and in exchange the right to sue the other driver is limited unless the injuries pass a threshold set by state law. Only a minority of states use the system, the thresholds differ among them, and states have both adopted and repealed no-fault requirements over time.
Non-Owner Car Insurance: A liability policy for someone who drives but does not own a vehicle, covering injury and property damage they cause while driving cars belonging to others. It includes no collision or comprehensive coverage, since there is no vehicle to repair, and it pays after any coverage carried by the car owner. It is commonly used to keep coverage continuous between vehicles or to satisfy an SR-22 filing, and it does not cover vehicles owned by members of the policyholder's own household.
Non-Renewal: An insurer declining to continue a policy when the current term ends, rather than ending it mid-term. Unlike a cancellation it takes effect on the renewal date, and states require advance written notice, commonly 30 to 60 days, so the policyholder has time to arrange replacement coverage. Claims history, property condition, and an insurer withdrawing from a region are common reasons.

O

Open Enrollment Period: The annual window during which a person can enroll in a health plan or switch plans without needing a special reason. The Marketplace period runs in the fall for coverage starting January 1, with dates varying in states that operate their own exchange, and employer plans set their own window each year. Outside it, enrolling generally requires a qualifying life event that opens a special enrollment period.
Open Perils: A coverage basis under which every cause of loss is covered except those the policy specifically excludes. Standard homeowners forms use it for the dwelling and other structures, with exclusions for flood, earth movement, and ordinary wear and tear. Sometimes called all risk, it puts the burden on the insurer to point to an exclusion in order to deny a claim, which is the reverse of a named perils basis.
Ordinance or Law Coverage: Coverage for the added cost of rebuilding to current building codes after a covered loss, which a standard policy does not otherwise pay. When an older home is damaged, code upgrades to wiring, plumbing or roof fastening can add substantially to the rebuild, and the policy would otherwise pay only to restore what was there. It can also pay to demolish and clear undamaged portions that a code requires to be torn down, and it is usually added by endorsement as a percentage of the dwelling limit.
Other Structures Coverage (Coverage B): The part of a homeowners policy covering structures on the property that are not attached to the house, such as a detached garage, shed, fence or in-ground pool. The limit is usually set as a percentage of the dwelling limit rather than chosen separately, and it can often be raised by endorsement. Structures used for business purposes or rented to others are commonly excluded or limited.
Out-of-Pocket Maximum: The most a member pays for covered in-network care in a plan year, after which the plan pays 100 percent of covered services for the rest of that year. Deductibles, copays and coinsurance count toward it, while monthly premiums, charges above the allowed amount and anything the plan does not cover do not. Federal rules cap it for Affordable Care Act plans and the cap is adjusted each year, and family policies carry both an individual and a family limit.

P

Permissive Use: The principle that auto coverage generally follows the car, so a licensed driver who borrows it with the owner's permission is usually covered. The owner's policy responds first, and a claim is charged against that policy rather than the borrower's. Drivers who live in the household, who are excluded by name, or who use the car for delivery or ride-hailing are treated differently, and the rules vary by policy and by state.
Personal Injury Protection (PIP): Auto coverage that pays medical expenses, and often lost wages, for the policyholder and passengers after a crash regardless of who was at fault. It is the core of no-fault auto systems, in which each driver's own policy handles their injuries first. Whether PIP is required, optional or unavailable depends on the state, and both the required limits and the list of covered expenses vary widely.
Personal Liability Coverage (Coverage E): The part of a homeowners policy that pays when a member of the household is legally responsible for injuring someone or damaging their property. It applies to incidents away from the home as well as on the premises, and it pays legal defense costs in addition to any settlement or judgment. Business activities and auto accidents are excluded and handled by other policies.
Personal Property Coverage (Coverage C): The part of a homeowners policy that covers belongings such as furniture, clothing, electronics and appliances, wherever they are kept. The limit is commonly set as a percentage of the dwelling limit rather than chosen directly. Categories such as jewelry, firearms, cash and collectibles are capped by internal sublimits, which can often be raised by scheduling the items individually.
Policy Limit: The maximum amount an insurer will pay under a coverage, stated per person, per claim, per occurrence or for the entire policy period. Costs above the limit fall to the policyholder. Auto liability is often written as split limits with separate caps for injuries per person, injuries per accident and property damage, while some policies use a single combined limit instead.
Pre-Existing Condition: A health condition a person already had before a policy took effect. Affordable Care Act plans may not deny coverage, charge more or exclude treatment because of one, and the same protection applies to employer group health plans. Other products treat them differently, since life and final expense underwriting relies on health history to set the price or decline an application, and short term health plans are not bound by the same rules.
Preferred Provider Organization (PPO): A health plan that pays the most for care from providers in its network but still covers out-of-network care at higher cost sharing, with no referral needed to see a specialist. That flexibility usually comes with a higher premium than an HMO or EPO carrying a comparable deductible. Out-of-network care is paid against the plan's allowed amount rather than the provider's charge, so a patient can end up owing more than the coinsurance percentage alone would suggest.
Premium: The amount charged for an insurance policy, billed monthly, every six months or annually depending on the insurer and the policy term. It is calculated from the coverages and limits selected, the deductibles chosen, and rating factors such as location, claims history and the vehicle or property being insured. Paying it keeps the policy in force, and missing it can lead to a lapse in coverage.
Premium Tax Credit: A federal subsidy that lowers the monthly cost of a health plan bought through the Marketplace, calculated from household income and the price of a benchmark plan in the local area. Most enrollees take it in advance, with the money paid straight to the insurer each month, then reconcile it against actual income when filing a federal tax return, which can produce either a larger refund or an amount owed back. Congress has changed the eligibility rules and income thresholds more than once, so the rules in force for the coverage year are the ones that apply.
Preneed Insurance: A life insurance policy bought through a funeral home and assigned to it, with the proceeds paying for a specific list of goods and services arranged in advance. It differs from final expense insurance, whose benefit is paid in cash to a beneficiary who is free to spend it on anything. State law regulates these contracts closely, including whether the prices are guaranteed against inflation, what happens if the funeral home closes or changes hands, and whether the policy can be transferred or cancelled.
Prior Authorization: A requirement that a health plan approve a service, procedure or prescription before it is provided, or the plan may refuse to cover it. It commonly applies to imaging, surgeries, hospital stays, durable medical equipment and higher cost drugs, and the provider usually submits the request on the patient's behalf. A denial can be appealed, federal and state rules set the timeframes a plan has to decide, and emergency care is generally exempt from the requirement.
Proof of Loss: A sworn statement a policyholder gives the insurer detailing what was damaged or lost, when it happened, and what it was worth. Property policies commonly require it within a set number of days after the insurer asks for it, supported by documents such as receipts, photographs or repair estimates. Missing the deadline can delay payment and, in some states, jeopardize the claim entirely.
Property Damage Liability: The part of an auto policy that pays for damage the insured driver causes to someone else's property, most often another vehicle. It also applies to fences, buildings, guardrails and other fixed objects, and it covers legal defense if a claim turns into a lawsuit. It never pays for damage to the insured's own car, which is what collision coverage is for.
Provider Network: The doctors, hospitals, pharmacies and other providers a health plan has contracted with to deliver care at negotiated rates. In-network care costs less and is protected from balance billing, while out-of-network care costs more or is not covered at all depending on the plan type. Networks change during the plan year, so a provider who is in-network when the plan is bought may not be months later, and the plan directory is where current participation is confirmed.
Public Adjuster: A licensed claims professional hired and paid by the policyholder to document a loss and negotiate the settlement with the insurer. Unlike staff and independent adjusters, who work for the insurer, a public adjuster represents the policyholder's side of the claim. Fees are typically a percentage of the settlement, and states regulate licensing, contract terms, fee caps and how soon after a disaster a public adjuster may solicit business.

Q

Qualifying Life Event: A change in circumstances that opens a special enrollment period, letting a person buy or change health coverage outside the annual open enrollment window. Common examples include losing other coverage, marriage or divorce, the birth or adoption of a child, a permanent move to a new coverage area, and an income change that affects subsidy eligibility. The window to act is limited, commonly 60 days for Marketplace coverage and at least 30 days for employer plans, and documentation of the event is often required.

R

Recoverable Depreciation: The portion of a claim payment an insurer holds back for depreciation and releases once the repair or replacement is finished and documented. It applies on replacement cost policies, where the first payment covers the depreciated value and the balance follows after the work is done. Policies set a deadline for completing repairs and submitting receipts, and depreciation is not recoverable at all under an actual cash value policy.
Rental Reimbursement Coverage: Optional auto coverage that pays for a rental car or other transportation while a covered vehicle is being repaired after a claim. It is normally written as a daily allowance with a maximum number of days or a total cap, so a long repair can outlast the coverage. It applies only when the vehicle is out of service because of a covered loss, not for routine maintenance or mechanical breakdown.
Replacement Cost Value (RCV): A claim settlement method that pays what it costs to replace damaged property with new items of similar kind and quality, with no deduction for depreciation. Insurers commonly pay the depreciated amount first and release the remaining recoverable depreciation once the repair or replacement is finished and documented. Replacement cost policies cost more than actual cash value policies, and some still apply depreciation to roof surfaces or to specific categories of property.
Rider: An optional provision added to a life or health insurance policy that changes what the contract covers, the life insurance counterpart to an endorsement on a property policy. Waiver of premium, accidental death, child coverage and accelerated death benefits are common examples. Some carry an added premium and some are included at no charge, and which ones are offered depends on the insurer, the product and the state.
Rideshare Coverage: An endorsement that extends a personal auto policy to driving for a ride-hailing or delivery platform, which the policy would otherwise exclude. Personal policies contain a livery exclusion that removes coverage while carrying passengers or goods for pay, and the platform's own insurance is thinnest while the app is on but no ride has been accepted. That gap is what the endorsement is meant to close, and availability and terms vary by insurer and by state.

S

SR-22: A form an insurer files with the state certifying that a driver carries at least the required liability coverage, usually after a serious violation or a lapse. It is a certificate of financial responsibility rather than a type of insurance, despite often being called SR-22 insurance. Which offenses require one, how long it must stay on file, and whether a state uses the form at all all vary, and Florida and Virginia use a similar filing called an FR-44 that requires higher limits.
Salvage Title: A title brand a state applies to a vehicle an insurer has declared a total loss, marking it as not roadworthy in its current condition. The damage threshold that triggers the brand is set by state law or by a total loss formula, so the same car can be branded in one state and not in another. A vehicle that is repaired and passes inspection usually receives a rebuilt title instead, and insurers may limit or decline collision and comprehensive coverage on either.
Scheduled Personal Property: An endorsement that insures specific high value items individually, listing each with its own limit rather than leaving it under a sublimit. Jewelry, watches, firearms, fine art, musical instruments and collectibles are the usual candidates, since standard policies cap those categories well below replacement cost. Scheduled items are commonly covered on an open perils basis and often without a deductible, and insurers may ask for an appraisal or a receipt.
Service Line Coverage: An endorsement covering the buried pipes and wires running from the street to the house, such as water, sewer, electrical and communication lines, which standard homeowners policies exclude. It typically pays to excavate, repair or replace the failed line and to restore the lawn or driveway disturbed by the work, subject to its own limit and deductible. It applies only to the portion of a line the homeowner is responsible for, and where that responsibility begins varies by utility and municipality.
Simplified Issue Life Insurance: Life insurance underwritten from a short health questionnaire and database checks, with no medical exam, no blood work and no attending physician statement. Approval often arrives in days rather than weeks, and the tradeoff is a higher cost per thousand dollars of coverage and lower maximum face amounts than a fully underwritten policy. Answering yes to a knockout question on the application can result in a decline, which is the gap guaranteed issue policies with a waiting period are written to fill.
Special Enrollment Period (SEP): A limited window outside open enrollment during which a person can buy or change health coverage after a qualifying life event. Marketplace enrollees generally get 60 days before or after the event, and employer plans must allow at least 30 days. Which events qualify, what documentation is required, and whether plan choices are restricted to the enrollee's current metal tier are set by federal rules that have changed over time.
Split Limits: Auto liability limits written as three separate maximums: bodily injury per person, bodily injury per accident, and property damage per accident. They appear on a declarations page in a form such as 25/50/25, where the numbers stand for thousands of dollars. The per person figure caps what any one injured party can collect and the per accident figure caps everyone combined, so a crash with several injuries can reach the second number quickly.
Stacking: Combining uninsured or underinsured motorist limits across several vehicles, or across several policies, so one claim can draw on more than one limit. A policy covering two cars with stacking might make twice the coverage available after a crash with an uninsured driver. Whether stacking is allowed, whether an insurer may charge for it, and whether it can be waived in writing are all set by state law, and stacked coverage costs more than unstacked.
Sublimit: A cap inside a coverage that limits payment for a particular category of property or type of loss below the overall coverage limit. Homeowners policies apply them to jewelry, cash, firearms, business property and similar categories, so a large personal property limit does not mean each item is fully covered. Raising a sublimit generally requires scheduling the items or adding an endorsement.
Subrogation: The right of an insurer, after paying a claim, to pursue the party that caused the loss and recover what it paid out. If the recovery succeeds the insurer may return the policyholder's deductible, in whole or in part, out of the amount collected. Policies require the policyholder to cooperate and not to sign away the right to recover, which is why settling directly with an at-fault party can create problems.
Suicide Clause: A standard life insurance provision that refunds premiums instead of paying the death benefit if the insured dies by suicide early in the policy. The period is two years in most states and one year in a few, and it runs alongside the contestability period. Reinstating a lapsed policy or replacing one with new coverage generally restarts the clock.
Surcharge: An amount added to a premium because of a specific event on the policy, such as an at-fault accident, a moving violation or a claim payment. It is applied at renewal and normally stays on the policy for a set number of years before dropping off, with the length shaped by state rules and insurer practice. It is different from a general rate increase, which raises the price for everyone in a rating group rather than for one policyholder.
Surplus Lines Insurance: Coverage written by an insurer that is not licensed in the state, used when the licensed market will not accept a risk such as a wildfire exposed home or a property with a long claims history. Rates and forms are not filed with the state regulator, so terms can be narrower and pricing more flexible, and policyholders are generally not protected by the state guaranty association if the insurer fails. It is placed through licensed surplus lines brokers, usually after documented declinations from admitted insurers, and state taxes and fees are added on top of the premium.

T

Term Life Insurance: Life insurance that covers a set number of years, commonly 10, 15, 20 or 30, and pays a death benefit only if the insured dies during that term. It builds no cash value, which is why it costs less than permanent coverage at the same face amount for the same person. Level term holds the premium fixed for the whole term, and many policies can be renewed at a higher price or converted to permanent coverage without new medical underwriting, subject to deadlines written into the contract.
Total Loss: A vehicle or property an insurer decides is not worth repairing, because the repair cost, sometimes combined with salvage value, meets or exceeds a threshold tied to its value. Instead of paying for repairs the insurer pays the actual cash value less the deductible. The threshold is fixed by state law in some places and left to insurer formula in others, and a totaled vehicle usually ends up with a branded or salvage title.

U

Umbrella Policy: A separate liability policy that pays after the limits on an underlying auto or homeowners policy are exhausted, usually sold in increments of one million dollars. Insurers normally require the underlying policies to carry specified minimum limits before they will write one. It covers liability rather than damage to the policyholder's own car or home, and some forms extend to claims such as libel or slander that the underlying policies exclude.
Underinsured Motorist Coverage (UIM): Auto coverage that pays the insured's remaining injury or damage costs when an at-fault driver carries liability limits too low to cover the loss. It applies after the other driver's liability limits are exhausted rather than in place of them. Availability, whether it can be rejected, and how it combines with the at-fault driver's limits all vary by state.
Underwriting: The process an insurer uses to decide whether to accept a risk, on what terms, and at what price. It draws on information such as claims history, the driving record or the condition of the property, the age and construction of the home or vehicle, and other factors permitted in that state. An application can be accepted, accepted with conditions or endorsements, or declined, and the same applicant can be underwritten differently by different insurers.
Uninsured Motorist Coverage (UM): Auto coverage that pays for the insured's injuries when the at-fault driver has no liability insurance or leaves the scene without being identified. Some states also offer an uninsured motorist property damage version that covers the vehicle itself. Many states either require this coverage or require insurers to offer it and obtain a written rejection, so the rules differ considerably from state to state.
Universal Life Insurance: Permanent life insurance with a flexible premium and an adjustable death benefit, built around a cash value account. Payments go into that account and the cost of insurance and expenses are drawn from it each month, with the balance earning interest at a rate the insurer declares subject to a guaranteed minimum, or in indexed and variable versions tied to market performance instead. If the cash value runs too low to cover the monthly charges the policy can lapse, so the flexibility comes with a need to monitor the account that whole life does not have.
Usage-Based Insurance (UBI): Auto insurance priced partly on driving behavior measured by a mobile app or a device in the vehicle rather than on traditional rating factors alone. Programs commonly track mileage, hard braking, rapid acceleration, speed and time of day, and some also flag phone handling while driving. What gets measured, whether a rate can rise as well as fall, and what the insurer may do with the data all vary by program and by state.

W

Waiver of Premium Rider: A rider that keeps a life insurance policy in force with no further premium payments if the insured becomes totally disabled. Coverage continues as though the premiums were still being paid, and policies define total disability specifically, commonly requiring an inability to work along with a waiting period of several months before the waiver starts. It costs an added premium, is usually available only up to a certain issue age, and the definition of disability and the exclusions vary by insurer.
Water Backup Coverage: An endorsement covering damage when water or sewage backs up through drains or sewers, or when a sump pump fails, which standard policies exclude. It is separate from flood insurance and from the sudden pipe bursts a policy already covers, and it is normally sold with its own limit well below the dwelling limit. Limits, deductibles, and whether resulting mold is included vary by insurer and by state.
Wear and Tear: The gradual deterioration of property from age and ordinary use, which homeowners and auto policies exclude. Insurance is written for sudden and accidental events, so a roof that has reached the end of its service life, a pipe that corroded over years or worn brakes are treated as maintenance rather than a claim. Damage that results from a failure can still be covered even when the failed part itself is not, and where insurers draw that line is a frequent source of claim disputes.
Whole Life Insurance: Permanent life insurance with a premium that stays level for life, a death benefit that does not shrink, and a cash value that grows on a guaranteed schedule. Both the premium and the death benefit are fixed when the policy is issued, which is what separates it from universal life, where each can be adjusted later. It costs more than term life at the same face amount, and policies from mutual insurers may also pay dividends, which are not guaranteed.
Wind and Hail Deductible: A separate deductible that applies to any wind or hail damage, not only to damage from a named storm, and is often stated as a percentage of the dwelling limit. Unlike a hurricane deductible it can be triggered by an ordinary thunderstorm, a tornado or a hail event with no tropical system involved. It appears in hail-prone inland regions as well as coastal ones, and in some areas wind is excluded from the homeowners policy entirely and written through a separate wind pool.
Wind Mitigation Inspection: An inspection that documents a home's wind resistant features, such as roof covering, roof deck attachment, roof to wall connections and impact rated windows and doors, so an insurer can apply credits. Florida uses a single standardized statewide form and requires property insurers to give discounts for verified features, and several other coastal states run their own programs. A report is usually good for several years unless the structure changes, and the size of any credit depends on the features found and on the insurer.