Insurance Glossary (A–Z)
This glossary provides clear explanations of common insurance terms to help you better understand coverage, policies, and industry language. It is for informational purposes only and not a substitute for professional or legal advice.
A
Accident
An unforeseen and unintentional event causing injury or damage.
Accidental Death Benefit
An extra payment provided by a life insurance policy if the insured dies as a result of an accident.
Actual Cash Value (ACV)
The value of property at the time of loss, calculated as replacement cost minus depreciation.
Adjuster
A professional who investigates insurance claims and determines how much should be paid to settle them.
Agent
A licensed individual or organization authorized to sell and service insurance policies on behalf of an insurer.
B
Beneficiary
The person or entity designated to receive the benefits of an insurance policy.
Binder
A temporary agreement that provides proof of insurance coverage before a formal policy is issued.
Broker
An independent professional who helps clients find the best insurance policy from multiple insurers.
Burglary Insurance
Coverage that protects against losses resulting from theft or burglary.
C
Claim
A request made to an insurer for payment based on the terms of an insurance policy.
Co-Insurance
A cost-sharing arrangement where the insured pays a percentage of the covered expenses after the deductible.
Coverage
The protection provided by an insurance policy against financial loss or damage.
D
Deductible
The amount the policyholder must pay out of pocket before the insurance company pays the remaining costs.
Depreciation
The decrease in value of property over time due to wear and tear or aging.
E
Endorsement
A document that modifies or adds coverage to an existing insurance policy.
Exclusion
Specific conditions or circumstances that are not covered by the insurance policy.
F
First-Party Coverage
Insurance that covers the policyholder’s own losses or damages.
Flood Insurance
Coverage for property loss caused by flooding, which is typically excluded from standard policies.
G
Grace Period
A set amount of time after a premium due date during which a policy remains in force even if payment has not been made.
Group Insurance
Coverage offered to a group, such as employees of a company, under a single policy.
H
Hazard
A condition that increases the likelihood of a loss occurring.
Homeowners Insurance
A type of property insurance that covers losses and damages to an individual’s residence and belongings.
I
Indemnity
Compensation for loss or damage to restore the insured to the financial position they were in before the loss.
Insurable Interest
A legitimate financial interest in the insured item or person, required to purchase insurance.
Insurer
The insurance company that provides coverage and pays claims.
Insured
The person or entity covered by an insurance policy.
J
Joint Life Policy
A life insurance policy covering two or more individuals, typically paying out on the first death.
K
Key Person Insurance
A life insurance policy taken out by a business on a key employee whose death would have a significant impact on the company.
L
Lapse
Termination of a policy due to non-payment of premiums.
Liability
Legal responsibility for damages or injury caused to another person or property.
M
Maturity Date
The date when the face value of a life insurance policy becomes payable.
Medical Payments Coverage
Insurance that covers medical expenses for injuries sustained in an accident, regardless of fault.
N
Named Perils
Specific risks or causes of loss listed in a policy that are covered.
O
Occupational Hazard
A risk associated with a person’s occupation that may affect insurance rates or coverage.
P
Policy
The written contract that outlines the terms and conditions of insurance coverage.
Premium
The amount of money an insured pays for an insurance policy.
Property Damage
Harm to physical property resulting in loss of value or function.
Q
Quote
An estimate of the cost of insurance coverage based on provided information.
R
Reinsurance
Insurance purchased by an insurer from another company to protect against large losses.
Rider
An addition or amendment to an insurance policy that provides extra coverage or modifies terms.
S
Settlement
The payment or resolution of a claim by an insurance company.
Subrogation
The right of an insurer to pursue recovery from a third party responsible for a loss.
T
Term Insurance
Life insurance that provides coverage for a set period and pays out only if death occurs during that time.
Third-Party Coverage
Insurance that covers damages or injuries caused to others by the policyholder.
U
Underwriting
The process by which insurers evaluate risks and decide whether to accept or reject insurance applications and under what terms.
Umbrella Policy
An extra layer of liability coverage that extends beyond the limits of standard insurance policies.
V
Valuation
The determination of the worth of an insured item or property, often used to calculate premiums or claims.
Void Policy
A policy that is no longer legally valid due to misrepresentation or breach of conditions.
W
Waiver
The voluntary relinquishment of a known right, often in writing.
Whole Life Insurance
A type of life insurance policy that provides coverage for the insured’s entire lifetime with a cash value component.
X
Ex Gratia Payment
A payment made by an insurer out of goodwill, without admitting liability, often in exceptional cases.
Y
Yearly Renewable Term
A life insurance policy renewed annually, usually with increasing premiums as the insured ages.
Z
Zero Deductible
An insurance policy feature where the policyholder is not required to pay any deductible amount before coverage begins.