Understanding insurance should be simple. We've worked to simplify the jargon below, helping you to better understand your policy.
From A-Z, we'll help you understand the trickiest insurance terms.
Can't find the definition you're looking for? Explore our auto, homeowners, and renters coverage type pages.
Accident : An unforeseen act or result that may cause bodily injury or property damage. In some policies, it is identified as occurring at a specific time and place. In others, it includes continuous or repeated exposure to the same conditions.
Act of God : An event caused by the forces of nature, without human intervention and which could not have been prevented by reasonable care; for example, flood, earthquake, hurricane.
Additional Insured : An individual or organization covered by an insurance policy other than the named Insured. In an auto policy, anyone who drives the policyholder's vehicle with their consent is an additional insured. In a home policy, a mortgage company may be listed as an additional insured.
Adhesion : One of the special characteristics of insurance contracts. The insurance company sets the terms of the insurance contract. The insured may accept or reject these terms, but they are not negotiable.
Agent : An individual or business firm having a license issued by the state insurance commissioner authorizing the sale of insurance policies and a contract with an insurance company authorizing the sale of that specific company's policies. Generally, an agent is authorized to receive applications for insurance, to bind coverage and to receive reports of loss. Generally, an agent may not pay claims, may not authorize repairs, and may not commit an insurance company to pay a claim by interpreting coverage. The coverage information forwarded by agents on the Loss Report may be accepted as accurate, unless it is found to be incomplete or inconsistent.
Amendatory Endorsement : This notice confirms that a change was made to a policyholder's base policy, such as adding towing service.
Appearance Allowance : Cosmetic adjustment for the vehicle. For instance, if a part is damaged in an accident but is still fully functional, the insurance company may pay the person making the claim money to keep the damaged part instead of fixing it.
Appraisal : An estimate by a Claims Representative or Appraiser to estimate the amount of damage to a policyholder's property or vehicle, and the cost to repair it. In the worst-case scenario, a determination of a complete loss may be made.
Arbitration : A legal hearing between insurance companies where each company presents its evidence to a neutral third party. That party then determines who's at fault.
Authorized Service Provider : A service provider contracted by a customer's insurance company that provides services at a discount rate.
Basic/State Minimum Financial Responsibility Limit : The lowest coverage amounts for which an insurance policy can be sold, as decided by law or an insurance company.
Betterment : A fee you may be charged if your vehicle ends up in better condition after a repair from an accident than it was in before the accident.
Broker : An insurance broker ordinarily is a solicitor of insurance who does not represent insurance companies in a capacity as agent but places orders for coverage with companies designated by the insured or with companies of the broker's own choosing.
Business Use : When a vehicle is used for business.Casualty : Coverages usually written by Casualty Underwriters; generally Bodily Injury and Property Damage coverages.
Casualty Insurance : A type of insurance primarily concerned with losses caused by injuries to persons and the legal liability imposed upon the insured for such injury or damage.
Catastrophe : A sudden, severe disaster that results in a large amount of damage and causes a high number of auto and home insurance claims.
Claim : A request for payment under a single item of coverage on an insurance policy. A request for payment under two items of coverage would be two claims.
Claimant : One who makes a claim.Claims Adjuster : Also known as a claims representative, an employee at an insurance company who handles the customer's claim.
Claimed Expenses : Refers to the claimant's alleged out of pocket expenses, which must be verified as accurate.
Collision (Waived Deductible) : If the policyholder's vehicle is impacted by another car, they won't need to pay a deductible if the other driver is uninsured and declared at fault.
Combined Single Limit : The maximum amount that an insurance company will pay for any combination of bodily injury and property damage liability claims. This is generally not subject to a per-person limit.
Commercial Lines : Insurance coverages for businesses.Compulsory Auto Financial Responsibility Laws : Laws that require policyholders to prove they can pay for damage from an accident. These laws vary by state.
Compulsory Limit : The minimum amount of insurance that policyholders are required to have by law in their state.
Condition : Used to describe the general maintenance and upkeep of a vehicle. Conditioning : This is the pre-accident condition of a vehicle. Conditions : The terms and provisions of an insurance contract.Covered Auto(s) : Any vehicle shown in the policy Declarations or, in some cases, a substitute vehicle used temporarily because of breakdown or repair of the policyholder's covered vehicle.
Damages : A sum of money a party is legally obligated to pay to another as compensation for property damage or injury.
Damages from the Loss : Vehicle damage from an accident. Date of Loss : This is the date of an accident/incident.Declarations/Declarations Page : The part of an insurance policy that provides detailed information about the policyholder, the insurer, and the various coverages provided by the policy. It can be thought of as a summary page with key information about your insurance policy and coverages.
Deductible : A reduction in value over time due to age, use, and condition of an item based on your market area.
Desk Adjuster : This is a Claims Representative who is the main point of contact throughout the claim process.
Desk Damage Estimate : A review of the policyholder's auto body shop estimate. Direct Bill : A bill sent by mail, also referred to as a paper bill. Direct Repair Program (DRP) : A network of repair shops preferred by an insurance company.Dwelling : Another term to describe the part of your home insurance policy that covers the physical structure of the primary residence on your property.
Endorsement : Attached to an insurance policy, it is used to modify the terms of the insurance contract. It can amend a policy to cover unique items or circumstances and it can also represent a change to a policy that's made during the policy's term.
Equity : Percent of a policy paid.Exclusions : The part of an insurance policy that excludes coverage for certain risks, persons, property, or locations.
Fair Plan : A program, created by law, to make fire and other forms of property insurance available to persons who have difficulty obtaining coverage from insurance companies.
Field Appraiser : An insurance representative who will come out and review the damage.Fire Insurance : Part of a homeowner's policy that insures against direct loss by fire, lightning, and other defined causes.
Floater Policy : A policy which insures personal property anywhere within a specified territory; the coverage ‘floats" with the goods as they are moved about.
General Damages : The portion of the claimant's claim which is in excess of his/her out-of-pocket expenses (i.e., pain and suffering, inconvenience).
Group Savings Plus : A discount through an affiliation (e.g. alumni, company/employer).Inexperienced Operator : A driver of any age who holds a license in the United States, Canada, or Puerto Rico for less than 3 years.
Improvements and Betterments : Additions or changes made by a lessee or renter at his or her own expense which enhance the value of the occupied building. These become part of the realty (and are not legally subject to removal) and require special insurance consideration.
Indemnity : The insurance principle of putting the insured back in the same (or similar) financial position after a loss as he or she was in before the loss occurred.
Inside Adjuster : Also known as a Claims Representative.Insurable Interest : Any interest in a subject, or any legal relation to it, of such a nature that a certain happening (such as fire) might cause monetary loss requiring insurance.
Insured : A person or organization covered by an insurance policy.Insuring Agreements : The part or parts of an insurance policy that state the various coverages provided.