Basic Glossary of Insurance Terms
Accident: An unforeseen and unintended event causing loss or injury.
Accidental death benefit: An additional benefit paid if the insured dies because of an accident.
Actual cash value: The value of your property, based on the current cost to replace it minus depreciation.
Beneficiary: The person or entity designated to receive the proceeds from an insurance policy.
Binder: A temporary insurance contract that provides proof of coverage until a permanent policy is issued.
Claim: A request made by the insured to the insurance company for payment of benefits under a policy.
Co-payment (co-pay): A fixed amount paid by the insured for covered services, typically at the time of service.
Deductible: The amount the insured must pay out-of-pocket before the insurance company pays a claim.
Dependent: A person, usually a family member, who relies on the policyholder for financial support and is covered under their insurance policy.
Exclusion: Specific conditions or circumstances for which the policy does not provide coverage.
Endorsement: An amendment or addition to an existing insurance policy that changes the terms or scope of the original policy.
Face amount: The amount of coverage provided by a life insurance policy, payable upon death of the insured.
First-party claim: A claim filed by the policyholder against their own insurance policy.
Grace period: The period after the premium due date during which the policyholder can pay without losing coverage.
Hazard: A condition that increases the likelihood or severity of a loss.
Health Maintenance Organization (HMO): A type of health insurance plan that requires members to use a network of doctors and hospitals.
Indemnity: Compensation for a loss or damage, restoring the insured to their financial position before the loss.
Insurable interest: The financial interest an insured has in the insured property or person.
Liability insurance: Coverage that protects against claims alleging that the insured’s negligence or inappropriate action resulted in bodily injury or property damage to another party.
Premium: The amount paid by the policyholder to the insurance company for coverage.
Policyholder: The person or entity that owns the insurance policy.
Rider: An add-on to an insurance policy that provides additional benefits or coverage.
Subrogation: The process by which an insurance company seeks reimbursement from the responsible party for a claim it has already paid.
Underwriting: The process by which an insurance company evaluates the risk of insuring a person or asset and determines the premium.
Waiting period: The time that must pass before some or all coverage begins.
