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Glossary of Insurance Terms

This resource is designed to help you understand the intricacies of insurance policies and claims. Whether you’re a policyholder, claimant, or simply interested in insurance matters, our glossary is here to assist you.


  1. Adjuster:

    A professional who assesses and evaluates insurance claims on behalf of the insurance company or the insured.

  2. Appraisal:

    A formal evaluation of property value or damage to determine the amount of an insurance claim.


  1. Beneficiary:

    The person or entity designated to receive insurance proceeds upon the death of the insured.


  1. Claim:

    A formal request made by the insured to the insurance company for coverage of a loss or damages.

  2. Coverage:

    The protection provided by an insurance policy for specified risks or events.


  1. Deductible:

    The amount the insured must pay before the insurance company covers the remaining costs of a claim.


  1. Endorsement:

    A written amendment or addition to an insurance policy that modifies its terms and conditions.

  2. Exclusion:

    Specific perils or circumstances that are not covered by an insurance policy.


  1. Flood Insurance:

    A specialized policy that provides coverage for damage caused by flooding, typically not covered under standard homeowners’ insurance.


  1. Grace Period:

    A brief period after the due date of an insurance premium during which coverage remains in effect, even if the premium is not paid.


  1. Homeowners Insurance:

    A policy that provides coverage for a homeowner’s property, personal belongings, and liability.


  1. Indemnity:

    The principle of restoring the insured to the same financial position they were in before a covered loss occurred.


  1. Joint Policy:

    An insurance policy that covers two or more individuals under a single policy.


  1. Key Person Insurance:

    A policy that provides coverage for a business or organization in the event of the death or disability of a key employee or owner, helping to mitigate financial losses and facilitate business continuity.

  2. Kidnap and Ransom Insurance:

    Coverage that protects individuals and organizations against the financial risks associated with kidnapping, extortion, or hostage situations.

  3. Known Loss Doctrine:

    A legal principle that states that insurance policies typically do not cover losses that were known to the insured before the policy was issued.


  1. Liability Insurance:

    Coverage that protects the insured against claims made by third parties for injuries or damage they sustain due to the insured’s actions or negligence.

  2. Loss Ratio:

    The ratio of claims paid out by an insurance company to the premiums it collects in a given period. It is often used as an indicator of an insurer’s financial health.

  3. Lapse:

    The termination of an insurance policy due to non-payment of premiums, resulting in a loss of coverage.


  1. Medicare:

    A federal health insurance program in the United States that provides coverage for individuals aged 65 and older and certain younger individuals with disabilities.

  2. Policyholder:

    The individual or entity that owns an insurance policy and is entitled to its benefits.


  1. Named Perils:

    Specific risks or events explicitly listed in an insurance policy for which coverage is provided. This is in contrast to an all-risk policy that covers any peril not specifically excluded.

  2. Nonrenewal:

    The decision by an insurance company not to renew an insurance policy at the end of its term, typically due to changes in risk factors or claims history.

  3. No-Fault Insurance:

    A type of auto insurance system where policyholders are compensated by their own insurance company for injuries and damages, regardless of who is at fault in an accident.

  4. Non-Owned Auto Insurance:

    Coverage that extends liability protection to an individual or business when using a vehicle not owned by them, such as a rental car or borrowed vehicle.

  5. Notice of Loss:

    A formal notification sent to an insurance company to inform them of a loss or potential claim, triggering the claims process.


  1. Occurrence Policy:

    An insurance policy that covers claims for events that occur during the policy period, regardless of when the claim is reported.

  2. Out-of-Pocket Costs:

    The expenses that the insured person must pay directly for covered services before the insurance company starts to reimburse.

  3. Overinsurance:

    A situation where the amount of insurance coverage purchased exceeds the actual value of the insured property, which can lead to higher premiums.

  4. Owner’s Policy:

    A title insurance policy that protects the property owner against title defects or issues that may arise after the property is purchased.


  1. Premium:

    The amount of money paid to an insurance company in exchange for coverage under an insurance policy.


  1. Quote:

    An estimate of the cost of an insurance policy based on the information provided by the applicant. It outlines the coverage, premium, and terms offered by the insurance company.

  2. Qualified Health Plan (QHP):

    A health insurance plan that meets the standards and requirements set forth by the Affordable Care Act (ACA) and is eligible for participation in the Health Insurance Marketplace (Exchange).


  1. Rider:

    An amendment or attachment to an insurance policy that modifies its terms or provides additional coverage.


  1. Subrogation:

    The process by which an insurance company seeks reimbursement from a third party for claims it has paid to its insured.


  1. Term Life Insurance:

    A type of life insurance that provides coverage for a specific period, typically at a lower premium than permanent life insurance.


  1. Underwriting:

    The process of evaluating and determining the risk associated with insuring a particular person, property, or event.


  1. Valuation:

    The process of determining the value of an insured item or property for the purpose of insurance coverage.


  1. Waiting Period:

    The period of time between the purchase of an insurance policy and when coverage becomes effective.

  2. Whole Life Insurance:

    A type of permanent life insurance that provides coverage for the insured’s entire lifetime and includes a cash value component.

  3. Waiver of Premium:

    A provision in some insurance policies that allows the policyholder to stop paying premiums if they become disabled or meet other specified criteria.


  1. Zero Deductible:

    An insurance policy feature where the policyholder is not required to pay any deductible before coverage begins.

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