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.
A
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Adjuster:
A professional who assesses and evaluates insurance claims on behalf of the insurance company or the insured.
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Appraisal:
A formal evaluation of property value or damage to determine the amount of an insurance claim.
B
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Beneficiary:
The person or entity designated to receive insurance proceeds upon the death of the insured.
C
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Claim:
A formal request made by the insured to the insurance company for coverage of a loss or damages.
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Coverage:
The protection provided by an insurance policy for specified risks or events.
D
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Deductible:
The amount the insured must pay before the insurance company covers the remaining costs of a claim.
E
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Endorsement:
A written amendment or addition to an insurance policy that modifies its terms and conditions.
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Exclusion:
Specific perils or circumstances that are not covered by an insurance policy.
F
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Flood Insurance:
A specialized policy that provides coverage for damage caused by flooding, typically not covered under standard homeowners’ insurance.
G
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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.
H
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Homeowners Insurance:
A policy that provides coverage for a homeowner’s property, personal belongings, and liability.
I
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Indemnity:
The principle of restoring the insured to the same financial position they were in before a covered loss occurred.
J
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Joint Policy:
An insurance policy that covers two or more individuals under a single policy.
K
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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.
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Kidnap and Ransom Insurance:
Coverage that protects individuals and organizations against the financial risks associated with kidnapping, extortion, or hostage situations.
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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.
L
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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.
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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.
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Lapse:
The termination of an insurance policy due to non-payment of premiums, resulting in a loss of coverage.
M
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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.
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Policyholder:
The individual or entity that owns an insurance policy and is entitled to its benefits.
N
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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.
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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.
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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.
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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.
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Notice of Loss:
A formal notification sent to an insurance company to inform them of a loss or potential claim, triggering the claims process.
O
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Occurrence Policy:
An insurance policy that covers claims for events that occur during the policy period, regardless of when the claim is reported.
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Out-of-Pocket Costs:
The expenses that the insured person must pay directly for covered services before the insurance company starts to reimburse.
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Overinsurance:
A situation where the amount of insurance coverage purchased exceeds the actual value of the insured property, which can lead to higher premiums.
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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.
P
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Premium:
The amount of money paid to an insurance company in exchange for coverage under an insurance policy.
Q
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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.
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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).
R
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Rider:
An amendment or attachment to an insurance policy that modifies its terms or provides additional coverage.
S
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Subrogation:
The process by which an insurance company seeks reimbursement from a third party for claims it has paid to its insured.
T
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Term Life Insurance:
A type of life insurance that provides coverage for a specific period, typically at a lower premium than permanent life insurance.
U
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Underwriting:
The process of evaluating and determining the risk associated with insuring a particular person, property, or event.
V
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Valuation:
The process of determining the value of an insured item or property for the purpose of insurance coverage.
W
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Waiting Period:
The period of time between the purchase of an insurance policy and when coverage becomes effective.
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Whole Life Insurance:
A type of permanent life insurance that provides coverage for the insured’s entire lifetime and includes a cash value component.
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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.
Z
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Zero Deductible:
An insurance policy feature where the policyholder is not required to pay any deductible before coverage begins.
