Insurance Dictionary
Core Insurance Dictionary
84 plain-English insurance terms that form the foundation of policies, claims, coverage, pricing and underwriting.
Accident
Simple meaning: Something unexpected happens and causes harm or damage.
Insurance meaning: An unexpected event that may cause injury, property damage, or another covered loss, depending on the policy.
Actual cash value (ACV)
Simple meaning: What damaged property was worth right before the loss, after age and wear are considered.
Insurance meaning: A way to value property for a claim. It is commonly described as replacement cost minus depreciation, but exact policy wording and state law can affect the calculation.
Also called: ACV
Important: Do not confuse actual cash value with market value or replacement cost.
Additional insured
Simple meaning: A person or business added to someone else’s policy for certain protection.
Insurance meaning: A person or organization given insured status under another party’s policy, usually for specified liability exposures. The protection depends on the endorsement and policy wording.
Adjuster
Simple meaning: The person who looks at a claim and helps decide what the insurance company owes.
Insurance meaning: A person who investigates, evaluates, or helps settle insurance claims. Adjuster licensing and roles vary by state.
Admitted insurer
Simple meaning: An insurance company approved by a state to sell that type of insurance there.
Insurance meaning: An insurer licensed or authorized by a state insurance regulator to transact specified insurance business in that state.
Also called: Authorized insurer
Agent
Simple meaning: A person licensed to sell or service insurance.
Insurance meaning: A licensed insurance producer who may represent one or more insurers or, depending on state law and the relationship, help consumers obtain insurance.
Important: The legal role of an agent can differ by state and contract.
Aggregate limit
Simple meaning: The most a policy will pay for a group of covered claims during a set time.
Insurance meaning: The maximum amount an insurer will pay for covered losses subject to an aggregate during the policy period or another stated period.
Applicant
Simple meaning: The person or business asking to buy insurance.
Insurance meaning: A person or entity applying for insurance coverage.
Application
Simple meaning: The information you give when asking for insurance.
Insurance meaning: A form or process used to provide information an insurer uses to evaluate a request for coverage.
Appraisal
Simple meaning: A professional estimate of value or damage.
Insurance meaning: A process used to estimate property value, amount of damage, or in some policies to resolve disputes about the amount of loss. The policy controls how appraisal works.
Arbitration
Simple meaning: A private way to settle a disagreement without a regular court trial.
Insurance meaning: A dispute-resolution process in which an arbitrator or panel decides a dispute. Whether arbitration is required or binding depends on the contract and applicable law.
Binder
Simple meaning: Temporary proof that insurance coverage has started.
Insurance meaning: A temporary insurance contract or evidence of coverage that applies until the formal policy is issued or the binder ends, subject to its terms.
Bodily injury
Simple meaning: Physical harm to a person.
Insurance meaning: Physical injury, sickness, disease, and sometimes death, as defined by the policy.
Broker
Simple meaning: A licensed insurance professional who can help a customer shop for coverage.
Insurance meaning: A licensed insurance producer who generally acts on behalf of the customer in seeking insurance, subject to state law and the producer’s contractual relationships.
Cancellation
Simple meaning: Insurance ends before the policy’s normal end date.
Insurance meaning: Termination of a policy before its scheduled expiration date by the insurer or policyholder, subject to policy terms and applicable law.
Carrier
Simple meaning: Another word people use for an insurance company.
Insurance meaning: A common industry term for an insurer that assumes insurance risk and issues policies.
Also called: Insurance carrier
Certificate of insurance (COI)
Simple meaning: A paper that shows basic facts about someone’s insurance.
Insurance meaning: A document summarizing certain insurance coverage information at a point in time. It generally does not change the policy or create coverage by itself.
Also called: COI
Important: Always read the actual policy and endorsements for coverage.
Claim
Simple meaning: A request asking insurance to pay for a covered loss.
Insurance meaning: A request for payment, benefits, defense, or another obligation under an insurance policy after a loss or covered event.
Claimant
Simple meaning: The person or business asking for money or benefits from a claim.
Insurance meaning: A person or entity asserting a right to payment or benefits in connection with an insurance claim.
Coverage
Simple meaning: The protection an insurance policy gives you.
Insurance meaning: The risks, property, people, services, losses, or liabilities an insurance contract agrees to insure, subject to limits, exclusions, conditions, and other terms.
Coverage limit
Simple meaning: The most the policy will pay for a certain kind of covered loss.
Insurance meaning: The maximum amount of insurance available for a particular coverage, claim, occurrence, person, item, or policy period, depending on the policy.
Covered loss
Simple meaning: A loss the policy says it will pay for.
Insurance meaning: A loss that falls within the policy’s insuring agreement and is not removed or limited by an exclusion, condition, limit, or other policy term.
Declarations page
Simple meaning: The policy’s quick facts page.
Insurance meaning: The part of an insurance policy that usually lists the named insured, policy dates, insured property or risks, coverages, limits, deductibles, and premium.
Also called: Dec page
Deductible
Simple meaning: The part of a covered loss you pay yourself before insurance pays its share.
Insurance meaning: An amount the insured must absorb for a covered loss or service before or while the insurer pays according to the policy. How a deductible applies varies by coverage.
Depreciation
Simple meaning: A drop in value because something gets older, worn, or outdated.
Insurance meaning: A reduction in property value based on age, condition, wear, obsolescence, or other factors. It may affect an actual cash value settlement.
Direct loss
Simple meaning: Damage caused directly by a covered event.
Insurance meaning: Physical damage or loss directly caused by a covered peril, as distinguished from an indirect or consequential loss such as lost income.
Effective date
Simple meaning: The day insurance coverage starts.
Insurance meaning: The date and time a policy or coverage becomes effective, subject to the policy terms and payment requirements.
Endorsement
Simple meaning: A change added to an insurance policy.
Insurance meaning: A written amendment that adds, removes, or changes policy terms or coverage. An endorsement becomes part of the policy.
Also called: Policy endorsement
Exclusion
Simple meaning: Something the policy says it does not cover.
Insurance meaning: A policy provision that removes or limits coverage for specified causes of loss, property, people, activities, or circumstances.
Expiration date
Simple meaning: The day the policy is scheduled to end.
Insurance meaning: The date and time a policy period ends unless it is renewed, replaced, extended, or otherwise continued.
Exposure
Simple meaning: Something that creates a chance of loss.
Insurance meaning: A person, property, activity, condition, or situation that creates the possibility of an insured loss.
First-party claim
Simple meaning: A claim you make under your own insurance policy.
Insurance meaning: A claim by an insured against the insured’s own insurer for coverage or benefits provided by the policy.
Fraud
Simple meaning: Lying or cheating on purpose to get insurance money or a benefit you should not get.
Insurance meaning: Intentional deception or material misrepresentation for improper insurance benefit or advantage. Insurance fraud laws vary by jurisdiction.
Grace period
Simple meaning: Extra time to make a required payment before certain coverage consequences happen.
Insurance meaning: A period after a premium due date during which payment may still be made without immediate lapse, when provided by the policy or law. Rules vary by insurance type and state.
Hazard
Simple meaning: Something that makes a loss more likely or more serious.
Insurance meaning: A condition that increases the frequency or severity of loss. Hazards may be physical, moral, or behavioral.
Indemnity
Simple meaning: Putting someone back as close as possible to where they were financially before a covered loss.
Insurance meaning: A core insurance principle under which payment is generally intended to compensate for covered loss rather than create a profit, subject to policy terms.
Insurable interest
Simple meaning: A real reason you would lose money or suffer a recognized loss if something happened to the person or property insured.
Insurance meaning: A legally recognized interest in the preservation of a person, property, or risk. Requirements vary by insurance type and state law.
Insurance
Simple meaning: A way to share the money risk of bad things happening.
Insurance meaning: A contract-based method of transferring or pooling specified financial risks in exchange for premium or another form of consideration.
Insurance company
Simple meaning: A company that takes insurance risk and issues insurance policies.
Insurance meaning: An insurer authorized or otherwise permitted to assume insurance risk and issue contracts of insurance, subject to applicable law.
Also called: Insurer
Insurance score
Simple meaning: A score some insurers may use to help predict insurance risk.
Insurance meaning: A rating tool that may use credit-related or other permitted information to help predict future insurance losses. Use and regulation vary by state and line of insurance.
Also called: Credit-based insurance score
Insured
Simple meaning: The person or business protected by the policy.
Insurance meaning: A person or entity that qualifies as an insured under the insurance contract.
Insuring agreement
Simple meaning: The main promise that says what the insurance company agrees to cover.
Insurance meaning: The policy section stating the insurer’s basic coverage promise, subject to exclusions, conditions, limits, endorsements, and definitions.
Lapse
Simple meaning: Coverage ends because a required condition, often payment, was not met.
Insurance meaning: Termination of coverage because required premium or another policy requirement was not satisfied, subject to applicable grace periods and law.
Liability
Simple meaning: Legal responsibility for harm or damage.
Insurance meaning: A legal obligation to pay for injury, damage, or loss caused to another person or entity.
Limit of liability
Simple meaning: The most the insurer will pay under a liability coverage.
Insurance meaning: The maximum amount payable under a liability coverage for a claim, occurrence, person, accident, or policy period, depending on the contract.
Loss
Simple meaning: Harm, damage, expense, or another event that may lead to an insurance claim.
Insurance meaning: An event or financial detriment that may fall within insurance coverage, subject to the policy definition and terms.
Loss history
Simple meaning: A record of past insurance claims or losses.
Insurance meaning: Information about prior claims and losses that insurers may use in underwriting or pricing, subject to applicable law.
Loss payee
Simple meaning: A person or business that may be paid because it has a financial interest in insured property.
Insurance meaning: A party named in a property policy or endorsement as having a financial interest in covered property and possible rights to claim payment.
Market value
Simple meaning: What property might sell for in the market.
Insurance meaning: The estimated price property would bring in a sale between willing parties. It is not the same as replacement cost and may not be the claim valuation method.
Material fact
Simple meaning: An important fact that could change an insurer’s decision or price.
Insurance meaning: Information significant enough to affect underwriting, eligibility, coverage, or premium. Legal standards for materiality vary.
Misrepresentation
Simple meaning: Giving information that is not true or is misleading.
Insurance meaning: A false or misleading statement of fact. Consequences depend on materiality, intent, policy terms, and applicable law.
Named insured
Simple meaning: The person or business listed by name as an insured on the policy.
Insurance meaning: The person or entity specifically identified as a named insured in the declarations or policy. Named insureds often have rights and duties beyond other insureds.
Named peril
Simple meaning: A cause of loss that is covered only because the policy lists it.
Insurance meaning: A coverage approach in which only specifically listed causes of loss are insured, subject to exclusions and conditions.
Nonadmitted insurer
Simple meaning: An insurer that is not licensed in a state for ordinary admitted business but may be allowed to insure certain risks there.
Insurance meaning: An insurer not admitted in a particular state that may provide surplus lines or other permitted coverage through legally authorized channels.
Also called: Surplus lines insurer
Nonrenewal
Simple meaning: The policy will end at its expiration date and will not be renewed.
Insurance meaning: A decision by the insurer or policyholder not to continue coverage for another policy term. Notice rules vary by state and line.
Occurrence
Simple meaning: An event or happening that can trigger coverage.
Insurance meaning: A policy-defined event, often an accident or repeated exposure to substantially the same harmful conditions, that may trigger coverage under occurrence-based insurance.
Open peril
Simple meaning: The policy covers causes of loss unless they are specifically excluded.
Insurance meaning: A property coverage approach that covers direct physical loss unless the cause is excluded or otherwise limited by the policy.
Also called: Special form; all-risk is an older informal term
Peril
Simple meaning: The thing that causes a loss, like fire or theft.
Insurance meaning: A cause of loss, such as fire, wind, theft, or collision.
Policy
Simple meaning: The insurance contract.
Insurance meaning: The written contract of insurance, including declarations, forms, endorsements, definitions, exclusions, and conditions.
Policyholder
Simple meaning: The person or business that owns or holds the insurance policy.
Insurance meaning: The person or entity that contracts for and holds the policy. The policyholder may or may not be the only insured.
Policy period
Simple meaning: The time the policy is active.
Insurance meaning: The stated period during which the policy can provide coverage, subject to its terms and any cancellation or extension.
Premium
Simple meaning: The price charged for insurance coverage.
Insurance meaning: The amount charged for an insurance policy or coverage. It may be paid monthly, annually, or on another schedule.
Proof of loss
Simple meaning: Information and documents showing what happened and what was lost.
Insurance meaning: A formal statement or documentation of a claimed loss that may be required by the policy within a specified time.
Quote
Simple meaning: An estimate of the price and terms that may be available for insurance.
Insurance meaning: A proposed premium or indication of coverage based on information provided. A quote is not always a binding contract and may change after underwriting.
Rate
Simple meaning: A number insurers use to help calculate the price of coverage.
Insurance meaning: A pricing factor or charge per unit of exposure used in calculating insurance premium, subject to applicable rating rules.
Reinstatement
Simple meaning: Putting a policy back in force after it ended or lapsed.
Insurance meaning: Restoration of a policy or coverage after lapse or termination, when permitted and when required conditions are met.
Renewal
Simple meaning: Continuing insurance for another policy period.
Insurance meaning: The continuation or replacement of coverage for a new policy term, usually with new dates and potentially different premium or terms.
Replacement cost
Simple meaning: What it costs to replace damaged property with new property of similar kind and quality, without subtracting for age, when the policy allows it.
Insurance meaning: A property valuation method based on the cost to repair or replace covered property with property of comparable kind and quality, without deduction for depreciation, subject to policy conditions and limits.
Rescission
Simple meaning: Treating a contract as if it should be undone.
Insurance meaning: A legal remedy that voids or unwinds a contract, subject to insurance law, policy terms, and limits on when an insurer may rescind coverage.
Reservation of rights
Simple meaning: The insurer says it will investigate or defend for now but may later say some or all of the claim is not covered.
Insurance meaning: A notice preserving an insurer’s right to deny coverage for specified reasons while it investigates or provides a defense, depending on applicable law.
Retention
Simple meaning: The part of a risk kept instead of transferred to insurance.
Insurance meaning: The amount of loss or risk an insured, insurer, or reinsurer keeps for its own account rather than transferring it.
Rider
Simple meaning: An added piece that changes or adds benefits to a policy.
Insurance meaning: An attachment or policy provision that modifies coverage. The term is common in life and health insurance and often functions like an endorsement.
Risk
Simple meaning: The chance that something bad could happen and cause a loss.
Insurance meaning: Uncertainty about the occurrence or financial effect of loss. Insurance transfers specified risks subject to the contract.
Risk management
Simple meaning: Ways to avoid, reduce, keep, or transfer risk.
Insurance meaning: The process of identifying, evaluating, controlling, financing, or transferring risks.
Schedule
Simple meaning: A list in the policy showing specific things, people, places, or amounts that are covered.
Insurance meaning: A policy list identifying covered items, locations, persons, values, limits, or other details.
Self-insurance
Simple meaning: Paying some or all losses with your own money instead of transferring all of the risk to an insurer.
Insurance meaning: A risk-financing method in which an individual or organization retains financial responsibility for losses, sometimes under a regulated self-insurance program.
Settlement
Simple meaning: An agreement about how a claim will be resolved or paid.
Insurance meaning: Resolution of a claim by payment, repair, release, compromise, or another agreed method, subject to rights under the policy and law.
Subrogation
Simple meaning: After paying a claim, the insurer may try to get the money back from the person who caused the loss.
Insurance meaning: An insurer’s right, after paying a covered loss, to pursue recovery from a responsible third party to the extent allowed by the policy and law.
Third-party claim
Simple meaning: A claim made against someone because another person says they caused harm.
Insurance meaning: A claim by someone seeking recovery from an insured for alleged injury, damage, or liability.
Underinsurance
Simple meaning: Not having enough insurance to fully cover a loss or need.
Insurance meaning: A condition in which insurance limits or benefits are insufficient for the covered exposure or loss.
Underwriter
Simple meaning: The person or system that decides how risky something is to insure and on what terms.
Insurance meaning: A professional or underwriting process that evaluates risk, eligibility, coverage terms, limits, and pricing.
Underwriting
Simple meaning: The process of deciding whether and how to insure a risk.
Insurance meaning: The insurer’s evaluation of an applicant or exposure to determine acceptability, classification, terms, limits, and premium.
Waiting period
Simple meaning: A time you must wait before certain coverage or benefits can start.
Insurance meaning: A period that must pass before specified coverage, benefits, or eligibility applies. Rules vary by insurance type and program.
Waiver
Simple meaning: Giving up a right on purpose.
Insurance meaning: The voluntary relinquishment of a known right. Whether a waiver is valid depends on facts, contract language, and law.
Back to the Insurance Dictionary
About Ensurance
Ensurance is a U.S. insurance-shopping company that helps people shop for better insurance prices and coverage options through one protected request.