Glossary of insurance terms meant as a resource for our readers, including a list of terms that are common in insurance policies and “lingo” and their definitions as follows:

Actual Cash Value: This is the value of replacing an item of personal property minus the depreciation.

Adjuster: Representative of the insurance company who attempts to determine the extent of liability and damages for a submitted claim.

Agent: a person who sells and provides service related to an insurance policy.  Agents fall into one of two categories as follows: (1) Independent Agents: Represent two or more insurance carriers and are able to “shop around” for the best rates, etc.; and (2) Direct Agents: Who only sell and service insurance policies for one particular company.

Aggregate Coverage Limit: The total amount that the insurance company may be liable to pay for a given period of time for multiple persons asserting claims.  (For example: In an auto accident claim, if there are 3 people in the car who are injured, there would be a “per claim” limit for any one person and an “aggregate limit” for all three claims).

Annuity: An agreement by an insurance company to make periodic payments for the life of the specified “annuitant(s)”

Automobile Liability Insurance: Insurance coverage for an “insured” who is found liable for either bodily injury or property damage related to a traffic collision.

Broker: An individual who seeks out and sells insurance policies for clients and doesn’t represent any one or more insurance company(ies).

Broker-Agent: As the name implies, a mixture of a “broker” and an “agent” (i.e. a person who does represent one or more insurance carriers but, is also able to “shop the marketplace” for policies from other carriers he or she does not represent).

Casualty Insurance: A type of insurance primarily focused on paying claims for bodily injury or property damage.

Claim: A demand for payment made by the “insured” or “claimant” or their legal representative (including beneficiaries).

Claimant: Person or entity making a claim.

Collision Insurance: Covers damage to the insured’s automobile resulting from coming into contact with another vehicle or inanimate object.

Commercial Lines: Insurance for businesses, professionals or other commercial enterprises.

Co-payment: A set flat fee that the insured is responsible for paying in the event of a claim.

Death Benefit: The specified amount to be paid in the event of the death of the covered person.

Deductible: The amount that must be paid by the insured prior to coverage “kicking in” (For example: An auto collision policy holder may have to pay the first $500 for the cost of repair of their vehicle after an auto accident before the insurance picks up and pays the rest).

Employment Practices Liability Insurance: Insurance for claims made by employees against an employer (excluding workers compensation claims). E.g. wrongful termination, discrimination, etc.

General Liability Insurance: Policy covering a wide variety of claims arising out of the operation of a business enterprise.  (E.g. slip and fall on business property, injury caused by product manufactured by business, contractual claims, etc.)

Hazard: Something that increases the likelihood of an accident or injury (e.g. storing dangerous chemicals on the property).

Hazardous Activity: Inherently dangerous activities such as skydiving, bungee jumping or other types of activities that may be excluded from coverage by the insurance carrier.

Insurer: Company providing the insurance coverage.

Insured: Person or entity for whom the insurance policy covers.

Liability Insurance: Insurance that covers for the negligence or contractual obligations of a named “insured”.

Occurrence: An event that gives rise to a claim.  Does not have to be accidental and can be caused over a long period of time and arise from something that the insured does not necessarily expect.

Personal Injury Protection (PIP): Usually in states that have no fault auto insurance provisions, this is the portion of the policy that will pay for the basic medical expenses of the insured and/or their immediate family members.

Personal Lines: Insurance for individuals such as life, home and auto coverage.

Premium: Payments made to an insurance company for specified coverage over a specified period of time.

Reinsurance: In essence, this is insurance that an insurance company buys for its own protection.

Subrogation: The right of an insurance company to seek reimbursement from third parties for payments made to or on behalf of their insured.

Term Life Insurance: Insurance that provides a death benefit for a specified period of time and does not build up any “cash surrender value”. (E.g. pays in the event of death up to age 65).

Total Loss: When the amount to repair property (such as an automobile) exceeds the fair market value of that property.

Umbrella Policy: A policy which would apply in the event that the loss exceeds the amount of the limits of basic coverage for an underlying insurance policy (E.g. if a person has $250,000 in basic auto coverage and a claim worth $500,000 is made, the umbrella policy would kick in to cover the additional $250,000).

Underwriter: Person trained to assess risk and to set rates and premiums accordingly.

Uninsured Motorist Coverage (UM): Coverage for the insured for medical and other expenses in the event that an at fault driver has no liability insurance.

Underinsured Motorist Coverage (UIM): Coverage for an insured in the event that an at fault driver has limits of coverage below the limits of the insured for medical and other expenses. (E.g. if a person is hit by someone with only $10,000 in liability coverage and the insured has $20,000 in coverage, the additional $10,000 would be available to cover medical and other costs).

 

 

Additional Resources:

Legal Dictionary – Definitions of Insurance Terms