Glossary
Plain-language definitions of insurance terms.
- Peril
- A specific cause of loss listed in a policy — fire, theft, hail, vandalism, etc. Some policies cover only "named perils"; others cover all perils except those e...
- Personal Injury Protection (PIP)
- Coverage that pays medical expenses, and sometimes lost wages, for you and your passengers after a crash regardless of who was at fault. Required in some states...
- Personal Property Coverage
- The part of a homeowners or renters policy that pays for damage to or theft of your belongings.
- Policy Limit
- The maximum amount your insurer will pay under a coverage. Limits can be per-claim, per-person, per-occurrence, or aggregate over the policy period.
- POS Plan
- A Point of Service plan blends HMO and PPO features: you pick a primary care doctor and need referrals, but you also get limited out-of-network coverage.
- PPO
- A Preferred Provider Organization is a health plan that lets you see specialists without a referral and covers some out-of-network care, usually at a higher cos...
- Preauthorization
- Approval a health plan may require before it will cover certain services, procedures, or drugs. Skipping it can lead to a denied claim.
- Premium
- The price you pay for an insurance policy — usually monthly, semi-annual, or annual.
- Premium Tax Credit
- A federal subsidy that can lower the monthly premium for a health plan bought through the Marketplace, based on household income and size.
- Professional Liability Insurance
- Also called errors and omissions, it covers claims that your professional advice or services caused a client financial harm. Common for consultants, agents, and...
- Proof of Loss
- A formal, often sworn statement a policyholder submits documenting the details and value of a claimed loss, which the insurer uses to evaluate payment.
- Property Damage Liability
- The portion of an auto liability policy that pays for damage you cause to other people's property — usually their vehicle.
- Provider Network
- The group of doctors, hospitals, and other providers that have contracted with a health plan to deliver care at negotiated rates. Care from in-network providers...
- Quote
- An estimate of what a policy will cost based on the information you provide. Quotes are not binding offers until coverage is bound.
- Replacement Cost
- What it would cost today to replace your damaged property with a comparable new item — without subtracting for depreciation.
- Rider
- An add-on to a base policy that adds, removes, or changes coverage. Equivalent to an endorsement; the term "rider" is more common in life insurance.
- Scheduled Personal Property
- An add-on that insures high-value items like jewelry, art, or instruments for more than the standard policy's per-item limits, often without a deductible.
- Short-Term Health Insurance
- Temporary medical coverage meant to fill a gap between other plans. It often excludes pre-existing conditions and may not cover essential benefits, so read the...
- Special Enrollment Period
- A window outside yearly open enrollment when you can sign up for or change health coverage after a qualifying life event, such as marriage, a new baby, or loss...
- SR-22
- A certificate an insurer files with the state to prove you carry the required minimum liability coverage. Often required after serious violations, it is a filin...
- Subrogation
- When your insurer pays your claim and then pursues recovery from a third party at fault for the loss — the insurer steps into your shoes.
- Term Life
- Life insurance that covers you for a fixed period (often 10–30 years). Pays a death benefit only if you die during the term; no cash value.
- Total Loss
- When the cost to repair a damaged vehicle exceeds a set percentage of its value, the insurer declares it a total loss and pays its actual cash value instead of...
- Umbrella Policy
- Liability coverage that sits above your auto, home, or boat policies and pays after those limits are exhausted. Usually sold in million-dollar increments.
- Underwriting
- The process an insurer uses to evaluate your risk and decide whether — and at what price — to offer coverage.
- Uninsured Motorist Coverage
- Auto coverage that pays for your injuries (and sometimes property damage) when the at-fault driver has no insurance. Required in some states, optional in others...
- Universal Life Insurance
- A type of permanent life insurance with flexible premiums and a cash-value component that earns interest. Coverage can last your lifetime if the policy stays ad...
- Usage-Based Insurance
- Auto coverage priced partly on your actual driving, measured through a mobile app or plug-in device that tracks factors like mileage, braking, and time of day.
- Variable Life Insurance
- Permanent life insurance that lets you invest the cash value in subaccounts similar to mutual funds. Values rise and fall with the investments, which adds risk.
- Water Backup Coverage
- An add-on that covers damage from water backing up through sewers or drains, or from a sump-pump failure, situations a standard policy usually excludes.
- Whole Life
- Life insurance that covers you for your entire life and includes a cash-value component. More expensive than term life.
- Workers' Compensation
- Coverage that pays medical costs and lost wages for employees injured on the job. Most states require it once a business has employees.
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