Insurance Dictionary in the U.S.
English Terms Explained
Understanding insurance in the United States can be difficult, mainly because many terms appear in English. This glossary explains the main terms in a simple way, organized by type of insurance.
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General insurance terms
Insurance Insurance
A contract in which you pay a company to help cover certain losses, accidents, or expenses, depending on what is written in the policy.
Policy Policy
A document that explains what the insurance covers, what it does not cover, how much it costs, and what the rules are.
Coverage Coverage
What the insurance can pay, or help pay for.
Premium Premium or insurance monthly payment
The amount you pay to keep the insurance active. It can be paid monthly, semiannually, or annually.
Deductible Deductible
The amount you need to pay out of pocket before the insurance starts paying.
Claim Claim
A request made to the insurance company when something covered by the policy happens, such as an accident, damage, theft, or loss.
Policyholder Policyholder
The person or company that purchased the insurance.
Insured Insured
The person, property, or company protected by the insurance.
Beneficiary Beneficiary
The person who receives the insurance payout in certain situations, very common in life insurance.
Limit Coverage limit
The maximum amount the insurer can pay for a covered situation.
Exclusion Exclusion
A situation the insurance does not cover.
Lapse Cancellation due to nonpayment
When the insurance stops being valid because payment was not made by the due date.
Quote Quote
A price estimate for an insurance policy.
Underwriting Risk assessment
The process used by the insurer to evaluate the customer’s profile and set the price, approval, and terms of the policy.
Agent Insurance broker or agent
A professional who helps you choose, understand, and purchase insurance.
Carrier Insurance company
The company responsible for the insurance.
Auto insurance
Auto Insurance Auto insurance
Insurance to protect the driver, the car, and third parties in case of an accident, theft, damage, or other situations provided for in the policy.
Liability Coverage Liability coverage
Helps pay for damage or injuries caused to other people when you are responsible for an accident.
Bodily Injury Liability Bodily injury liability
The part of the policy that helps pay medical expenses or compensation when someone else is injured in an accident you caused.
Property Damage Liability Property damage liability
Helps pay for damage caused to another person’s car, wall, pole, house, or other property.
Collision Coverage Collision coverage
Helps pay for repairs to your car after a crash, even if you caused the accident.
Comprehensive Coverage Comprehensive coverage
Protects against damage not caused by a collision, such as theft, fire, a falling tree, hail, or vandalism.
Uninsured Motorist Coverage Uninsured motorist coverage
Helps protect you when the driver responsible for the accident does not have insurance.
Underinsured Motorist Coverage Underinsured motorist coverage
Helps when the at-fault driver has insurance, but their limit is not enough to pay for all damages.
Personal Injury Protection Personal injury protection
May help pay medical expenses and other losses after an accident, depending on the state.
Medical Payments Coverage Medical payments coverage
Helps pay medical expenses for you or your passengers after an accident.
Full Coverage Full coverage
A day-to-day term used to refer to a combination of coverages, usually liability, collision, and comprehensive. It does not mean everything is covered.
Home insurance
Homeowners Insurance Homeowners insurance
Insurance for homeowners. It may cover the structure of the home, personal belongings, and liability for accidents involving third parties.
Dwelling Coverage Dwelling coverage
Helps pay for repairs or rebuilding of the home if it is damaged by something covered.
Personal Property Coverage Personal property coverage
Helps protect items inside the home, such as furniture, clothing, electronics, and personal items.
Loss of Use Loss of use
Helps pay extra costs if you need to live somewhere else temporarily due to a covered loss.
Personal Liability Personal liability
Helps protect you if someone is injured on your property or if you cause damage to someone else.
Replacement Cost Replacement cost
The amount needed to replace an item with a similar new one, without deducting wear and tear.
Actual Cash Value Actual cash value
The value of the item considering wear and tear over time.
Peril Covered peril
An event that can cause a loss, such as fire, theft, or strong winds.
Flood Insurance Flood insurance
Separate insurance for damage caused by flooding. In many cases, standard homeowners insurance does not cover flooding.
Windstorm Coverage Windstorm coverage
Coverage for damage caused by strong winds, common in regions with hurricanes or storms.
Renters insurance
Renters Insurance Renters insurance
Insurance for those who rent a house or apartment. It generally covers personal belongings, liability, and some additional living expenses.
Tenant Tenant
A person who rents a property.
Landlord Landlord
The person or company that owns the rental property.
Personal Belongings Personal belongings
Items that belong to the tenant, such as clothing, a computer, a cell phone, furniture, and electronics.
Additional Living Expenses Additional living expenses
Helps with temporary costs if the rental property becomes uninhabitable due to a covered issue.
Life insurance
Life Insurance Life insurance
Insurance that pays an amount to beneficiaries when the insured person dies, according to the policy rules.
Term Life Insurance Term life insurance
Life insurance that is valid for a defined period, such as 10, 20, or 30 years.
Whole Life Insurance Whole life insurance
Life insurance that can last a lifetime, as long as payments are made as agreed.
Death Benefit Death benefit
The amount paid to beneficiaries when the insured person dies.
Cash Value Cash value
A value that can grow within some types of permanent life insurance.
Beneficiary Beneficiary
The person chosen to receive the life insurance payout.
Rider Additional coverage
An extra option added to the policy to increase or tailor the protection.
Health insurance
Health Insurance Health insurance
Insurance that helps pay for medical expenses, appointments, tests, prescriptions, and treatments, according to the coverage purchased.
Copay Fixed copay
A fixed amount you pay for a service, such as a doctor’s visit or a prescription.
Coinsurance Percentage coinsurance
The portion of the bill you pay as a percentage after meeting the deductible.
Out-of-Pocket Maximum Out-of-pocket maximum
The maximum amount you pay in covered expenses during the year. After that, the plan usually pays 100% of covered services.
Network Provider network
A group of doctors, hospitals, clinics, and pharmacies that accept the plan.
In-Network In-network
A provider or service that is part of the plan’s network.
Out-of-Network Out-of-network
A provider or service that is not part of the plan’s network. It usually costs more.
Primary Care Physician Primary care physician
A doctor who provides basic care and can refer you to specialists.
Specialist Specialist
A doctor focused on a specific area, such as cardiology, dermatology, or orthopedics.
Prescription Drug Coverage Prescription drug coverage
The part of the plan that helps pay for medications prescribed by a doctor.
Business insurance
Business Insurance Business insurance
Insurance to protect a business against losses, lawsuits, accidents, property damage, and other risks.
General Liability Insurance General liability insurance
Helps protect the business if someone alleges damage, an accident, or a loss caused by the business.
Professional Liability Insurance Professional liability insurance
Helps protect professionals and businesses against claims related to an error, failure, or negligence in a service provided.
Errors and Omissions Insurance Errors and omissions insurance
A type of professional insurance that protects against claims for errors, failures, or incomplete information in the service.
Workers’ Compensation Workers’ compensation insurance
Helps cover medical expenses and part of the income of employees who are injured at work.
Commercial Property Insurance Commercial property insurance
Protects business assets such as the building, equipment, inventory, furniture, and tools.
Business Interruption Insurance Business interruption insurance
Helps cover lost revenue when the business needs to temporarily stop due to a covered issue.
Commercial Auto Insurance Commercial auto insurance
Insurance for cars, vans, trucks, or other vehicles used for work purposes.
Certificate of Insurance Certificate of insurance
A document that proves the business has active insurance.
Insurance for rental properties and investors
Landlord Insurance Landlord insurance
Insurance for those who rent out a property to someone else. It may protect the structure, liability, and loss of rent in some situations.
Rental Property Insurance Rental property insurance
Insurance designed for houses or apartments used as a source of rental income.
Loss of Rental Income Loss of rental income
Coverage that may help when the property becomes unfit to rent due to a covered loss.
Vacancy Vacancy
A situation in which the property is unoccupied. This can affect coverage, depending on the policy.
Umbrella insurance
Umbrella Insurance Umbrella insurance
Extra insurance that increases your liability protection when the limit of another policy is not enough.
Excess Liability Excess liability
Additional protection above the limits of a primary policy.
Important terms when purchasing
Effective Date Coverage start date
The day the insurance begins.
Expiration Date Expiration date
The day the policy ends if it is not renewed.
Renewal Renewal
Continuation of the insurance for a new term.
Cancellation Cancellation
Ending the policy before the end date.
Endorsement Policy change
A change made to the policy, such as adding a car, changing the address, or including coverage.
Declarations Page Policy declarations page
The part of the policy that shows the main information, such as the insured’s name, coverages, limits, deductibles, and price.
Grace Period Grace period
Extra time to pay the insurance before it is canceled.
Binder Temporary proof of coverage
A temporary document showing that coverage is already active before the final policy is issued.
Non-Renewal Non-renewal
When the insurer or the customer decides not to continue the policy after it expires.