Insurance Glossary

Actual Cash Value (ACV)

The cost to replace damaged property minus depreciation. This is the fair market value of the property at the time of loss.

Related: Replacement Cost

Adjuster

A professional who investigates insurance claims to determine the extent of the insurance company's liability. Adjusters may work for the insurance company, be independent, or represent the policyholder (public adjusters).

Bodily Injury Liability

Coverage that pays for injuries to others when you're legally responsible. This includes medical expenses, lost wages, and pain and suffering.

Learn more: Auto Insurance Coverage

Business Interruption Insurance

Coverage that compensates a business for lost income during periods when it cannot operate normally due to a covered event, such as fire or natural disaster.

Learn more: Business Owners Policy

Claims-Made Policy

An insurance policy that covers claims only if the policy is active both when the incident occurred and when the claim is filed. Common in professional liability insurance.

Collision Coverage

Auto insurance that pays for damage to your vehicle resulting from a collision with another vehicle or object, regardless of who is at fault.

Commercial General Liability (CGL)

Insurance that protects businesses against liability claims for bodily injury, property damage, and personal injury arising from business operations.

Learn more: General Liability Insurance

Deductible

The amount you must pay out-of-pocket before your insurance coverage begins. Higher deductibles typically result in lower premiums.

Endorsement (Rider)

An amendment to an insurance policy that modifies coverage. Endorsements can add, remove, or alter coverage terms.

Exclusion

Specific conditions, circumstances, or types of losses that are not covered by an insurance policy. Always review exclusions carefully.

Experience Modification Rate (EMR)

A factor used in workers' compensation insurance that compares your company's claims history to industry averages. A rate below 1.0 means fewer claims and lower premiums.

Learn more: Workers Compensation

General Aggregate Limit

The maximum amount an insurance policy will pay for all covered losses during the policy period, excluding products-completed operations.

Guaranteed Replacement Cost

Coverage that pays to rebuild your home even if costs exceed the policy limit, often used when construction costs increase unexpectedly.

Indemnity

The principle that insurance will restore you to your financial position before a loss occurred, neither profiting nor losing from the claim.

Inland Marine Insurance

Coverage for movable property, equipment, and goods in transit. Originally covered goods transported over water, now includes land-based property.

Liability Coverage

Protection against financial loss if you're legally responsible for injury to others or damage to their property.

Loss of Use

Coverage for additional living expenses if your home becomes uninhabitable due to a covered loss, including hotel costs and meal expenses.

Named Perils

An insurance policy that covers only the specific risks explicitly listed in the policy, such as fire, theft, or windstorm.

Occurrence Policy

Coverage for incidents that occur during the policy period, regardless of when the claim is filed. Provides lifetime protection for covered incidents.

Peril

A specific risk or cause of loss covered by an insurance policy, such as fire, theft, or natural disaster.

Premium

The amount you pay for insurance coverage, typically monthly, quarterly, or annually.

Replacement Cost

The cost to replace damaged property with new property of similar kind and quality, without deduction for depreciation.

Subrogation

The right of an insurance company to pursue a third party that caused a loss to recover the amount paid to the insured.

Umbrella Policy

Additional liability coverage that goes beyond the limits of your primary insurance policies, providing extra protection against major claims.

Underwriting

The process of evaluating risk and determining appropriate coverage terms and premiums for an insurance policy.

Uninsured Motorist Coverage

Protection for injuries and damage caused by a driver who doesn't have insurance or has insufficient coverage.