Insurance terms can get confusing fast. This glossary is here to make things simple. Whether you’re reviewing a policy, comparing coverage, or just trying to understand what something means, you’ll find clear, straightforward definitions without the industry jargon.
We’ve put this together to help you make more informed decisions about your coverage. If you ever have questions or want help applying any of these terms to your situation, the team at M&L Insurance is here to help.
An event causing loss that occurs unexpectedly and unintentionally, usually at a specific time and place.
A provision that allows a policyholder to receive part of their life insurance benefit while still alive, typically in cases of terminal illness or long-term care needs.
An additional payment made if the insured dies as a result of an accident, often equal to the policy’s face value.
Expenses related to gaining new insurance business, including marketing, commissions, underwriting, and policy issuance.
The value of property at the time of loss, calculated as replacement cost minus depreciation.
A professional who uses statistics and financial theory to assess risk and determine insurance pricing.
Additional protection added to a policy covering risks like water damage, freezing, falling objects, and vandalism.
A person or entity added to a policy who is also protected under its coverage.
A person who evaluates claims and determines the amount payable by the insurance company.
A payment made before the coverage period begins.
The point at which a policyholder’s age changes for insurance rating purposes.
The minimum and maximum ages at which a person can qualify for coverage.
An organization that sells insurance on behalf of one or more carriers.
A licensed individual who sells and services insurance policies.
A classification used to determine insurance rates based on vehicle age.
Coverage that protects against most risks of physical loss unless specifically excluded.
An insurance policy with a term of one year.
A financial product that provides regular payments over time, often used for retirement income.
The person who receives payments from an annuity.
A formal request submitted to an insurer to obtain coverage.
An evaluation of property value or damage, often used in claim settlements.
Meeting established standards for insurance acceptance and safety requirements.
A geographic region used for determining insurance rates.
The intentional burning of property, often associated with fraud.
Property or resources owned that have monetary value.
A person who receives rights or ownership of a policy.
The transfer of rights or ownership of a policy from one party to another.
Terms often used interchangeably to describe financial protection against loss.
The person named in the policy who receives the insurance payout upon the insured’s death.
A temporary agreement, written or verbal, that provides immediate insurance coverage until a formal policy is issued.
Coverage that protects the insured and passengers against injury or death caused by an uninsured or hit-and-run driver.
Insurance that covers injuries to another person for which the policyholder is legally responsible.
A policy or endorsement that provides expanded coverage beyond basic insurance, often including additional risks like vandalism, falling objects, or weather-related damage.
A licensed professional who represents clients in finding insurance policies from multiple providers and is typically paid by commission.
Coverage that protects buildings, materials, and equipment during construction against damage or loss.
The unlawful entry into a property with visible signs of forced entry, with intent to commit theft.
Life insurance used to protect a business against the financial loss of key individuals or owners, and to help maintain stability and continuity.
The termination of an insurance policy before its scheduled expiration date by either the insurer or the policyholder.
The insurance company that provides and underwrites the coverage.
The savings portion of a permanent life insurance policy that accumulates over time and can be borrowed against or withdrawn.
A large-scale event, such as a hurricane or flood, that causes widespread damage and results in a high number of insurance claims.
A document that provides proof of insurance coverage, including policy details and effective dates.
A request made to an insurance company for payment of a covered loss.
The person or entity filing a claim for insurance benefits.
A professional who investigates claims and determines the amount the insurer should pay.
Coverage that pays for damage to a vehicle resulting from a collision with another vehicle or object.
Coverage that protects against non-collision-related damage such as theft, fire, vandalism, or natural disasters.
The provisions within an insurance policy that outline the responsibilities of both the insurer and the policyholder.
The legal agreement between the insurance company and the policyholder outlining coverage, terms, and conditions.
The protection provided by an insurance policy against specific risks.
A loss that falls within the terms and conditions of an insurance policy and is eligible for payment.
A numerical rating used by insurers in some cases to help determine risk and set premiums.
Physical harm or loss to property caused by a covered event.
The section of an insurance policy that summarizes key details such as the insured’s name, coverage limits, deductibles, and policy period.
The amount a policyholder must pay out of pocket before the insurance company begins to cover a claim.
An annuity contract where payments begin at a future date, allowing funds to accumulate over time.
The decrease in value of property over time due to age, wear and tear, or obsolescence.
A loss that occurs as a direct result of a covered event, such as damage from a fire or storm.
A condition that prevents an individual from performing work or daily activities due to illness or injury.
Coverage that provides income replacement if the insured becomes unable to work due to illness or injury.
A return of a portion of premium paid, typically issued by mutual insurance companies when financial performance allows.
A provision that pays an additional benefit, often double the policy amount, if death results from an accident.
The physical structure of a home covered under a homeowners insurance policy.
Insurance that protects the structure of a home against covered risks such as fire, wind, or other damage.
A type of insurance policy that provides coverage specifically for residential structures, often used for rental properties.
The portion of an insurance premium that has been used to provide coverage for a specific period of time.
The date on which an insurance policy begins providing coverage.
A person who qualifies for coverage under another individual’s insurance policy, such as a spouse or child.
Costs incurred as a result of a covered loss that require immediate action, such as temporary repairs or accommodations.
A written amendment to an insurance policy that modifies its terms, coverage, or conditions.
Coverage that applies after the limits of a primary insurance policy have been exhausted.
Specific conditions, risks, or situations that are not covered by an insurance policy.
The date on which an insurance policy ends unless it is renewed.
The degree of risk or likelihood that a loss may occur.
Additional protection added to a policy that expands coverage to include risks such as windstorm, hail, explosion, riot, or vandalism.
Coverage that reimburses additional costs incurred to continue business operations after a covered loss.
The amount covered by the terms of an insurance contract, usually found on the first page of the policy.
The most common automobile policy, which provides protection for all members of a household or family.
Expenses incurred at the time of a person’s death, including funeral costs, court expenses, outstanding bills or debts, mortgages, loans, and taxes.
A claim filed by an insured against their own insurance policy.
A death benefit with a set dollar amount that does not change.
The full cancellation of a policy as of its effective date, requiring a complete refund of any premium paid.
A type of insurance that covers movable personal property and provides additional protection beyond standard policy limits, such as for jewelry or high-value items.
A provision in most property insurance policies that eliminates coverage for damage caused by flooding and potentially other water-related events like seepage or sewer backup.
Individual life or health insurance policies issued to a group of people with a common affiliation or interest, also known as wholesale insurance.
A trial period, typically up to 20 days, during which a policyholder can review and cancel a new policy with no obligation or penalty.
Insurance that is commonly understood to cover a broad range of losses up to policy limits, though the term itself does not have a strict legal definition.
The person named in the policy who receives the insurance payout upon the insured’s death.
A temporary agreement, written or verbal, that provides immediate insurance coverage until a formal policy is issued.
Coverage that protects the insured and passengers against injury or death caused by an uninsured or hit-and-run driver.
Insurance that covers injuries to another person for which the policyholder is legally responsible.
A policy or endorsement that provides expanded coverage beyond basic insurance, often including additional risks like vandalism, falling objects, or weather-related damage.
A licensed professional who represents clients in finding insurance policies from multiple providers and is typically paid by commission.
Coverage that protects buildings, materials, and equipment during construction against damage or loss.
The unlawful entry into a property with visible signs of forced entry, with intent to commit theft.
Life insurance used to protect a business against the financial loss of key individuals or owners, and to help maintain stability and continuity.
Insurance that pays the difference between the actual cash value of a vehicle and the amount still owed on the loan. Some gap policies may also cover the deductible.
Insurance coverage for the legal liability of automobile dealers, garages, repair shops, and service stations for bodily injury and property damage arising from their business operations.
A broad term referring to liability insurance other than automobile coverage. It protects individuals and businesses from risks such as bodily injury, property damage, product liability, completed operations, and contractual liability.
A period of time after the premium due date during which the policy remains in force without penalty.
Willful and reckless disregard for the safety or rights of others.
The maximum total loaded weight of a single vehicle as specified by the manufacturer.
Several insurance companies operating under common ownership and often shared management.
A circumstance that increases the likelihood or severity of a loss. For example, storing explosives in a home basement increases the risk of an explosion.
A managed care plan that provides healthcare services through a network of doctors, hospitals, and providers, typically at a lower cost than traditional plans.
A contractual agreement in which one party assumes the legal liability of another party.
An insurance policy that combines coverage for a dwelling, personal property, theft, additional living expenses, and personal liability into one package.
In health insurance, individuals who are expected to have a higher-than-average number of claims due to medical history or physical condition. Coverage may still be offered with conditions such as waivers or waiting periods.
Compensation provided to restore a person to their financial position prior to a loss, through payment, repair, or replacement.
A claims adjuster who provides services to insurance companies for a fee but is not directly employed by them.
The condition of an individual seeking insurance, including factors such as health, risk level, and life expectancy.
The written contract between an insurer and the insured that outlines coverage, terms, and conditions.
The person or organization covered by an insurance policy.
The insurance company that provides coverage under a contract of insurance.
A named beneficiary whose right to receive policy proceeds cannot be changed without their consent.
Life insurance policies written on the lives of children within specified age limits.
Insurance used for business purposes to compensate a company for financial losses resulting from the death of a key employee or important member of the organization.
The termination or discontinuance of an insurance policy due to non-payment of a premium.
Legal responsibility for injury or damage to another person or their property resulting from negligence.
Coverage that pays for injuries to others and damage to their property when the policyholder is at fault. This includes accidents caused by the policyholder or permitted drivers.
Coverage for losses the insured is legally responsible for. For example, in homeowners insurance, it protects against financial loss if the policyholder is sued for injury or property damage.
A certification issued by the department of insurance confirming that an individual is qualified to solicit insurance applications for a specified period.
A certification issued by the department of insurance confirming that an insurance company is authorized to operate within a state.
The average number of years a person is expected to live based on age, demographics, and other statistical factors.
Insurance coverage that pays a specified amount to beneficiaries upon the death of the insured individual.
The maximum amount an insurance company will pay for a covered loss.
The financial damage or cost covered under the terms of an insurance policy.
A provision in homeowners or renters insurance that reimburses additional living expenses, such as housing and food, if the insured property becomes uninhabitable due to a covered event.
A person or entity with a legal financial interest in insured property, typically a lender. In the event of a claim, payments may be made to both the insured and the lien holder.
A policy provision that directs claim payments to a party with an insurable interest in the covered property.
The percentage of claims paid out compared to the premiums earned by an insurer over a specific period.
Optional coverage under an auto policy that pays for medical expenses resulting from an auto accident, regardless of fault. Coverage for non-family members is typically limited to when they are occupants of the insured vehicle.
The lowest amount of premium that can be charged for a specific insurance coverage.
A provision in a property insurance policy that protects the mortgage lender’s interest, stating that loss payments will be made to both the insured and the named mortgagee.
A discount offered by insurers to policyholders who insure more than one vehicle under the same policy.
A report that contains information from an individual’s driving history, including license details, traffic violations, and accident records.
A type of life insurance used to pay off the remaining mortgage balance if the insured person dies.
A term referring to insurers that offer a variety of coverages, such as auto, fire, health, commercial, and homeowners insurance.
Insurance companies owned by their policyholders, where profits may be returned to members in the form of dividends.
An endorsement to an auto policy stating that coverage does not apply when a specifically named individual is operating the vehicle.
The person, business, or entity specifically listed on the insurance policy as the insured. Others may still be covered under the policy, such as drivers operating the vehicle with permission.
A type of property insurance that covers only the specific risks or causes of loss that are explicitly listed in the policy.
The failure to exercise the level of care that a reasonable and prudent person would under similar circumstances.
In commercial auto policies, coverage for vehicles used in business operations that are not owned, leased, hired, rented, or borrowed by the insured, typically employee-owned vehicles used for work purposes.
A decision by an insurance company not to renew a policy at the end of its term.
Insurance designed for drivers considered higher risk due to poor driving history or prior cancellations, typically resulting in higher premiums.
The use of a property. For example, a home that also operates as a business would have a “business occupancy.” Occupancy is important in determining insurance rates and whether a risk is acceptable.
The risk of illness or injury associated with a specific occupation or job duties.
An event that results in an insured loss. In liability insurance, an occurrence may include continuous or repeated exposure to conditions that cause injury or damage, even if the event is not sudden.
Insurance that covers incidents that occur during the policy period, regardless of when the claim is reported.
A provision in an auto policy that extends coverage to individuals who are driving the insured’s vehicle with permission.
The age of the insured at the time the insurance policy was originally purchased.
The person who has the legal right to exercise all privileges of a life insurance policy, including making changes to the policy. This may be the insured or another designated party.
A status in which a life insurance policy requires no further premium payments to remain in force.
Additional amounts of life insurance purchased using policy dividends that require no further premium payments.
An injury or condition that prevents the insured from performing one or more, but not all, of the important duties of their job.
The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.
A term used to describe how long insurance policies remain continuously in force without lapsing.
A policy that provides insurance coverage for privately owned passenger vehicles.
A type of general liability coverage for non-physical harms such as false arrest, wrongful detention, malicious prosecution, wrongful eviction, slander, libel, and invasion of privacy.
An automobile insurance coverage required in some states that provides benefits such as medical expenses, lost income, and funeral costs regardless of fault.
Movable items owned by an individual, as opposed to real property such as land or buildings. Generally defined as anything other than real estate.
Material, structural, or operational features of a risk that increase the likelihood of loss, such as building construction, wiring, or heating systems.
Insurance policies that have been issued and are still active and unexpired as of a given date.
The written contract between the insurer and the insured outlining the terms, conditions, and coverage.
An additional charge by some insurers, separate from the premium, often applied at the start of a policy.
The individual or entity that owns an insurance policy. A mortgagee may receive a copy of the policy but is not considered the policyholder.
A loan provided by an insurer to a policyholder using the cash value of a life insurance policy as collateral.
The time during which an insurance policy is active, from the effective date to the expiration date.
An individual considered lower risk by an insurer, often resulting in lower premiums due to better health or lifestyle factors.
The location where insurance coverage applies.
A medical condition that existed prior to the start of a health insurance policy.
The amount paid by the insured to maintain an insurance policy.
The total amount of premium written and still unexpired on the insurer’s books.
The portion of a premium that has been used to provide coverage over time without a claim.
The portion of a premium that applies to the remaining, unused period of the policy.
The person first designated to receive benefits from a life insurance policy.
The insurance policy that pays first when multiple policies apply to a loss.
The net amount payable by an insurance company upon the death of the insured or maturity of a policy.
Coverage that pays for damage caused by the insured’s vehicle to another person’s property.
Physical injury to property resulting in loss of use.
Coverage that protects real and personal property against physical loss or damage.
The cancellation of a policy with a full refund of the unused premium, without penalty.
The specific details within a policy that outline benefits, conditions, and terms of coverage.
The primary cause of a loss in an unbroken chain of events. For example, water damage from firefighting is covered under fire insurance because fire is the proximate cause.
An occurrence that triggers an insured’s eligibility for coverage or benefits.
A charge per unit used to determine insurance premiums.
A policy issued at a higher premium to cover an individual considered a greater-than-average risk, often due to health conditions or hazardous occupation.
A geographic area where similar risks are grouped together to establish fair and consistent insurance rates.
Coverage that protects against loss of rental income resulting from a covered peril.
Land and anything permanently attached to it, including buildings and vegetation.
An option in a renewable term life policy allowing the policyholder to renew coverage at the end of the term without providing evidence of insurability, at a predetermined rate.
An amount of money returned to a policyholder due to overpayment or unearned premium.
The process of restoring a lapsed policy by providing proof of insurability and paying any required past-due premiums.
A policy issued to replace and continue coverage after an existing policy expires.
Optional auto insurance coverage that pays a daily amount for a rental vehicle while the insured car is being repaired due to a covered loss.
A type of property insurance that covers personal belongings, provides liability protection, and may cover additional living expenses. Coverage may be based on replacement cost or actual cash value.
The amount required to replace damaged property without deducting for depreciation, subject to policy limits.
In disability insurance, a benefit paid when there is a partial loss of income due to a covered disability, typically calculated as a percentage of the full benefit.
A portion of premium returned to the policyholder due to cancellation, rate adjustment, or overpayment.
An endorsement or additional provision added to an insurance policy to modify coverage.
The chance of loss related to a person, property, or liability. The term may also refer to the insured subject itself.
A list describing the property or items insured under an insurance policy.
An alternate beneficiary designated to receive payment if the primary beneficiary predeceases the insured.
The cancellation of an insurance policy before its expiration date where a penalty is applied, resulting in less than a full pro-rata premium refund.
Insurance coverage that protects only one party with an insurable interest in a property. For example, a lender may insure a property to protect its financial interest if the borrower does not carry their own coverage.
Policies for which an extra premium is charged due to increased risk.
Policy provisions required by law or regulation, such as those related to grace periods and incontestability.
An individual who qualifies for insurance at standard rates without additional charges or restrictions based on underwriting guidelines.
An insurance company owned by shareholders, as opposed to a mutual company owned by policyholders.
The process by which an insurance company assumes the insured’s right to recover damages from a third party responsible for a loss.
An individual considered a higher risk due to health, lifestyle, occupation, or other factors, often resulting in higher premiums or coverage limitations.
An additional charge added to an insurance premium, often due to increased risk such as driving violations or policy lapses.
Fees deducted when a life insurance policy or annuity is surrendered, or in some cases when funds are borrowed or the policy lapses.
The length of time for which an insurance policy or bond remains in force.
The official ending or cancellation of an insurance policy.
Life or health insurance coverage provided for a specific period of time, which expires without value if the insured survives the term.
A claim filed by one person against another person’s insurance policy.
A private wrong or harm, other than a breach of contract, that results in legal liability. Torts may be intentional or caused by negligence. Liability insurance protects against claims arising from unintentional torts.
A condition that prevents a person from performing the duties of their occupation or any occupation for which they are reasonably qualified, depending on the policy definition.
A loss so severe that the property is considered completely destroyed or beyond repair, or where the cost of repair equals or exceeds the policy limits.
Auto insurance coverage that pays for towing when a vehicle cannot be driven, as well as on-site labor such as changing a flat tire.
The insurance coverage that applies first to a loss before any excess or umbrella policy is triggered.
A professional who evaluates risks, determines whether to accept or reject an application, and sets appropriate rates and coverage terms.
Coverage that protects the insured from financial loss due to bodily injury caused by an uninsured or hit-and-run driver who is legally responsible.
The portion of a prepaid premium that has not yet been used for coverage. If a policy is canceled early, this amount is typically refunded.
Auto insurance coverage that pays for injuries and, in some cases, property damage caused by a driver with no insurance or insufficient coverage to pay for the full loss.
A flexible, interest-sensitive life insurance policy that allows adjustable premium payments and builds cash value over time.
Incidents that have occurred but have not yet been reported to the insurance company.
Additional liability coverage that provides protection above the limits of underlying policies such as auto or homeowners insurance.
The primary purpose for which a vehicle is used, such as commuting, personal use, or business use, which can affect insurance rates.
Medical charges considered reasonable and standard within a geographic area, used by insurers to determine reimbursement amounts.
A property insurance provision, typically in commercial policies, that restricts coverage if a building has been vacant for a specified period, usually 60 days.
An annuity policy in which benefit payments are not guaranteed and instead fluctuate based on the performance of an underlying investment account.
A type of life insurance in which the face value and cash value fluctuate based on the performance of investment options supporting the policy.
A 17-digit alphanumeric code that uniquely identifies a vehicle, including details such as manufacturer, model, year, and specifications.
A person with a life-threatening or terminal illness who sells their life insurance policy for a lump sum payment.
A type of life insurance that provides coverage for the insured’s entire lifetime and pays a benefit upon death.
A system established by state law that provides benefits to employees who are injured in the course of employment, regardless of fault.