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Insurance Glossary

Insurance terms, explained in plain English

Every term you'll meet on an auto, home or renters declarations page — what it means, what it actually pays for, and where it commonly catches people out.

Insurance documents are written for the people who settle claims, not for the people who buy them. This glossary translates 55 of the terms that turn up most often. Each entry has a full page with a worked example and the questions people actually ask.

Everywhere

Terms that mean the same thing on an auto, home or renters policy.

Declarations PageThe summary page of your policy — who’s covered, what’s covered, your limits, and yo… PremiumWhat you pay for the policy, usually shown per 6-month or 12-month term. DeductibleYour share of a claim before insurance pays. A $1,000 deductible means the first $1,… LimitThe most your policy will pay for a covered loss. Everything above the limit is on y… EndorsementAn add-on or change to the standard policy — extra coverage bolted on. Sometimes cal… ExclusionSomething your policy specifically will not pay for. Always worth reading. ClaimYour formal request for the insurer to pay for a covered loss. UnderwritingThe insurer’s process of deciding whether to cover you and at what price. Named InsuredThe person or people the policy officially covers — the names on the dec page. Policy PeriodThe start and end dates your coverage is active. LapseA gap with no coverage, usually from a missed payment. Even short lapses can raise f… Grace PeriodExtra time after a missed payment before the policy cancels. Length varies by carrie… Actual Cash Value (ACV)Pays what your stuff is worth today, after depreciation — not what you paid for it. Replacement CostPays what it costs to buy new today, without subtracting depreciation. The richer al… DepreciationThe value things lose over time — the gap between what you paid and what it’s worth … BinderTemporary proof of coverage while the full policy paperwork is finalized. Bundling (Multi-Policy Discount)Buying more than one policy from the same insurer — usually auto plus home, or auto …

Auto

Terms specific to car insurance.

Umbrella PolicyAn extra layer of liability that sits on top of your auto and home limits — typicall… Roadside AssistanceAn add-on that pays for towing, jump-starts, lockouts, and flat tires. It is a servi… CLUE ReportYour claims history report. Insurers check it when pricing you — like a credit repor… Bodily Injury LiabilityPays for injuries you cause to others. The two numbers, like 25/50, are in thousands… Property Damage LiabilityPays for damage you cause to other people’s property — their car, their fence, the g… Split LimitsThree buckets of money, written like 25/50/25. Bucket one: up to $25k for each indiv… Per Person vs. Per AccidentThe first number caps what any one injured person can receive; the second caps the w… Combined Single LimitOne pool of liability money for any mix of injuries and property damage, instead of … CollisionCovers damage to your own vehicle from a crash, regardless of fault. ComprehensiveCovers your vehicle for almost everything that isn’t a crash — theft, hail, fire, va… Uninsured Motorist (UM)Your protection when a driver with no insurance hits you. Your policy steps in for t… Underinsured Motorist (UIM)Kicks in when the at-fault driver has insurance — just not enough to cover your inju… Medical Payments (MedPay)Pays medical bills for you and your passengers after a crash, regardless of fault. Personal Injury Protection (PIP)Broader medical coverage required in no-fault states — medical bills, lost wages, an… No-Fault StateA state where your own policy pays your injury bills first, no matter who caused the… Rental ReimbursementPays for a rental car while yours is in the shop for a covered claim. Gap CoveragePays the difference between what you owe on your loan and what the car is worth if i… Total LossWhen repairs would cost more than the vehicle is worth, the insurer “totals” it and … LienholderThe lender that financed your vehicle. They’re listed on your policy and usually req… SR-22Not insurance — a form your insurer files proving you carry required coverage, usual… TelematicsPrograms that price your insurance partly on how you actually drive, tracked by an a… Full CoverageIndustry slang for liability plus comp and collision. There’s no official “full cove… SurchargeA price increase added after an accident or violation.

Home

Terms specific to homeowners insurance.

Umbrella PolicyAn extra layer of liability that sits on top of your auto and home limits — typicall… CLUE ReportYour claims history report. Insurers check it when pricing you — like a credit repor… Dwelling Coverage (A)Pays to rebuild or repair the structure of your home itself. Other Structures (B)Covers the detached stuff — garage, shed, fence. Personal Property (C)Your stuff — furniture, clothes, electronics — at home and often anywhere in the wor… Loss of Use (D / ALE)Pays your extra living costs — hotel, meals — if a covered loss makes your place unl… Personal Liability (E)Covers you if someone’s injured on your property or you accidentally damage someone … Open Peril vs. Named PerilOpen peril covers everything except what’s excluded; named peril covers only what’s … Flood InsuranceStandard home policies do NOT cover flooding. It’s a separate policy, mostly through… Water BackupAn add-on covering damage when sewers or sump pumps back up — a very common exclusio… Wind / Hail DeductibleA separate, often percentage-based deductible just for wind and hail claims, common … Scheduled PropertyListing high-value items — rings, instruments, collectibles — individually for cover… Ordinance or LawPays the extra cost of rebuilding to current building codes, not just back to how it… EscrowWhen your mortgage lender collects your insurance premium with your monthly payment …

Renters

Terms specific to renters insurance.

Personal Property (C)Your stuff — furniture, clothes, electronics — at home and often anywhere in the wor… Loss of Use (D / ALE)Pays your extra living costs — hotel, meals — if a covered loss makes your place unl… Personal Liability (E)Covers you if someone’s injured on your property or you accidentally damage someone … Scheduled PropertyListing high-value items — rings, instruments, collectibles — individually for cover… Renters Insurance (HO-4)Covers your belongings and liability in a rented place. Your landlord’s policy cover… Additional InterestYour landlord listed on your renters policy so they’re notified if it cancels. They … RoommatesUsually NOT covered by your renters policy unless named on it. Each roommate typical…

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CoverageCard is an educational tool. This page is not insurance advice, not legal advice, and not financial advice, and we are not an insurance company, agency, or licensed producer. Coverage varies by policy, insurer and state — your own policy documents control. For coverage decisions, talk with a licensed insurance producer in your state.