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How we define insurance terms and words!


ACV – replacement cost minue depriciation.
Adjuster – an agent of an insurance company who investigates insurance claims. After investigating the claim, they’ll determine if the claim is covered, and if so, how much you’ll be paid.
Agent an individual whom is licensed to sell insurance on behalf of an insurance company.
Appraisal – a professional assessment of your property to determine its value.


Bodily Injury – bodily harm, sickness, or disease, including death that results from the harm, sickness, or disease.
Broker – an individual that acts or aids in the negotiation of insurance contracts, inplacing risks, or in soliciting or effecting contracts, as the agent of the applicant/buyer and not as the agent of the insurance company.
Burglary – the taking of property form within a premises by a person unlawfully entering or breaking out of a premises as evidenced by marks of forcible entry or exit.


Cancellation – the termination of your insurance policy by either party.
Claim – when you make a request to your insurance company to pay you after a loss.
Coverage – the protection against financial loss provided by an insurance contract.
Credit based insurance score – a number that is calculated using information from your credit report.


Damage – physical harm to or loss of property.
Damages – a sum of money that compensates an injured party (individual or organization).
Declarations page – the page in a policy that shows the name and address of the insurer, the period of time a policy is in force, the amount of the premium and the amount of coverage.
Deductible – the amount of the damage or loss that you’re responsible for before your company pays on a claim. Higher deductibles allow insurance companies to offer reduced premiums. Lower deductibles will increase the amount of the premium you will pay.
Direct Loss – a loss or damage as a direct result of a covered peril or cause of loss.


Effective date – the date that your coverage goes into effect.
Endorsement – an add-on to your insurance policy that changes the coverage provided in your policy.
Expiration date – the date on which your policy expires.
Exposure – the susceptibility to suffering a loss.


Hazard – a condition, circumstance,or situation that makes the occurrence of a loss more likely.


Insurable Interest – a financial interest a person has in the object being insured.
Insurance – a technique or business of transferring the risk of an individual or organization to another by means of a contract.
Insurance contract – the document that is the agreement between your insurance company and you (the policyholder) detailing the terms and conditions of your insurance coverage.
Insured – the policyholder; the person(s) protected in case of a loss or claim.
Insurer – the insurance company that provides insurance coverage and services.


Lapse – a policy that ends because the premium amount was not paid.
Limits – the maximum dollar amount of protection purchased by the policyholder for specific coverages.
Loss – the injury or damage sustained by the insured that the insurance company agrees to cover.
Loss history – the losses you have suffered, and their values, over a certain period of time.


Market Value – the value of property as determined by the amount of money people would pay for the property, knowing all the relevant facts.
Mutual insurance company – an incorporated insurance company that’s owned by its policyholders.


Negligence – when a person doesn’t exercise reasonable care in a given situation, they may be considered to be negligent.
Non-renewal – the action by the insurance company to terminate insurance coverafe at the expiration date or anniversary date of the policy.


Over-insurance – When the limit of insurance exceeds the value of the property insured.
Occurence – an accident, including continuous or repeated exposure to substantially the same conditions.


Perils – a cause of loss
Policy – a formal written contract of insurance.
Policyholder – the person who applied for, pays for and is issued the insurance policy.
Policy period – the period of time for which the insurance policy provides coverage.
Premium – the amount of money an insurance company charges to provide coverage.


Rate – a number that, when multiplied by a limit of insurance or a measure of exposure, determines your premium
Reinstatement – when your policy goes back into force after it lapsed due to nonpayment of premiums.
Replacement Cost – the cost to replace damaged property with like kind and quality without taking into account depreciation.
Risk – the chance that a loss may occur.
Robbery – the unlawful taking of property from a person by actual violence or threat of violence.


Subrogation – in insurance, subrogation substitutes one party (insurer) for another party (insured) in order to pursue any rights that the insured may have against a third party who is liable for a loss.
Surcharge – when an insurance company increases your rate due to a factor that increases your likelihood of suffering a loss.


Term the length of time covered by a policy.
Theft – any act of stealing.


Underwriter – the person who accepts or rejects risks for an insurance company.
Underwriting – the process an insurance company uses to decide whether to accept or reject an application for a policy.


Worker’s Compensation insurance that provides compensation to a worker when the worker cannot continue to work.
Wrongful Termination – termination of an employee in retaliation for filing a worker’s comp claim.

Glossary of basic insurance terms. Glossary of Basic Insurance Terms | American Family Insurance. (n.d.). Retrieved August 30, 2022.