Top 25 Insurance Terms You Need to Know

Top 25 Insurance Terms You Need to Know

October 03, 2022

Insurance can be a tricky subject, especially when it includes a bunch of terms most people aren’t familiar with. We want to make sure that you understand exactly what these terms mean so you can be better equipped for your insurance discussions with your agent! Here are 25 terms to know to better understand your insurance:

  • Actual Cash Value – How much something costs to replace currently, instead of when it was insured (fluctuates based on current market)
  • Agent – Your contact who liaises between you and your insurance provider
  • Automatic Draft – Having your insurance payments pull automatically from your bank account
  • Bodily Injury – Damage caused to an actual person, includes coverage of cost from medical expenses and loss of life
  • Cancellation – When your insurance contract ends before the policy’s specified end-date
  • Claim – When you request compensation for a loss or damages from your insurance
  • Collision – Coverage for when your vehicle is damaged from a collision with an object or other vehicle
  • Comprehensive – Coverage for damaged caused by events other than collision, such as theft, vandalism, weather events, or animals
  • Deductible – The amount you pay out-of-pocket before your insurance covers the rest
  • Depreciation – The amount an item loses in value
  • EFT – Electronic Fund Transfer, catch-all term for digital payments
  • Endorsement – An addition to a policy that adds, removes, or changes the coverage or terms; Also called a “rider”
  • Exclusion – A part of a policy that excludes or limits coverage
  • GracePeriod – The period after a premium due date where payment can still be made without interrupting coverage
  • Insured – The person or people insured/protected by a policy
  • Insurer – The company that provides the insurance and its services (E.G. Nationwide, Progressive)
  • Liability – Coverage for damage to people or property in cases where you are deemed at fault
  • Limit – The most a policy will pay in the case of a claim
  • Peril – The cause of a claim
  • Policy – The written contract describing the specifics of your insurance coverage
  • Premium – The actual cost of your insurance; This is the amount you pay to remain insured
  • Quote – The estimated cost of coverage based on the information provided to the insurance provider
  • Replacement Cost – The amount an item is insured for to replace (locked in, regardless of current market)
  • Surcharge – An extra charge applied to the premium, usually in the event of a claim
  • Uninsured Motorist – Coverage that pays you for damages caused by a motorist without insurance or a hit-and-run accident

We hope that you find these terms helpful and easier to understand! If you have other terms you would like to ask about or questions about your insurance in general, feel free to contact us.

You can call or text us at (901)377-7935, or email us at [email protected].