---
title: "Insurance terms explained"
description: "Insurance terms explained by Riskado: 160 definitions."
url: "https://riskado.com/insurance-terms/"
lang: "en"
image: "https://riskado.com/og/default.jpg"
alternates:
  es: "https://riskado.com/es/terminos-de-seguros.md"
---

# Insurance terms explained

Search insurance terms

160 terms

## A

[Accidental death and dismemberment](https://riskado.com/insurance-terms/accidental-death-and-dismemberment/) (ad&d, accidental death and dismemberment insurance)

Accidental death and dismemberment, or AD&D, is accident-only coverage that pays a stated benefit when a covered accident causes death or a listed loss, such as a hand, foot or eyesight. The death benefit usually goes to your beneficiary, and a dismemberment benefit usually goes to you.

[Actual cash value](https://riskado.com/insurance-terms/actual-cash-value/) (acv)

Actual cash value, or ACV, is what covered property is worth at the time of loss after depreciation for age, wear and condition. An ACV claim generally pays the repair or replacement amount less depreciation and the deductible, up to the policy limit. The policy, an endorsement or state law can set a different method.

[Agent](https://riskado.com/insurance-terms/agent/) (insurance agent, producer)

An insurance agent is a licensed producer appointed by an insurer to sell, solicit, negotiate and service insurance for that insurer. An agent can explain coverage, submit applications, collect premiums and sometimes bind coverage, but cannot change the policy's written limits, exclusions, deductibles or claim obligations. State law sets the agent's authority.

[At-fault accident](https://riskado.com/insurance-terms/at-fault-accident/) (at-fault determination, at fault)

An at-fault accident is a vehicle accident in which an insured driver is legally responsible for all or part of the injury or property damage. The driver's liability insurance may pay covered claims from others, up to the policy limits, and the accident may affect premiums, discounts or renewal depending on state law and the insurer's rating plan.

## B

[Beneficiary](https://riskado.com/insurance-terms/beneficiary/) (primary beneficiary)

A beneficiary is the person or organization named in a policy to receive the proceeds when the insured dies. In life insurance, that is the death benefit, paid as the designation directs, whether to one person or split among primary and contingent beneficiaries. The policy and state law decide how changes, missing beneficiaries and payment work.

[Binder](https://riskado.com/insurance-terms/binder/) (binding receipt, bind)

A binder is a temporary insurance contract that puts specified coverage in force before the formal policy is issued or delivered. It names the insurer, the insured risk, the effective dates, the limits and the terms. Coverage still follows the binder's conditions, exclusions, deductible and premium terms until the permanent policy replaces it.

[Boat insurance](https://riskado.com/insurance-terms/boat-insurance/) (boat owners package policy, watercraft)

Boat insurance is coverage for a boat or other watercraft that can pay for covered physical damage and for bodily injury or property damage you are legally responsible for. It may also cover medical payments, wreck removal, salvage, equipment and trailers, with the limits, deductible, valuation method, cruising territory, exclusions and operator rules controlling payment. [Boat insurance guides](https://riskado.com/boat-insurance/)

[Bodily injury liability](https://riskado.com/insurance-terms/bodily-injury-liability/) (bodily injury, bi, bodily injury liability coverage)

Bodily injury liability is the auto coverage for claims that you legally caused another person's injury or death. It can pay covered damages and provide a legal defense, within the policy's exclusions and limits. The declarations page shows the amount available per injured person and per accident. It does not pay your own injuries.

[Builders risk insurance](https://riskado.com/insurance-terms/builders-risk-insurance/) (builder's risk insurance, builders risk)

Builders risk insurance is temporary property coverage for a building or structure while it is being built, renovated, or repaired. It can pay for covered physical loss or damage to the work, materials, supplies, and certain temporary structures, within the policy's limit, covered causes of loss, deductible, exclusions, and end date.

[Business interruption insurance](https://riskado.com/insurance-terms/business-interruption-insurance/) (business income insurance, business interruption coverage, business income, extra expense coverage)

Business interruption insurance, also called business income insurance, helps replace the net income a business would have earned and pay continuing operating expenses when a covered physical loss slows or stops operations. Depending on the policy, it may also pay reasonable extra expenses such as temporary premises. Limits, exclusions, deductibles and restoration periods apply.

[Business owner's policy](https://riskado.com/insurance-terms/business-owners-policy/) (bop, business owners policy, business owner's policy (bop))

A business owner's policy, or BOP, is a package policy that bundles business property, liability, and business income or interruption coverage for eligible small businesses under one premium. The declarations, deductibles, exclusions, limits, endorsements and state rules decide what it pays and what the business pays itself. [Business owner's policy guides](https://riskado.com/business-owners-policy/)

## C

[Cancellation](https://riskado.com/insurance-terms/cancellation/) (cancelable, cancellable contract, flat cancellation, pro-rata cancellation, short-rate cancellation, pro rata)

Cancellation ends an insurance policy before its scheduled expiration date, either at your request or the insurer's, and stops coverage on the stated effective date. You may owe earned premium for the time covered and get back unearned premium. State law and the policy set who may cancel, why, and with what notice.

[Cash value](https://riskado.com/insurance-terms/cash-value/) (cash surrender value, cash value life insurance, surrender value)

Cash value is the savings element of a permanent life insurance policy and represents the policy owner's interest in it. You can reach it through a policy loan, withdrawal or surrender. It is not necessarily what you paid in premiums, and surrender charges, loans, interest and policy terms can reduce the net cash surrender value.

[Catastrophic health plan](https://riskado.com/insurance-terms/catastrophic-health-plan/) (catastrophic coverage)

A catastrophic health plan is an ACA-qualified health plan with lower premiums and very high deductibles and out-of-pocket costs. It covers essential health benefits, free preventive care and at least three primary-care visits before the deductible. Enrollment is limited to people under 30 or people with a qualifying hardship or affordability exemption.

[Certificate of insurance](https://riskado.com/insurance-terms/certificate-of-insurance/) (coi, acord certificate)

A certificate of insurance summarizes the insurer, policy types, limits, policy numbers and effective dates for a certificate holder, as evidence that coverage exists. It is not the policy, it does not pay claims, and it cannot add coverage, create additional insured status or change the premium or the policy's terms.

[Claim](https://riskado.com/insurance-terms/claim/) (insurance claim, claim number, claim #, first-party claim, third-party claim, CLM)

A claim is a request for an insurer to apply a policy to a covered loss, event, service, or bill. The insurer investigates and pays its covered share, subject to the policy's limits, exclusions, deductible, valuation rules, and deadlines. Filing a claim starts the coverage decision process; it does not by itself guarantee payment.

[Claimant](https://riskado.com/insurance-terms/claimant/) (CLMT, first-party claimant, third-party claimant)

A claimant is the person or organization asking an insurer to pay a covered loss or benefit. That can be the policyholder, an insured, someone injured by an insured, a beneficiary, a healthcare provider or an authorized representative. Being the claimant does not guarantee coverage or payment; the policy, evidence, limits, deductibles and state law decide that.

[Claims-made policy](https://riskado.com/insurance-terms/claims-made-policy/) (claims-made form, extended reporting period, tail coverage, prior acts coverage, retroactive date)

A claims-made policy is liability insurance that covers a qualifying claim when it is first made, and often reported, during the policy period or an extended reporting period. It covers earlier acts only if they happened on or after the policy's retroactive date. If coverage ends, you may need tail coverage for claims reported later.

[Classic car insurance](https://riskado.com/insurance-terms/classic-car-insurance/) (antique automobile, agreed value policy, agreed value)

Classic car insurance is auto coverage for a collectible, historic, restored, modified or specially valued vehicle. It may insure the car at an agreed value instead of a depreciated cash value, in exchange for limits on mileage, storage, drivers or everyday use. The declarations page and endorsements set the actual coverage. [RV, golf cart and recreational vehicle insurance guides](https://riskado.com/recreational-vehicle-insurance/)

[Coinsurance](https://riskado.com/insurance-terms/coinsurance/) (coinsurance clause)

Coinsurance is the part of a covered cost that you pay under an insurance policy. In health insurance, it is usually a percentage of the allowed amount after the deductible. In property insurance, a coinsurance clause can reduce a claim when the insured limit is below the required percentage of the property's value.

[Collision coverage](https://riskado.com/insurance-terms/collision-coverage/) (collision)

Collision coverage is optional auto insurance that pays for damage to your covered vehicle when it overturns or hits another vehicle or object, usually regardless of fault. It pays repair costs or the vehicle's pre-loss market value, minus your deductible. A lender or lessor may require it even though state law generally does not.

[Commercial auto insurance](https://riskado.com/insurance-terms/commercial-auto-insurance/) (business auto, business auto coverage form, commercial auto)

Insurance for vehicles a business owns, leases, hires or has employees drive for work. It can pay the company's covered liability for bodily injury or property damage caused by a covered auto, defend covered claims and, when purchased, pay for covered damage to business vehicles, within the declared limits, symbols and deductibles. [Commercial auto insurance guides](https://riskado.com/commercial-auto-insurance/)

[Commercial package policy](https://riskado.com/insurance-terms/commercial-package-policy/) (commercial lines, commercial insurance, business insurance, small business insurance, commercial multiple peril policy)

A commercial package policy, or CPP, combines two or more business coverages, commonly commercial property and commercial general liability, in one policy. It gives the business coordinated declarations and conditions while keeping separate limits, deductibles, exclusions and endorsements for each coverage part. The issued policy determines what losses are covered.

[Commercial property insurance](https://riskado.com/insurance-terms/commercial-property-insurance/) (commercial property, property insurance, business personal property, business personal property coverage, building coverage)

Business insurance that pays to repair or replace a listed building, business personal property and, when included, property of others in the business's care after covered physical loss or damage. Limits, covered causes of loss, valuation, coinsurance, deductibles and exclusions decide what the insurer pays and what the business keeps. [Commercial property insurance guides](https://riskado.com/commercial-property-insurance/)

[Commercial umbrella insurance](https://riskado.com/insurance-terms/commercial-umbrella-insurance/) (excess liability coverage, excess liability, commercial umbrella)

Commercial umbrella insurance is business liability coverage above specified underlying policies, such as commercial general liability or commercial auto. It can pay covered damages and defense costs after the underlying limits are used up, and some forms address certain coverage gaps. The declarations, exclusions, retained limit and endorsements decide the actual protection.

[Comprehensive coverage](https://riskado.com/insurance-terms/comprehensive-coverage/) (comprehensive, other than collision)

Comprehensive coverage is optional auto insurance that pays for covered damage to your vehicle from causes other than collision, such as theft, fire, vandalism, hail, flood, falling objects, glass breakage and animal impact. You usually pay a deductible first. The policy then pays covered repair costs or the vehicle's actual cash value, subject to its terms.

[Contractual liability](https://riskado.com/insurance-terms/contractual-liability/) (hold harmless agreement, hold-harmless clause, indemnity agreement)

Contractual liability is responsibility you accept for another party through a written or oral agreement, such as a hold-harmless or indemnity clause. A liability policy may cover it when the agreement qualifies as an insured contract, and may exclude promises outside that definition, subject to its endorsements, limits, and state law.

[Copay](https://riskado.com/insurance-terms/copay/) (copayment, copayments)

A copay, or copayment, is a fixed dollar amount you pay for a covered health-care service, usually when you receive care. The amount can differ by service, provider network, or prescription tier. Your deductible may apply first, and the plan pays the remaining covered amount under its terms.

[Coverage](https://riskado.com/insurance-terms/coverage/) (insurance coverage, cov., cobertura)

Coverage is the protection an insurance policy provides for specified risks, losses, people, property, services or expenses. It sets out what the insurer may pay, defend or reimburse, always subject to the policy's limits, deductibles, exclusions, conditions and effective dates. The NAIC sums it up as what the policy protects.

[Crime insurance](https://riskado.com/insurance-terms/crime-insurance/) (commercial crime insurance, burglary, burglary and theft insurance, money and securities coverage)

Crime insurance is business coverage that reimburses a policyholder for specified direct financial losses from criminal acts, such as employee dishonesty, burglary, robbery, forgery, embezzlement, or certain computer and funds-transfer fraud. The declarations, insuring agreements, limits, deductibles, definitions, and exclusions decide what is covered and how much is paid.

[Critical illness insurance](https://riskado.com/insurance-terms/critical-illness-insurance/) (critical illness rider, dread disease policy)

Critical illness insurance is supplemental health coverage that pays a stated benefit, usually a lump sum paid to you, when you are diagnosed with a serious disease or condition listed in the policy and the diagnosis meets the policy's definition. You can use the money for medical or household costs, but it is not comprehensive medical insurance.

[Crop insurance](https://riskado.com/insurance-terms/crop-insurance/) (crop hail insurance)

Crop insurance protects a farmer's insured crop, yield, or revenue against specified losses such as drought, excessive moisture, freeze, hail, or disease. Federal policies are sold by approved private insurers with USDA support, while private crop-hail policies cover narrower perils. The policy sets the guarantee, premium, exclusions, and payment.

[Cyber liability insurance](https://riskado.com/insurance-terms/cyber-liability-insurance/) (cyber insurance, cyber liability)

Cyber liability insurance is business coverage for losses caused by a cyber incident. Depending on the policy, it can pay your own costs for legal advice, investigation, customer notification, data recovery, downtime, extortion or fraud, and it can cover claims brought by customers, vendors or regulators. Limits, retentions and exclusions vary from policy to policy.

## D

[Death benefit](https://riskado.com/insurance-terms/death-benefit/) (face amount, face value)

A death benefit is the amount an insurer pays the named beneficiary or estate when the insured person dies, under the policy's terms. In life insurance it is usually the main payout. The amount paid can differ from the original face amount because of policy loans, interest, accelerated benefits, withdrawals, exclusions, riders, or state rules.

[Declarations page](https://riskado.com/insurance-terms/declarations-page/) (dec page, declarations, declaration page, dec sheet)

A declarations page is the summary at the front of an insurance policy. It lists who and what is insured, the policy period, coverage types and limits, deductibles, premium, discounts, endorsements and any lender. It confirms what you bought and what it costs; the full policy decides whether a claim is payable.

[Deductible](https://riskado.com/insurance-terms/deductible/) (deducible, ded., insurance deductible)

A deductible is the dollar amount or percentage of a covered loss that you pay before your insurer pays its share. It can apply per claim, event, person or policy year, and separate deductibles can apply to different coverages. The declarations page and policy wording show the amount, how it is calculated and when it applies.

[Dental insurance](https://riskado.com/insurance-terms/dental-insurance/) (dental coverage)

Dental insurance is health coverage that helps pay for covered dental services, from cleanings and X-rays to fillings and other treatment. It can come inside a health plan or as a separate dental plan. The policy sets covered procedures, networks, deductibles, coinsurance, waiting periods and the annual maximum the plan will pay.

[Depreciation](https://riskado.com/insurance-terms/depreciation/) (recoverable depreciation)

Depreciation is the drop in an insured property's value from age, use, and wear and tear. On an actual cash value claim, the insurer subtracts it from the repair or replacement cost. Replacement cost coverage generally pays without that deduction, subject to the policy limit, deductible, conditions, and state law.

[Directors and officers insurance](https://riskado.com/insurance-terms/directors-and-officers-insurance/) (d&o, d&o insurance, directors and officers liability insurance)

Directors and officers insurance is commercial liability coverage for claims alleging that directors, officers or other covered managers committed wrongful acts in their corporate roles, such as negligent acts, omissions, misstatements or misleading statements. Depending on the policy, it can pay defense costs, settlements or judgments for the individuals and the organization. [Professional liability insurance guides](https://riskado.com/professional-liability-insurance/)

[Disability insurance](https://riskado.com/insurance-terms/disability-insurance/) (disability income insurance, short-term disability, long-term disability, disability income rider)

Disability insurance pays you periodic income when illness or injury keeps you from working under the policy's definition of disability. It replaces only part of your lost earnings, usually after a waiting period called the elimination period, and only for the benefit period the policy states.

[Dwelling coverage](https://riskado.com/insurance-terms/dwelling-coverage/) (coverage a, dwelling)

Dwelling coverage, often called Coverage A, is the part of a property policy that pays to repair or rebuild the insured home and its attached structures after a covered loss, up to its limit and after the deductible. It does not cover the land, and it does not automatically cover belongings, detached structures, liability or flood.

## E

[Earned premium](https://riskado.com/insurance-terms/earned-premium/) (unearned premium)

Earned premium is the part of an insurance premium that pays for coverage already provided during the expired portion of the policy term. The rest is unearned premium. If a policy ends early, the insurer may refund the unearned part, but the policy, filed rate, cancellation method, minimum premium, audits and state law can change the amount.

[Earthquake insurance](https://riskado.com/insurance-terms/earthquake-insurance/) (earthquake coverage, earthquake, commercial earthquake insurance)

Earthquake insurance is a separate policy, or an endorsement to a homeowners, renters, condo or commercial property policy, that pays for covered earthquake damage to your building, other structures, belongings and sometimes extra living costs. Standard policies generally exclude earthquake shaking, and this coverage usually carries a percentage deductible.

[Effective date](https://riskado.com/insurance-terms/effective-date/) (expiration date, policy expiration date, policy period, term date)

The effective date is the date an insurance policy goes into force and your coverage begins, subject to the policy's limits, exclusions, conditions, payment rules and any waiting periods. A loss before that date generally falls outside the policy, while a loss during the policy period is judged under its terms.

[Elimination period](https://riskado.com/insurance-terms/elimination-period/) (waiting period, probationary period)

An elimination period is the stretch of time after a covered disability, loss, or long-term-care need begins when the policy pays no benefits. You cover the lost income or care costs yourself during that time. Benefits usually start once it ends, if the policy's eligibility rules are met, and the policy sets its length and counting method.

[Employer's liability insurance](https://riskado.com/insurance-terms/employers-liability-insurance/) (employers liability)

Employer's liability insurance is Part Two of a workers' compensation and employers' liability policy. It protects an employer against covered legal liability for damages from an employee's work-related injury or disease when the claim falls outside workers' compensation benefits, subject to the policy's exclusions, conditions, listed states and limits.

[Employment practices liability insurance](https://riskado.com/insurance-terms/employment-practices-liability-insurance/) (epli, employment practices coverage)

Employment practices liability insurance (EPLI) is business liability coverage for claims arising from workplace practices, such as discrimination, harassment, wrongful termination, wrongful discipline and failure to hire or promote. It can pay covered defense costs, settlements or judgments for the business and other insured people, within the policy's limit, retention, exclusions and claims-made rules.

[Endorsement](https://riskado.com/insurance-terms/endorsement/) (rider, policy rider, riders, floater)

An endorsement is a written change attached to an insurance policy. It can add coverage, raise a limit, schedule an item, add an insured, exclude a risk or change a condition. Because it becomes part of the contract, it can change what the insurer pays on a claim and what you pay in premium. Its wording controls.

[Equipment breakdown coverage](https://riskado.com/insurance-terms/equipment-breakdown-coverage/) (boiler and machinery insurance)

Equipment breakdown coverage is insurance for sudden, accidental physical damage to covered boilers, machinery, pressure equipment or electrical equipment. It can pay to repair or replace the equipment and, where the policy includes them, damage to other property, lost business income, spoiled goods, temporary repairs and expediting costs, within its limits and deductible.

[Excess and surplus lines](https://riskado.com/insurance-terms/excess-and-surplus-lines/) (surplus line, surplus lines, excess and surplus insurance, non-admitted insurer, nonadmitted insurer)

Excess and surplus lines insurance is property and casualty coverage placed with an eligible insurer that is not licensed in your state, usually because licensed insurers will not or cannot cover a specialized risk. It can fill that gap, but the policy can carry different wording, fees, taxes, renewal terms and guaranty-fund protection.

[Excess coverage](https://riskado.com/insurance-terms/excess-coverage/) (excess)

Excess coverage is liability insurance that pays after an underlying policy, or a self-insured retention, has been used up. It raises the amount available for a covered claim, but its own limits, exclusions, required underlying insurance and handling of defense costs decide what it pays. In some forms, an umbrella policy is a broader kind of excess coverage.

[Exclusion](https://riskado.com/insurance-terms/exclusion/) (exclusions)

An exclusion is a policy provision that removes or restricts coverage for a specified peril, person, property, location, service or condition. When one applies, the insurer may pay nothing for that part of the loss, and you carry it unless another policy, endorsement or exception provides coverage.

## F

[Fair market value](https://riskado.com/insurance-terms/fair-market-value/) (market value)

Fair market value is what a knowledgeable, willing buyer would pay a knowledgeable, willing seller in a current sale with no unusual pressure on either side. In insurance, it can set the claim payment for damaged or destroyed property, but the policy's valuation method, depreciation, deductible, limits, exclusions and state law decide the final amount.

[Fiduciary liability](https://riskado.com/insurance-terms/fiduciary-liability/) (fiduciary liability coverage, fiduciary)

Fiduciary liability is the legal exposure of the people and organizations that manage an employee benefit plan or its assets. Fiduciary liability insurance generally helps pay covered defense costs, settlements, judgments or plan losses from alleged breaches of those duties. It is generally optional under ERISA and is separate from the required ERISA fidelity bond.

[Final expense insurance](https://riskado.com/insurance-terms/final-expense-insurance/) (burial insurance, final expense life insurance, funeral preplanning insurance)

Final expense insurance is a small life insurance policy meant to leave money for funeral, burial, cremation, medical, legal or other final costs after the insured dies. The insurer pays the death benefit to the named beneficiary, who can generally use it for any lawful purpose, under the policy's terms.

[Fire insurance](https://riskado.com/insurance-terms/fire-insurance/) (fire coverage, fire insurance policy, dwelling fire insurance, fire and extended coverage, standard fire policy)

Fire insurance is coverage for loss caused by fire, usually built into homeowners, condo, renters, dwelling-fire, commercial property or residual-market policies. It can pay to repair or replace insured property and belongings and to cover added living costs, subject to the policy's limits, deductible, exclusions and replacement-cost or actual-cash-value rules.

[First-party claim](https://riskado.com/insurance-terms/first-party-claim/) (first party)

A first-party claim is a request for payment you make directly to your own insurer under your own policy after a loss, such as a collision claim on your auto policy, a fire claim on your homeowners policy or a PIP claim after a car injury. The insurer applies the policy's coverage, exclusions, limits, conditions and deductible.

[Flood insurance](https://riskado.com/insurance-terms/flood-insurance/) (flood coverage, national flood insurance program, nfip)

Flood insurance is separate coverage for direct physical damage caused by a flood as the policy defines it, such as overflowing rivers, storm surge, rapid surface-water runoff or qualifying mudflow. Standard homeowners and renters policies usually exclude flood, so buildings and belongings need their own flood policy, with its own limits, deductibles, exclusions and waiting period. [Flood insurance guides](https://riskado.com/flood-insurance/)

[Full coverage](https://riskado.com/insurance-terms/full-coverage/) (full coverage car insurance, full coverage auto insurance, comp and collision, comprehensive and collision, FC, full cov)

An informal auto-insurance label, usually meaning liability coverage plus collision and comprehensive coverage. Together they can pay for injury or damage you cause to others, damage to your own car after a crash, and covered losses like theft, fire, weather or vandalism. It is not a standardized policy and does not mean everything is covered.

## G

[Gap insurance](https://riskado.com/insurance-terms/gap-insurance/) (gap coverage, guaranteed auto protection, gap)

Gap insurance is optional coverage for a financed or leased vehicle that helps pay the difference between the vehicle's actual cash value and the remaining loan or lease balance after a covered total loss or qualifying theft. Its exclusions, deductible rules, limits and eligibility come from the policy or waiver contract.

[General liability insurance](https://riskado.com/insurance-terms/general-liability-insurance/) (commercial general liability, cgl, cgl policy, commercial general liability policy, general liability)

Business liability coverage, also called commercial general liability or CGL, for claims that a business is legally responsible for third-party bodily injury, property damage, or covered personal and advertising injury. It can pay covered damages, medical expenses and defense costs, subject to the policy's exclusions, conditions, endorsements and limits. [General liability insurance guides](https://riskado.com/general-liability-insurance/)

[Grace period](https://riskado.com/insurance-terms/grace-period/) (insurance grace period, premium grace period, insurance payment grace period, policy grace period)

A grace period is the time after an insurance premium is due when you can still pay the overdue amount and keep the policy in force. The premium is still owed. How long the period lasts, and how claims are handled during it, depends on the policy, the type of insurance and the law that applies.

[Group life insurance](https://riskado.com/insurance-terms/group-life-insurance/) (group insurance, group coverage)

Life insurance issued under one master policy to cover members of an eligible group, such as employees, union or association members, or debtors. Each person receives a certificate showing the amount, beneficiary and conditions, while the employer, association, trustee or creditor holds the policy. Continuing or converting coverage depends on the policy, certificate and state law.

[Guaranteed issue life insurance](https://riskado.com/insurance-terms/guaranteed-issue-life-insurance/) (guaranteed issue, guaranteed insurability, guaranteed acceptance)

Life insurance issued without medical underwriting, such as health questions or an exam, when the applicant meets the insurer's eligibility rules on age, state or enrollment. In exchange, coverage amounts are often limited, premiums can be higher, and the full death benefit may be replaced by a graded benefit during an initial period.

[Guaranteed renewable](https://riskado.com/insurance-terms/guaranteed-renewable/) (guaranteed renewal, noncancellable and guaranteed renewable contract, optionally renewable contract, conditionally renewable contract)

Guaranteed renewable means the insurer must offer to continue your policy as long as you pay premiums on time, even if your health or claims history changes. It does not lock in the premium: if the policy allows, the insurer can raise rates for a whole class, and the policy may still end at a stated age.

## H

[Health insurance](https://riskado.com/insurance-terms/health-insurance/) (medical insurance, health coverage, health plan, healthcare insurance)

A contract in which an insurer pays some or all of your covered health care costs in exchange for a premium. You can still owe a deductible, copayments, coinsurance, noncovered charges or out-of-network costs. Your policy or plan documents, network rules and state and federal law decide what the insurer actually pays. [Health insurance guides](https://riskado.com/health-insurance/)

[Health maintenance organization](https://riskado.com/insurance-terms/health-maintenance-organization/) (hmo, HMO plan, organización para el mantenimiento de la salud)

A health maintenance organization (HMO) is a type of health insurance plan that generally covers care from doctors, hospitals and other providers in its network. It may require you to live or work in its service area, coordinate care through a primary-care provider or get specialist referrals, and it usually does not cover routine out-of-network care.

[High deductible health plan](https://riskado.com/insurance-terms/high-deductible-health-plan/) (hdhp)

A high deductible health plan, or HDHP, is health coverage with a higher deductible than traditional plans, so you pay more for covered care before the plan starts paying, often in exchange for a lower monthly premium. A plan that meets federal requirements can be paired with a tax-advantaged health savings account (HSA).

[Hired and non-owned auto](https://riskado.com/insurance-terms/hired-and-non-owned-auto/) (hired autos, non-owned auto, hired and non-owned auto insurance)

Hired and non-owned auto (HNOA) is business auto liability coverage for vehicles a business uses but does not own: rented, leased, hired or borrowed vehicles, and employees' personal cars used for work. It protects the business against covered claims for injury or property damage to others, subject to the policy's limits, exclusions and other-insurance terms.

[Homeowners insurance](https://riskado.com/insurance-terms/homeowners-insurance/) (homeowner insurance, homeowner policy, homeowners insurance policy)

A policy that protects a home, attached structures, personal belongings and the policyholder's liability for covered losses, and may also pay additional living expenses when a covered loss makes the home unlivable. It does not cover every loss: exclusions, deductibles, limits, endorsements, the policy form and state law control what the insurer pays. [Homeowners insurance guides](https://riskado.com/homeowners-insurance/)

[Hospital indemnity insurance](https://riskado.com/insurance-terms/hospital-indemnity-insurance/) (hospital indemnity, hospital benefits, supplemental accident coverage)

Hospital indemnity insurance is supplemental coverage that pays a fixed cash amount for a covered hospital admission, hospital day or other listed health event. The policy sets the payment, not the hospital bill, and it usually goes to the insured. It adds to comprehensive health insurance rather than replacing it.

## I

[Identity theft coverage](https://riskado.com/insurance-terms/identity-theft-coverage/) (identity theft insurance, identity fraud expense coverage, identity theft endorsement, ID theft insurance)

Identity theft coverage is insurance that reimburses specified expenses you pay to restore your identity or credit after identity fraud, such as document, mailing, legal, telephone, loan reapplication, and lost-wage costs. It is subject to the policy limit, deductible, exclusions, and reporting conditions, and it generally does not repay money stolen from an account.

[Independent agent](https://riskado.com/insurance-terms/independent-agent/) (independent agency, independent agent or producer, independent agency system)

An independent agent is a licensed insurance producer who represents several insurers instead of just one. The agent can compare and place coverage with the insurers the agency is appointed by, explain policy choices and service the policy. The agent usually represents those insurers, not you, and the insurer commonly pays the agent's commission.

[Inflation guard](https://riskado.com/insurance-terms/inflation-guard/) (inflation protection)

Inflation guard is an endorsement or policy provision that automatically raises specified home, condo, or renters insurance limits as repair and rebuilding costs rise. It can keep coverage closer to current construction costs, but it may raise the premium and does not guarantee full rebuilding cost. The percentage and the coverages it affects vary by policy.

[Inland marine insurance](https://riskado.com/insurance-terms/inland-marine-insurance/) (inland marine, transit insurance, business equipment protection, cargo insurance)

Inland marine insurance is property coverage for business or personal property that is in transit, mobile, temporarily stored, away from a permanent premises, or held for someone else, such as tools, equipment, materials, cargo and customer property. Payment depends on the policy's covered causes of loss, limit, deductible, valuation and exclusions.

[Insurable interest](https://riskado.com/insurance-terms/insurable-interest/) (insurable interest requirement, interés asegurable, stranger-originated life insurance, STOLI)

Insurable interest is a real financial, legal, ownership, family or other recognized stake in the person or property being insured. It means the policyholder or beneficiary would suffer harm if the insured event happened. The requirement keeps insurance from becoming a bet and helps decide who may buy coverage and who may be paid.

[Insurance commissioner](https://riskado.com/insurance-terms/insurance-commissioner/) (state insurance department, department of insurance)

An insurance commissioner is the state official who enforces insurance law and oversees insurers, agents, rates, policy forms, licensing, market conduct and consumer complaints. The commissioner can investigate violations and order lawful corrective action, but does not become your insurer, change your policy's coverage or guarantee payment of a disputed claim.

[Insurance fraud](https://riskado.com/insurance-terms/insurance-fraud/) (fraud)

Insurance fraud is deliberate deception by an insurer, agent, adjuster, provider or policyholder to get an insurance benefit they are not entitled to. It can involve an application, a premium, a policy or a claim. For a policyholder, it can mean a denied claim, cancellation or nonrenewal, civil penalties or criminal charges.

[Insurance license](https://riskado.com/insurance-terms/insurance-license/) (license, licensed insurer, appointment)

An insurance license is state-issued authority for an agent, broker, agency or other producer to sell, solicit or negotiate specific lines of insurance. It does not by itself let the holder represent an insurer, and it does not guarantee coverage, set the premium or decide whether a claim is paid.

[Insurance quote](https://riskado.com/insurance-terms/insurance-quote/) (quote, quotation, misquote)

An insurance quote is an estimate of the premium an insurer would charge for proposed coverage, based on the information you supply. It lets you compare price, limits, deductibles and options before you buy, but it is not the policy or proof that coverage is active. The binder or issued policy controls your coverage.

[Insurance to value](https://riskado.com/insurance-terms/insurance-to-value/) (insurance-to-value ratio, ITV, insured to value)

Insurance to value compares your property's insurance limit with its replacement cost, the cost to rebuild or replace it. It shows whether your coverage is adequate and whether a covered loss is paid at replacement cost or reduced under a coinsurance rule. It is based on rebuilding cost, not market price, tax value, or land value.

[Insurer](https://riskado.com/insurance-terms/insurer/) (insurance company, carrier, insurance carrier)

An insurer is the insurance company or other legally recognized organization that takes on covered risk under a policy. You pay it a premium, and it pays covered claims or benefits according to the policy's limits, deductibles, exclusions, conditions, endorsements and state law. It is a different party from your agent, broker or claims administrator.

[Insuring agreement](https://riskado.com/insurance-terms/insuring-agreement/) (insuring clause)

An insuring agreement is the section of an insurance policy that states what the insurer promises to cover: the covered risk or event, who is covered, for what period and the basic duties on each side. It is the starting point for any claim, but limits, the deductible, exclusions, definitions, conditions and endorsements decide the final payment.

## K

[Key person insurance](https://riskado.com/insurance-terms/key-person-insurance/) (key man insurance, key-person insurance, key man insurance policy)

Key person insurance is life or disability coverage a business buys on an owner, partner, employee or other person essential to its operations. The business typically owns the policy, pays the premiums and receives the benefit if that person dies or becomes disabled under the policy terms, helping it replace income and keep running.

## L

[Landlord insurance](https://riskado.com/insurance-terms/landlord-insurance/) (dwelling fire policy, dp-3, rental property insurance)

Landlord insurance protects a home you rent to others and your financial interest in it. Depending on the policy, it can cover the building, other structures, landlord-owned appliances or furnishings, liability claims and rent lost after a covered building loss. It generally does not cover the tenant's belongings, and the declarations page sets the limits and deductible. [Landlord and rental property insurance guides](https://riskado.com/landlord-insurance-guides/)

[Lapse](https://riskado.com/insurance-terms/lapse/) (lapsed, policy lapse)

A lapse is the end of an insurance policy after a required premium stays unpaid past the grace period or payment deadline. Losses after the lapse date may not be covered. Some policies allow reinstatement, an automatic premium loan, or nonforfeiture benefits, and the policy and state law decide whether those apply.

[Liability insurance](https://riskado.com/insurance-terms/liability-insurance/) (liability, liability coverage, liability limits)

Coverage that protects you when covered conduct makes you legally responsible for another person's bodily injury, property damage or other covered loss. Your insurer may pay the covered damages and defend you, up to the policy's limits. It does not generally pay for your own vehicle, property or injuries.

[Life insurance](https://riskado.com/insurance-terms/life-insurance/) (life policy, life coverage, life insurance policy, permanent life insurance, cash value life insurance)

Life insurance is a contract in which an insurer pays a death benefit to the named beneficiary when the insured person dies, as long as premiums are paid and the policy's exclusions and conditions are met. Term life covers a set period, while permanent policies can last for life and may build cash value.

[Limit of liability](https://riskado.com/insurance-terms/limit-of-liability/) (limits, policy limit, limit, limits of insurance, coverage limit, combined limit)

A limit of liability is the maximum amount an insurance policy will pay for a covered claim, person, accident, occurrence, or policy period. It may be split between bodily injury and property damage or combined into one amount. Covered losses above the limit generally remain the policyholder's responsibility.

[Liquor liability insurance](https://riskado.com/insurance-terms/liquor-liability-insurance/) (dramshop law)

Liquor liability insurance is business liability coverage for bodily injury or property damage a business may legally owe because it caused or contributed to someone's intoxication, served alcohol unlawfully or broke an alcohol law. It can pay covered defense costs and damages, within the policy's limits, exclusions and conditions and the law of the state where the claim arises.

[Loan lease payoff coverage](https://riskado.com/insurance-terms/loan-lease-payoff-coverage/) (loan/lease payoff coverage, loan/lease gap)

Loan lease payoff coverage is optional auto coverage for a financed or leased vehicle. After a covered total loss, it can pay the eligible difference between the car's actual cash value and the larger amount you still owe on the loan or lease. It is often called GAP or loan/lease coverage, and the endorsement sets its limit and exclusions.

[Long-term care insurance](https://riskado.com/insurance-terms/long-term-care-insurance/) (long-term care, ltc, long term care insurance)

Long-term care insurance helps pay for eligible ongoing care outside an acute-care hospital, such as care at home, in assisted living or in a nursing facility. It pays only after the policy's eligibility trigger and waiting period are met, and only up to its daily or monthly benefit, benefit period and lifetime maximum.

[Loss assessment coverage](https://riskado.com/insurance-terms/loss-assessment-coverage/) (loss assessment)

Loss assessment coverage can pay your share of a condominium, co-op or homeowners association assessment after a covered loss damages common property or creates association liability. Your policy limit, deductible and exclusions, plus the association's documents, decide the payment, and earthquake and flood assessments commonly need separate coverage.

[Loss of use](https://riskado.com/insurance-terms/loss-of-use/) (additional living expense, ale, coverage d, loss of use insurance)

Loss of use is coverage that helps pay the necessary increase in living expenses, such as temporary housing and meals, when a covered loss makes your home unfit to live in. It can also cover fair rental value or qualifying civil-authority losses. Your policy's limits and time provisions set the payment.

## M

[Material misrepresentation](https://riskado.com/insurance-terms/material-misrepresentation/) (misrepresentation, concealment)

Material misrepresentation is a false statement or omission about an important fact that could have changed an insurer's decision to issue coverage, the premium it charged or the outcome of a claim. Depending on the policy and state law, it can lead to a claim denial, cancellation, nonrenewal or rescission of the policy.

[Mechanical breakdown insurance](https://riskado.com/insurance-terms/mechanical-breakdown-insurance/) (mechanical repair coverage, extended warranty)

Mechanical breakdown insurance (MBI) is insurance from an authorized insurer that helps pay to repair or replace covered property, such as a car's engine or transmission, when it fails from defective materials, defective workmanship, or normal wear and tear. What it pays depends on the policy's covered parts, deductible, limits, exclusions, and claim rules.

[Medical malpractice insurance](https://riskado.com/insurance-terms/medical-malpractice-insurance/) (malpractice)

Medical malpractice insurance is professional liability coverage for physicians, other licensed health care professionals and health care facilities. It protects you against covered legal liability for injury, death or other loss caused by alleged negligence or wrongful professional services, and generally pays covered defense costs, subject to the policy's limits, exclusions and reporting rules.

[Medical payments coverage](https://riskado.com/insurance-terms/medical-payments-coverage/) (medpay, med pay, medical payments, medical payments (auto))

Medical payments coverage, often called MedPay, helps pay reasonable, necessary medical and funeral expenses for covered people injured in an auto accident, regardless of fault, up to your limit. Depending on the policy, it can cover you, resident relatives, passengers, or you as a pedestrian. State law and policy wording control exclusions and payment order.

[Minimum coverage](https://riskado.com/insurance-terms/minimum-coverage/) (state minimum, financial responsibility)

Minimum coverage is the least insurance protection that state law, a lender, a contract or a policy rule requires. In auto insurance, it usually means the required bodily injury and property damage liability limits, plus any state-required protections such as uninsured motorist or personal injury protection. It pays only covered losses within those limits. [Car insurance requirements by state](https://riskado.com/car-insurance-requirements/)

[Mortgage life insurance](https://riskado.com/insurance-terms/mortgage-life-insurance/) (mortgage protection insurance, decreasing term life insurance, decreasing term policy, credit life insurance)

Mortgage life insurance is life coverage tied to a mortgage or other loan. If the insured borrower dies while covered, it generally pays the lender some or all of the remaining mortgage balance, subject to the policy's amount, term, exclusions and conditions. It is usually treated as credit life insurance or decreasing term mortgage protection.

[Motorcycle insurance](https://riskado.com/insurance-terms/motorcycle-insurance/) (motorbike insurance, bike insurance, mc insurance)

Motorcycle insurance is vehicle insurance written for a motorcycle. It pays covered claims for injuries or property damage you cause to others and, if you add the coverage, damage to the bike, theft, medical bills or injuries caused by uninsured drivers. State law sets the minimums; your declarations page sets the actual coverage. [Motorcycle insurance guides](https://riskado.com/motorcycle-insurance/)

[Mutual insurance company](https://riskado.com/insurance-terms/mutual-insurance-company/) (mutual insurer, stock insurer, reciprocal insurer)

A mutual insurance company is an insurer owned by its policyholders instead of outside stockholders. It collects premiums and pays covered claims under the policy, and depending on the company and state law, policyholders may have voting rights, may receive dividends, or may owe an assessment on an assessable policy. Mutual status alone does not change coverage.

## N

[Named perils](https://riskado.com/insurance-terms/named-perils/) (named peril, named peril policy, named perils policy, covered perils, covered peril)

Named perils coverage pays for property damage caused by causes of loss specifically listed in the policy, such as fire, theft or windstorm. Damage from an unlisted cause is generally not covered under that coverage section. The exact list, deductible, limits and endorsements are in the policy and can differ by coverage section.

[No-fault insurance](https://riskado.com/insurance-terms/no-fault-insurance/) (no fault, choice no-fault)

No-fault insurance is auto coverage that pays covered medical expenses, lost wages and related injury losses through the applicable insurer without first deciding who caused the accident. It usually comes through personal injury protection, or PIP. It generally does not pay for vehicle damage, and state law sets the limits, claim deadlines and lawsuit rights. [No-fault and PIP insurance guides](https://riskado.com/no-fault-insurance/)

[Non-owner car insurance](https://riskado.com/insurance-terms/non-owner-car-insurance/) (non-owners policy, named non-owner coverage, non owner policy)

Non-owner car insurance is auto liability coverage for a driver who does not own a car. It can pay for injuries or property damage you cause while driving a qualifying borrowed or rented car, up to your limits and subject to permission, regular-use and business-use rules. It generally does not cover the car itself.

[Non-standard auto insurance](https://riskado.com/insurance-terms/non-standard-auto-insurance/) (non-standard market, assigned risk, residual market, high-risk driver)

Non-standard auto insurance is car coverage for a driver an insurer classifies as higher-than-average risk, often because of driving history, limited experience, claims, vehicle characteristics or prior insurance history. It can include ordinary liability and vehicle coverages, but premium, eligibility, limits, deductibles and exclusions depend on the insurer, policy and state law.

## O

[Occurrence policy](https://riskado.com/insurance-terms/occurrence-policy/) (occurrence, occurrence coverage form)

A liability policy that covers injury, property damage or another covered event that happens during the policy period, even if the claim is reported after the policy ends. Payment still depends on the insuring agreement, exclusions, conditions, deductibles, limits and state law, and the policy form sets the exact trigger.

[Ordinance or law coverage](https://riskado.com/insurance-terms/ordinance-or-law-coverage/) (ordinance or law, ordinance and law)

Ordinance or law coverage helps pay the extra cost of repairing, demolishing or rebuilding a home or building to meet current building, zoning or land-use rules after a covered loss. The endorsement or declarations page sets its limit, deductible and conditions. Without it, code-upgrade costs may be excluded.

[Other structures coverage](https://riskado.com/insurance-terms/other-structures-coverage/) (other structures, other structure, coverage b)

Other structures coverage, also called Coverage B, helps pay to repair or replace covered detached structures on your residence premises, such as a detached garage, shed, fence or qualifying pool. A standard HO-3 form limits it to 10% of the dwelling limit, and the policy's exclusions, deductible, loss settlement and endorsements decide the actual payout.

[Out-of-pocket maximum](https://riskado.com/insurance-terms/out-of-pocket-maximum/) (out-of-pocket limit, out of pocket maximum, out-of-pocket max)

An out-of-pocket maximum is the most you pay during a health plan year for covered, usually in-network, services through deductibles, copayments and coinsurance. After you reach it, the plan pays 100% of covered in-network benefits for the rest of the plan year. Premiums, noncovered services and balance bills generally do not count.

## P

[Peril](https://riskado.com/insurance-terms/peril/) (perils, hazard)

A peril is the event or cause of loss an insurance policy covers, such as fire, theft, hail, windstorm or premature death. The policy's covered-peril wording, exclusions, deductible, limit and endorsements decide whether the insurer pays for a loss and how much remains your responsibility.

[Personal auto policy](https://riskado.com/insurance-terms/personal-auto-policy/) (pap, automobile insurance, auto insurance)

A personal auto policy is an insurance contract for the private-use vehicles of an individual or household. It pays liability claims for injuries or damage you cause to others and, if purchased, covers medical costs, uninsured drivers, collision, theft, weather damage, towing or rentals. The declarations page shows what you bought.

[Personal injury protection](https://riskado.com/insurance-terms/personal-injury-protection/) (pip, personal injury protection coverage)

Personal injury protection, or PIP, is auto insurance that pays covered medical expenses and certain economic losses for eligible people hurt in a vehicle accident, generally without first proving fault. Depending on state law and the policy, it can also pay lost earnings, replacement services, rehabilitation, funeral expenses, or death benefits. [No-fault and PIP insurance guides](https://riskado.com/no-fault-insurance/)

[Personal liability coverage](https://riskado.com/insurance-terms/personal-liability-coverage/) (coverage e, personal liability insurance, comprehensive personal liability)

Personal liability coverage is the part of a homeowners, condo or renters policy, usually Coverage E, that pays covered damages and legal defense when you or another insured is legally responsible for injuring someone or damaging their property. The declarations page shows the limit, and exclusions decide whether a given accident is covered.

[Personal property coverage](https://riskado.com/insurance-terms/personal-property-coverage/) (personal property, coverage c, personal effects)

Personal property coverage pays to repair, replace, or compensate for covered damage to or loss of your movable belongings, such as furniture, clothing, electronics, and appliances. It usually appears as Coverage C on homeowners, condominium, and renters policies. Your limit, deductible, exclusions, special sublimits, and valuation wording determine what the insurer pays.

[Pet insurance](https://riskado.com/insurance-terms/pet-insurance/) (pet health insurance, dog insurance, cat insurance, animal insurance, veterinary insurance)

Pet insurance is a property insurance policy that helps pay eligible veterinary bills for a pet's covered accidents and illnesses. You pay a premium and usually a deductible and a share of covered costs. Exclusions, waiting periods, preexisting-condition rules, the reimbursement formula and annual or lifetime limits decide what the insurer pays.

[Point of service plan](https://riskado.com/insurance-terms/point-of-service-plan/) (pos)

A point of service plan, or POS plan, is health insurance that pays one benefit level when you use in-network providers and a lower one when you go out of network. In-network care usually costs you less. Many POS plans also ask for a primary care referral before specialist care, and the plan documents set the exact rules.

[Policy](https://riskado.com/insurance-terms/policy/) (insurance policy)

An insurance policy is the written contract between an insurer and a policyholder. It states which risks, people, property or services are covered, the limits, deductibles, exclusions, conditions, premium and coverage period, and the duties of both sides. The issued policy and its endorsements decide what the insurer pays after a covered loss.

[Policy loan](https://riskado.com/insurance-terms/policy-loan/) (loan value)

A policy loan is money an insurer advances to the owner of a cash-value life insurance policy, secured by the policy's cash surrender value. Interest accrues on the balance, and unpaid principal and interest reduce the death benefit or surrender value. A large enough balance can cause the policy to lapse.

[Policyholder](https://riskado.com/insurance-terms/policyholder/) (policy holder, insured, named insured)

A policyholder is the person or organization named in an insurance policy as its holder. The policyholder generally pays or arranges the premium and receives policy notices. Coverage for the policyholder and for other people depends on the policy's definitions, limits, exclusions, conditions, and endorsements, so a policyholder and an insured can be different people.

[Preferred provider organization](https://riskado.com/insurance-terms/preferred-provider-organization/) (ppo)

A preferred provider organization, or PPO, is a health plan that contracts with doctors, hospitals and other providers to form a network. You generally pay less for covered care from in-network providers and can still use out-of-network providers at a higher cost. The plan sets your deductible, coinsurance, authorization rules and out-of-pocket limits.

[Premium](https://riskado.com/insurance-terms/premium/) (insurance premium, monthly premium, annual premium)

An insurance premium is the amount charged for coverage. You, your employer, a government subsidy, or another payer sends it to the insurer on the policy's payment schedule, and paying it keeps coverage in force under the policy terms. The premium is separate from the deductible, coinsurance, copayments, limits, exclusions, and any claim payment.

[Premium financing](https://riskado.com/insurance-terms/premium-financing/) (down payment, installment plan)

Premium financing is a loan arrangement in which you borrow from a lender or premium finance company to pay an insurance premium, then repay the financed amount plus interest, service charges or fees. It changes how the premium is paid, not the policy's limits or exclusions, and missed payments can lead to cancellation under the agreement and state law.

[Premium tax credit](https://riskado.com/insurance-terms/premium-tax-credit/) (advance premium tax credit, aptc, subsidy)

A premium tax credit is a refundable federal tax credit that helps eligible people pay for qualified health insurance bought through a Marketplace. You can apply all, part or none of the estimated credit in advance to lower your monthly premium, and the final amount is settled on your federal tax return using your actual income and household.

[Private mortgage insurance](https://riskado.com/insurance-terms/private-mortgage-insurance/) (pmi, mortgage insurance)

Private mortgage insurance (PMI) is insurance a lender arranges through a private mortgage insurer on certain conventional mortgages, commonly when the down payment is below 20%. It protects the lender against losses if the borrower defaults. The borrower generally pays the premium, which raises mortgage costs but does not insure the home or the borrower.

[Product liability insurance](https://riskado.com/insurance-terms/product-liability-insurance/) (products liability, product liability)

Product liability insurance protects a business when a product it made, sold, distributed, handled or leased allegedly causes bodily injury, death or property damage. It can pay covered defense costs and damages, subject to the policy's limits, exclusions, conditions, covered-product description, territory and products-completed operations aggregate.

[Professional liability insurance](https://riskado.com/insurance-terms/professional-liability-insurance/) (errors and omissions, e&o, errors and omissions insurance, malpractice insurance, professional liability)

Professional liability insurance protects a professional or business against covered claims that an error, omission, negligence, or wrongful act in providing professional services caused financial loss, bodily injury, or property damage. It can pay defense costs, settlements, or judgments up to the policy limits, and it is also called errors and omissions or malpractice insurance. [Professional liability insurance guides](https://riskado.com/professional-liability-insurance/)

[Property damage liability](https://riskado.com/insurance-terms/property-damage-liability/) (property damage, pd, property damage liability coverage)

Property damage liability is auto insurance that pays for damage you legally cause to someone else's car or other tangible property while using a covered vehicle. It includes a legal defense and pays only up to the property damage limit on your declarations page. It does not normally pay to repair your own car.

## R

[Reinsurance](https://riskado.com/insurance-terms/reinsurance/) (RI, reinsurer, ceding insurer, cedent, treaty reinsurance, facultative reinsurance)

Reinsurance is insurance an insurer buys from another insurer. The original insurer transfers part of its risk and pays the reinsurer a premium, and the reinsurer reimburses part of its covered losses. Your original insurer normally still handles and pays your claims, and your coverage, deductible and limit stay the same.

[Rental reimbursement](https://riskado.com/insurance-terms/rental-reimbursement/) (rental reimbursement coverage, loss of use (auto), rental car coverage)

Rental reimbursement is optional auto coverage that helps pay for a rental car or other substitute transportation while your insured vehicle is out of use because of a covered loss. Your policy sets the daily and total limits, what transportation counts, the eligibility rules and when payment ends. Routine maintenance and ordinary travel fall outside it.

[Renters insurance](https://riskado.com/insurance-terms/renters-insurance/) (tenants insurance, renters policy)

Renters insurance is a tenant's policy that pays to repair or replace your covered belongings, covers personal liability if you injure someone or damage their property, and may pay extra living costs after a covered loss makes your rental unlivable. It generally does not insure the landlord's building. [Renters insurance guides](https://riskado.com/renters-insurance/)

[Replacement cost](https://riskado.com/insurance-terms/replacement-cost/) (replacement cost value, rcv, replacement cost coverage)

Replacement cost is the amount needed to repair, rebuild or replace covered damaged property with new materials of like kind and quality, without subtracting depreciation. Your deductible, policy limit, exclusions and claim conditions still apply. Some policies pay actual cash value first and release withheld depreciation after repair or replacement.

[Rider](https://riskado.com/insurance-terms/rider/) (endorsement, insurance rider, insurance policy rider, policy amendment, floater, scheduled endorsement)

A rider is a written amendment to an insurance policy that adds, removes, limits, excludes or expands coverage. It can change what the insurer pays, your premium or deductible, and the conditions for a claim. When the rider's wording differs from the base policy, the rider's wording controls.

[Rideshare insurance](https://riskado.com/insurance-terms/rideshare-insurance/) (rideshare)

Rideshare insurance is auto coverage for driving through a transportation network company such as Uber or Lyft. It extends or supplements a personal auto policy while the app is on, a ride is accepted or a passenger is aboard, when a personal policy may exclude business use. It can address liability, vehicle damage, uninsured motorists and medical payments.

[Risk](https://riskado.com/insurance-terms/risk/) (risk management, hazard, pure risk)

In insurance, risk is the possibility that an uncertain event will cause a financial loss. An insurer evaluates your risk to decide whether to offer coverage, what premium to charge, and which limits, deductibles, exclusions and conditions apply. The policy itself decides whether a particular loss is covered and how much is paid.

## S

[Self-insured plan](https://riskado.com/insurance-terms/self-insured-plan/) (self-funded, fully insured, self-insured (or self-funded) plan)

A self-insured plan is employer-sponsored health coverage in which the employer, rather than an insurance company, pays covered medical claims. The employer may hire an administrator to process claims and may buy stop-loss insurance for very large claims. The plan document sets covered services, exclusions, deductibles, out-of-pocket limits and appeal rights.

[Self-insured retention](https://riskado.com/insurance-terms/self-insured-retention/) (sir)

A self-insured retention, or SIR, is the part of a covered liability or property loss that the policyholder pays before the insurer responds. It shows up mainly on business liability, umbrella and excess policies. The policy decides whether defense costs count toward it and whether it applies per claim or in the aggregate.

[Short-term health insurance](https://riskado.com/insurance-terms/short-term-health-insurance/) (short term policy, limited benefit insurance)

Short-term health insurance is temporary medical coverage meant to fill a gap between comprehensive plans. It may pay for some doctor, hospital, or emergency care, but it can exclude pre-existing conditions and essential health benefits, set benefit limits, and end without guaranteed renewal. The policy and state law decide what the insurer pays. [Health insurance guides](https://riskado.com/health-insurance/)

[SR-22](https://riskado.com/insurance-terms/sr-22/) (sr22, fr-44, sr-22 insurance)

An SR-22 is a certificate an insurer files with a state motor-vehicle agency proving that the named driver has required motor-vehicle liability insurance. It is not separate insurance and does not pay accident losses by itself. The underlying policy's limits, exclusions, conditions, and state rules determine the protection available. [SR-22 and FR-44 insurance guides](https://riskado.com/sr-22-insurance/)

[Subrogation](https://riskado.com/insurance-terms/subrogation/) (waiver of subrogation, transfer of rights of recovery, subrogation and reimbursement, subrogación)

Subrogation is an insurer's right, after paying your covered loss, to step into your legal position and recover the money from the person or insurer responsible. It can return part or all of your deductible, but you must cooperate and not release the responsible party without the insurer's consent.

[Summary of benefits and coverage](https://riskado.com/insurance-terms/summary-of-benefits-and-coverage/) (sbc, outline of coverage)

A Summary of Benefits and Coverage (SBC) is a standardized health plan document that shows covered services, the deductible, copayments, coinsurance, out-of-pocket limits, exclusions, network rules and coverage examples. It helps you compare plans and see how costs are shared, but it is only a summary; the full policy or plan document controls coverage.

## T

[Theft coverage](https://riskado.com/insurance-terms/theft-coverage/) (theft)

Theft coverage pays for covered property stolen in a covered theft, subject to the policy's limits, exclusions, valuation method, and deductible. Homeowners, condo, and renters policies generally handle stolen belongings under personal property coverage, while auto policies handle a stolen car through comprehensive, or other-than-collision, coverage.

[Third-party claim](https://riskado.com/insurance-terms/third-party-claim/) (third party)

A request for payment from someone other than the policyholder or the insurer, made because the policyholder allegedly caused covered injury or property damage. The policyholder's liability coverage may pay the injured person, settle the claim and provide a legal defense, but only within the policy's coverage, exclusions, conditions and limits.

[Title insurance](https://riskado.com/insurance-terms/title-insurance/) (lender's policy, owner's policy, title)

A policy that protects a property owner or mortgage lender against covered losses from title defects, liens, encumbrances or ownership claims that existed before the policy date but surfaced later. An owner's policy protects the owner; a lender's policy protects only the lender. It is generally paid once, at purchase or refinancing.

[Travel insurance](https://riskado.com/insurance-terms/travel-insurance/) (trip insurance)

Travel insurance covers listed financial risks tied to a planned trip, such as covered trip cancellation or interruption, lost baggage, travel medical costs, emergency evacuation, repatriation of remains or rental-vehicle damage. It pays only for the events the policy names, within stated limits and subject to exclusions, conditions, deductibles and state law.

## U

[Umbrella insurance](https://riskado.com/insurance-terms/umbrella-insurance/) (umbrella policy, personal umbrella policy, umbrella liability)

Umbrella insurance is extra personal liability coverage above auto, homeowners, renters, condominium or similar primary insurance. It can pay covered damages and defense costs that exceed the primary policy's limit and may cover some liability claims the primary policy excludes. It does not generally pay for damage to your own home or vehicle. [Umbrella insurance guides](https://riskado.com/umbrella-insurance/)

[Underinsured motorist coverage](https://riskado.com/insurance-terms/underinsured-motorist-coverage/) (uim, underinsured motorist, uninsured/underinsured motorist, um/uim)

Underinsured motorist coverage, or UIM, helps pay covered bodily-injury losses when another driver is legally responsible but carries too little liability insurance. Your insurer pays within the UIM limit, subject to the policy, state law, offsets, exclusions and any exhaustion or settlement requirements. [Uninsured motorist coverage guides](https://riskado.com/uninsured-motorist-coverage/)

[Underwriting](https://riskado.com/insurance-terms/underwriting/) (underwriter)

Underwriting is how an insurer evaluates risk, decides whether to offer coverage, classifies the applicant, and sets the policy's price or terms. It can affect eligibility, premium, limits, deductibles, exclusions, endorsements, and renewal. Your declarations page, binder, or renewal notice shows the result.

[Uninsured motorist coverage](https://riskado.com/insurance-terms/uninsured-motorist-coverage/) (um, uninsured motorist, uninsured motorist bodily injury, umbi)

Uninsured motorist coverage is an auto-policy protection that pays covered bodily-injury losses, and sometimes vehicle damage, when an at-fault driver has no applicable liability insurance or is a hit-and-run driver. What you can collect depends on your limit, state law, eligible insureds, deductibles, and exclusions. [Uninsured motorist coverage guides](https://riskado.com/uninsured-motorist-coverage/)

[Uninsured motorist property damage](https://riskado.com/insurance-terms/uninsured-motorist-property-damage/) (umpd, uninsured or underinsured motorists property damage)

Uninsured motorist property damage, or UMPD, is auto coverage that pays for damage to your vehicle when an uninsured or hit-and-run driver is responsible. It is separate from bodily-injury uninsured motorist coverage, and its limit, deductible, physical-contact rule and claim conditions can differ from collision coverage. Your declarations page and policy form control. [Uninsured motorist coverage guides](https://riskado.com/uninsured-motorist-coverage/)

[Universal life insurance](https://riskado.com/insurance-terms/universal-life-insurance/) (universal life)

Universal life insurance is permanent life insurance with a death benefit and a cash-value account. Premiums are flexible, but payments must cover insurance charges to keep the policy active. Cash value earns credited interest, while charges, loans, withdrawals, and changing assumptions can reduce it or cause the policy to lapse.

## V

[Valued policy](https://riskado.com/insurance-terms/valued-policy/) (agreed value policy, agreed amount insurance, valued policy law)

A valued policy is insurance that fixes the insured value before a loss instead of calculating it afterward from the amount of damage. If a covered loss is total, the agreed amount can set the payment, subject to the policy's deductible, exclusions, conditions, and state law. Partial losses may follow a different settlement formula.

[Variable life insurance](https://riskado.com/insurance-terms/variable-life-insurance/) (variable universal life insurance, variable-universal life insurance)

Variable life insurance is permanent life insurance whose cash value, and sometimes its death benefit, rises or falls with the investments you choose in the insurer's separate accounts. Charges come out of each premium before the rest is invested, and any guaranteed minimum death benefit depends on paying required premiums and the policy's loan and withdrawal terms.

[Vicarious liability](https://riskado.com/insurance-terms/vicarious-liability/) (legal liability)

Vicarious liability means a person or business is legally responsible for someone else's negligent act because of their relationship, such as employer and employee or vehicle owner and permitted driver. A liability policy can defend you and pay a covered claim, but only under its terms, exclusions, covered-person rules and limits.

[Vision insurance](https://riskado.com/insurance-terms/vision-insurance/) (vision coverage)

Vision insurance is limited health coverage that helps pay for routine eye care, such as eye exams, prescription glasses, frames, lenses and contact lenses. It can come inside a health plan or as a stand-alone policy, and the policy sets the provider network, how often benefits renew, the allowances, copays, exclusions and what you still owe.

## W

[Waiver of premium](https://riskado.com/insurance-terms/waiver-of-premium/) (waiver of premium rider)

Waiver of premium is a provision or rider on a life, disability, health or long-term care policy that excuses specified premium payments after a qualifying disability or other stated event. The policy stays in force, while the rider sets the disability definition, waiting period, proof required, premiums covered and how long the waiver lasts.

[Water backup coverage](https://riskado.com/insurance-terms/water-backup-coverage/) (water backup of sewers or drains coverage, sewer backup, water damage coverage)

Water backup coverage is an optional endorsement to homeowners, condo or renters insurance that can pay for direct property damage when water or waterborne material backs up through a sewer or drain, or overflows from a sump pump or related equipment. It usually carries its own limit and deductible, and floodwater and the failed pipe are treated separately.

[Whole life insurance](https://riskado.com/insurance-terms/whole-life-insurance/) (whole life, permanent life insurance, ordinary life, straight whole life insurance, permanent life)

Whole life insurance is permanent life insurance meant to stay in force for the insured's lifetime as long as required premiums are paid. It pays a death benefit to named beneficiaries and generally builds cash value. Premiums, guarantees, dividends, loans and surrender charges depend on the policy and state law.

[Wind and hail deductible](https://riskado.com/insurance-terms/wind-and-hail-deductible/) (wind/hurricane deductible, hurricane/named storm deductible, named storm deductible, windstorm or hail coverage, hurricane deductible)

A wind and hail deductible is the amount you pay toward a covered wind or hail loss before your insurer pays the rest of the covered amount, within the policy's limits and exclusions. It may be a fixed dollar amount or a percentage of the dwelling limit, and the declarations page and endorsements show which applies.

[Workers' compensation insurance](https://riskado.com/insurance-terms/workers-compensation-insurance/) (workers compensation, workers comp, worker's compensation, workers' compensation)

Workers' compensation insurance is employer-paid coverage for work-related employee injuries, illnesses, disabilities, and deaths. It generally pays required medical care, rehabilitation, wage-replacement, and death benefits under state law while limiting the employer's exposure to employee lawsuits. Benefits, covered workers, and the employer requirement depend on the state and policy. [Workers' compensation insurance guides](https://riskado.com/workers-compensation-insurance/)

## Guides about insurance terms

- [Connecticut Umbrella Insurance: Who Needs It, Typical Cost, and How to Add It to Your Policies](https://riskado.com/connecticut-umbrella-insurance/)

    A Connecticut umbrella policy is optional excess liability coverage that sits above your auto and home limits. Learn what it covers, excludes and requires.

- [Do I Need Umbrella Insurance: Who Benefits, What It Costs, and When It Is a Waste of Money](https://riskado.com/do-i-need-umbrella-insurance/)

    Umbrella insurance adds liability coverage above your auto and home limits. See who benefits, what it excludes, what it costs and what to ask an agent.

- [Replacement Cost vs Actual Cash Value: How Each Pays a Claim, With Worked Examples](https://riskado.com/replacement-cost-vs-actual-cash-value/)

    Replacement cost pays to repair or replace without subtracting depreciation; actual cash value subtracts it. See worked examples, plus roof and car rules.