Insurance Term Glossary

  • Agent
    A representative who sells insurance for one or more companies.
  • Application
    A request for insurance. It gives the insurer information about the person who wants to buy a policy.
  • Arbitration
    The process in which a third-party examines facts presented by both you and the insurance company when you disagree about a settlement offer. Arbitration can be binding (the arbiter's decision is final) or non-binding (you can still take the insurer to court if you are unsatisfied).
  • Broker
    A licensed person or organization you can pay to shop for insurance on your behalf.
  • Binder
    A temporary or preliminary agreement, in effect for less than 60 days, that provides coverage until a policy can be written or delivered.
  • Cancellation
    Termination of a policy before its normal expiration date.
  • Claim
    Your request for the insurance company to pay you an amount under the terms of your policy.
  • Claims Adjuster
    A person an insurance company hires to settle claims. The adjuster can be a company employee or an independent party under contract with the company.
  • Covered Expenses
    The losses or conditions that the policy will pay for.
  • Declarations Page (“Dec Page”)
    A page your company sends you to show your premium and coverage. Some insurance companies only send a new declarations page at renewal unless there’s a change to your policy. You should get a revised declarations page whenever there’s a change to your policy.
  • Deductible
    The dollar amount you must pay out of pocket for each claim before the insurance company begins paying.
  • Endorsement
    Amendment to the policy used to add, change, or delete coverage. Also referred to as a “rider.”
  • Excluded Driver
    A resident of your household who will not be covered under your policy in the event of an accident.
  • Exclusions
    Specific situations or circumstances listed in your policy describing when benefits will not be paid.
  • Insured
    The policyholder or person(s) protected in case of a loss/claim.
  • Insurer
    The insurance company.
  • Lapsed Policy
    A policy that has terminated for non-payment of premiums.
  • Liability Coverage
    Insurance protection that pays for claims or judgments brought against the insured.
  • Negligence/Negligent
    A determination of fault in an accident caused by your inattention or carelessness.
  • Non-Bound Application
    An application that does not result in coverage being issued or money changing hands. The insurance agent submits the application to the company to find out whether or not you will be accepted.
  • Non-renewal
    A notice of the insurance company’s refusal to renew your policy prior to the end of the policy term.
  • Policy
    The contract form issued by the company to explain the coverage provided. It is a legal document.
  • Premium
    The price charged for insurance.
  • Property Damage Liability
    Pays for damage to another person’s car or property such as fences, buildings, utility poles, signs, and trees.
  • Settlement
    After negotiating, the amount you agree to accept from the insurance company as full payment for your loss.
  • Total Loss
    When the cost to repair a vehicle approaches or exceeds the vehicle’s actual cash value.
  • Umbrella Liability Insurance
    A policy that "floats" above your other coverage. You must carry a certain amount of underlying liability coverage before you may buy an umbrella policy. This coverage kicks in if you are sued for an amount greater than the limits of your auto policy.
  • Youthful Driver
    A driver between the ages of 16 and 25.
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