There are a lot of industry terms associated with insurance coverage, which can make it seem a little mysterious and feel a little overwhelming. We built this glossary to help you crack the code and become an insider so that when you research, evaluate, and select coverage, you know can talk the talk!
Actual cash value. The policy covers the actual cash value, that is the depreciated current market value value of the item, not what you paid for it at the time of purchase. For many items, the actual cash value is less than the replacement cost. For example, if you lose your three-year old laptop, you’ll receive its current value, typically not enough to replace it with a new one.
All risk. See Open perils.
Blanket personal property. Provides coverage for valuable items above the personal property sub-limits. Coverage does not require itemization and appraisal of high value items.
CHIP. Nickname for the State Children's Health Insurance Program. Health insurance policies issued in association with the Federal/State partnership created by title XXI of the Social Security Act.
Deductible. The amount you pay for covered services/expenses before your insurance plan starts to pay. Deductibles are often a feature of health and auto insurance. Higher deductibles can lower your premiums, but you’ll pay more if you file a claim on the policy.
Homeowner’s insurance. Covers your home's structure (house) and your belongings in the event of a destructive event, such as a fire. Generally these policies cover not only damage to your property, but also your liability for any injuries and property damage to others caused by you or members of your family (including your household pets).
Liability insurance. Provides coverage when you’re financially responsible for injuring a person or damaging their property. It will also protect you from lawsuits.
Long-term disability income. A policy that provides a weekly or monthly income benefit for more than five years for individual coverage and more than one year for group coverage for full or partial disability arising from accident and/or sickness.
Long-term care insurance. Covers long-term services and supports, including personal and custodial care in a variety of settings such as your home, a community organization, or other facility.
Medicaid - Policies issued in association with the Federal/State entitlement program created by Title XIX of the Social Security Act of 1965 that pays for medical assistance for certain individuals and families with low incomes and resources.
Medicare - A state assistance program, passed under Title XVIII of the Social Security Amendments of 1965, to provide hospital and medical expense insurance to those over 65 years of age.
Multi-Peril Insurance. Personal and business property coverage combining several types of property insurance in one policy.
Named perils. Typical language for personal property insurance, coverage applies for events that are specifically listed (“named”) in your policy. If an event isn’t named, it isn’t covered.
No-fault coverage. Insurance coverage that pays for medical bills, lost wages, and other expenses if you’re injured in a crash, no matter who is at fault. No fault insurance is required in 12 states. Other states offer it as a optional add-on.
Premium. The amount you pay for an insurance policy. It is your cost for the protection that the insurance policy provides. Typically premiums are per calendar year, though you may be billed monthly or quarterly.
Primary Insurance. Coverage that takes precedence when more than one policy covers the same loss.
Personal Injury Protection (PIP). See No-fault coverage.
Open perils. A more expansive personal property insurance, coverage applies to all risks, so that unless a peril is specifically excluded in your policy, it is covered.
Renter’s Insurance. Liability coverage for contents within a renter's residence. Coverage does not include the structure but does include any affixed items provided or changed by the renter. It can also provide liability and loss of use benefits.
Replacement cost. The policy will cover the cost of buying a brand-new item. If you lose your laptop, for example, you’ll be able to replace it with a new one. This coverage typically costs a little more, but can be a worthwhile protection if you have to use it.
Scheduled personal property. Provides coverage for valuable items (a piece of heirloom jewelry, an objet d’art). This type of coverage identifies the items that will receive broader coverage than the standard coverage and may require appraisal.
Short-term disability income. A policy that provides a weekly or monthly income benefit for up to five years for individual coverage and up to one year for group coverage for full or partial disability arising from accident and/or sickness.
Sub-limits. A maximum coverage amount for specific categories of items. Items typically included in policy sub-limits include: electronics; firearms; furs; business items; jewelry and watches; money, gold, and coins; silver-, gold- and pewterware; watercraft and trailers.
Umbrella insurance. Provides extra liability coverage if you are sued for a damage amount higher than the liability limits of another policy.
Underinsured Motorist Coverage. Policy option for bodily injury or property losses caused by a motorist with coverage insufficient to cover the total dollar amount of losses. Compensation for the injured party is equal to the difference between the losses incurred and the liability covered by the motorist at fault.
Uninsured Motorist Coverage. Policy option for bodily injury or property losses caused by a motorist with no insurance coverage.
