Understand what you're buying.

Premium

The amount you pay for your insurance policy, typically monthly or annually.

Deductible

The amount you pay out of pocket before your insurance coverage kicks in on a claim.

Liability

Coverage that pays for injuries or property damage you cause to others.

Replacement Cost Value (RCV)

Pays to replace damaged property with a new equivalent, without deducting for depreciation.

Actual Cash Value (ACV)

Pays replacement cost minus depreciation — you receive less because the item was used.

Umbrella Policy

Extra liability coverage that sits above your auto and home policies, typically in $1M increments.

Endorsement / Rider

An add-on to your base policy that extends or modifies coverage for a specific item or situation.

Exclusion

A specific condition, event, or item that your policy does NOT cover.

Underwriting

The process an insurance company uses to evaluate risk and determine your premium.

Carrier

The insurance company that actually issues and backs your policy.

Binder

A temporary document confirming coverage is in force while the formal policy is being issued.

Subrogation

The right of your insurer to pursue a third party that caused an insurance loss to recover claim costs.

Declarations Page

The summary page of your policy showing your name, address, coverage types, limits, deductibles, and premium. Often called the "dec page."

Policy Limit

The maximum amount your insurance company will pay for a covered loss under your policy.

Peril

A specific cause of loss covered by your policy, such as fire, wind, theft, or water damage.

Loss

A reduction in value or an event that triggers a claim under your insurance policy.

Claim

A formal request to your insurance company to pay for a covered loss or event.

Personal Property

Your belongings — furniture, clothing, electronics, and other items inside your home or vehicle.

Additional Insured

A person or organization added to your policy who also receives coverage protections, often required by lenders or landlords.

Mortgagee

The lender (bank or mortgage company) listed on your homeowner's policy who has a financial interest in your property.

Uninsured/Underinsured Motorist

Coverage that protects you if you're in an accident caused by a driver who has no insurance or not enough insurance to cover your damages.

Comprehensive

Auto coverage that pays for damage to your vehicle from non-collision events such as theft, weather, fire, or hitting an animal.

Collision

Auto coverage that pays for damage to your vehicle when it collides with another vehicle or object, regardless of fault.

Bodily Injury Liability

Coverage that may pay for injuries to others when you are legally responsible for a covered accident, subject to the policy terms and limits.

Property Damage Liability

Coverage that may pay for damage you are legally responsible for causing to someone else's property, subject to the policy terms and limits.

Split Limits

Liability limits divided into separate maximum amounts, commonly including bodily injury per person, bodily injury per accident, and property damage per accident.

Combined Single Limit (CSL)

One combined liability limit available for covered bodily injury and property damage arising from an accident, rather than separate bodily injury and property-damage limits.

PIP / No-Fault

In states where applicable, coverage that may provide certain benefits for injuries resulting from an auto accident regardless of fault. Benefits and requirements vary by state.

Medical Payments

Coverage that may help pay certain medical expenses resulting from a covered accident, subject to the policy terms and limits.