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Insurance Terms made Simple
Insurance Terms Made Simple
Welcome to Peak Insurance USA's Insurance Glossary – your go-to resource for understanding insurance terminology. We believe that informed decisions lead to better coverage, which is why we've created this comprehensive guide to help you navigate the world of insurance with confidence.
In this glossary, you'll find:
- ✓ Clear, easy-to-understand definitions
- ✓ Real-world examples that make sense
- ✓ Terms covering auto, home, business, and life insurance
- ✓ Quick navigation to find exactly what you need
Can't find what you're looking for? Our team at Peak Insurance is always here to help. Contact us at (855) 218-8881 for personalized assistance.
Insurance Terms Glossary
Welcome to Peak Insurance USA's comprehensive insurance glossary. Use this resource to better understand your insurance options and make informed decisions about your coverage.
Quick Navigation
Insurance Categories
A
- Actual Cash Value (ACV)
- The current market value of an item after depreciation. Example: A 5-year-old TV would be covered for its current market value, not its original purchase price.
- Additional Living Expenses (ALE)
- Coverage that pays for extra costs if you can't live in your home due to a covered loss, such as hotel bills and restaurant meals.
- Adjuster
- A professional who evaluates insurance claims and determines the amount of loss.
- Agent
- A licensed professional who sells insurance policies and provides customer service to policyholders.
- Auto Insurance
- Protection for your vehicle against accidents, theft, and liability for injuries or damage to others.
B
- Beneficiary
- The person or entity designated to receive insurance benefits in the event of the insured's death.
- Binding
- The process that makes an insurance policy active and in force.
- Bodily Injury Liability
- Coverage that pays for injuries you cause to others in an auto accident.
- Business Insurance
- Coverage that protects businesses from financial losses due to property damage, liability claims, or other risks.
- Business Interruption Insurance
- Coverage that helps replace lost income if your business must temporarily close due to a covered loss.
C
- Claim
- A formal request for payment from your insurance company after a covered loss.
- Collision Coverage
- Insurance that pays for damage to your vehicle from an accident with another vehicle or object.
- Commercial Property Insurance
- Coverage that protects business buildings and contents from covered perils.
- Comprehensive Coverage
- Insurance that covers damage to your vehicle from non-collision incidents (theft, weather, vandalism).
- Coverage Limit
- The maximum amount an insurance company will pay for a covered loss.
D
- Deductible
- The amount you pay out-of-pocket before insurance coverage begins. Example: With a \$500 deductible, you pay the first \$500 of a covered loss.
- Declarations Page
- The summary page of your insurance policy showing coverage limits, premium, and basic policy information.
- Depreciation
- The decrease in value of property over time due to age, wear and tear, or obsolescence.
- Dwelling Coverage
- The part of a homeowners policy that covers the main structure of your home.
E
- Endorsement
- A written change to your insurance policy that either adds or modifies coverage.
- Errors and Omissions Insurance (E&O)
- Professional liability insurance that protects against claims of inadequate work or negligent actions.
- Exclusion
- Specific conditions or circumstances not covered by your insurance policy.
- Extended Replacement Cost
- Coverage that pays more than the policy limit to rebuild your home if construction costs have increased.
F
- Fair Market Value
- The price a willing buyer would pay a willing seller in an open market.
- First-Party Coverage
- Insurance that pays benefits directly to the policyholder.
- Flood Insurance
- Separate insurance coverage for damage caused by flooding, not typically included in standard homeowners policies.
- Full Coverage
- A term typically used in auto insurance that includes both comprehensive and collision coverage.
G
- Gap Insurance
- Coverage that pays the difference between your car's actual cash value and what you still owe on your loan if your car is totaled.
- General Liability Insurance
- Coverage that protects businesses against claims of bodily injury or property damage.
- Grace Period
- The time after your premium due date during which you can still pay your premium without losing coverage.
H
- Hazard Insurance
- Coverage for damage caused by specific perils like fire, wind, or hail.
- Homeowners Insurance
- A package policy that covers your home, personal property, liability, and additional living expenses.
- High-Risk Driver
- A driver who, due to their driving record or other factors, is considered more likely to have accidents.
I
- Indemnity
- The principle that insurance should restore you to the same financial position you were in before a loss.
- Insurance Score
- A rating based on your credit history that helps determine your insurance premium.
- Insured
- The person or entity protected by an insurance policy.
L
- Liability Coverage
- Protection if you're legally responsible for someone else's injuries or property damage.
- Life Insurance
- Insurance that pays a benefit to your beneficiaries when you die.
- Loss of Use Coverage
- Insurance that pays for additional living expenses if you can't live in your home due to a covered loss.
M
- Medical Payments Coverage
- Coverage that pays for medical expenses regardless of who is at fault.
- Multi-Policy Discount
- A discount for having multiple insurance policies with the same company.
- Motorcycle Insurance
- Specialized coverage for motorcycles and their riders.
N
- Named Insured
- The person(s) specifically listed as insured on a policy.
- Named Perils
- Specific causes of loss listed in an insurance policy as covered.
- No-Fault Insurance
- Auto insurance system where each person's insurance covers their own injuries regardless of fault.
O
- Occupancy
- How a property is used (primary residence, seasonal home, etc.).
- Open Perils
- Coverage for all risks except those specifically excluded in the policy.
- Ordinance or Law Coverage
- Insurance that covers the increased costs of meeting current building codes during repairs.
P
- Personal Property Coverage
- Insurance for your belongings, such as furniture, clothing, and electronics.
- Premium
- The amount you pay for your insurance coverage, usually monthly, quarterly, or annually.
- Property Damage Liability
- Coverage for damage you cause to others' property while driving.
Q
- Quote
- An estimate of how much your insurance coverage will cost based on the information you provide.
- Qualified Business Income
- Income from a trade or business that may qualify for special tax treatment.
R
- Replacement Cost
- Coverage that pays to replace damaged property with new items of similar type and quality, without deducting for depreciation.
- Renters Insurance
- Coverage for tenants' personal belongings and liability protection.
- Rider
- An optional addition to your policy that provides extra coverage for specific items or risks.
S
- Surety Bond
- A three-party agreement guaranteeing that specific obligations will be fulfilled.
- Scheduled Personal Property
- Items specifically listed on your policy for additional coverage.
- SR-22
- A certificate proving you carry the state-required minimum auto insurance coverage.
T
- Term Life Insurance
- Life insurance that provides coverage for a specific period.
- Third-Party Coverage
- Insurance that covers claims made against you by others.
- Total Loss
- When an insured item is damaged beyond repair or the cost to repair exceeds its value.
U
- Umbrella Insurance
- Extra liability coverage above the limits of your auto or homeowners policies.
- Underwriting
- The process of evaluating risk to determine premium rates and coverage terms.
- Uninsured Motorist Coverage
- Protection if you're in an accident with a driver who has no insurance.
V
- Valuable Items Coverage
- Additional insurance for high-value items like jewelry or art.
- Vandalism
- Intentional damage to property, typically covered under comprehensive auto insurance or homeowners insurance.
W
- Waiver of Subrogation
- An agreement preventing an insurance company from recovering damages from a negligent third party.
- Workers Compensation
- Insurance that provides benefits to employees for work-related injuries or illnesses.
Need Help Understanding Your Insurance Options?
Contact Peak Insurance today for personalized guidance:
- 📞 Phone: (855) 218-8881
- 📍 Address: 6110 Ridge Ave, Philadelphia, PA 19128
- ⏰ Hours: Monday-Friday, 8am-5pm
