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25 Insurance Terms to Know with Easy-to-Understand Definitions

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Insurance Definition with Pen

Do you find insurance confusing? You’re not alone. Most people break out in a cold sweat at the mere mention of the word. We wanted to help make insurance less intimidating, so we created a glossary of 25 basic insurance terms with definitions that are easy to understand. Don’t worry, there won’t be a quiz at the end! But feel free to use this as a “cheat sheet” when the time comes to purchase insurance, make sense of an existing insurance policy, or file a claim.  

Glossary of 25 Common Insurance Terms  

 

1. Insurer

An insurer is the insurance company that provides compensation to the insured after a financial loss.

2. Insured or policyholder

The insured or policyholder is the person that is financially covered and entitled to receive the benefits of an insurance policy.

3. Additional insured 

Any person or party besides the policyholder who is added to a policy, so that they will also be covered by that policy.

4. Insurance policy  

An insurance policy is a formal contract between you (the insured or policyholder) and your insurance company (the insurer) that lays out the terms and conditions of your insurance coverage.

Every insurance policy includes:  

 

5. Declarations Page

A declarations page, often called a “dec page,” is the first page of your insurance policy. It details what you’re insuring, how your coverage works, and how much it costs.

6. Insuring Agreement

The insuring agreement is the portion of your policy that specifies exactly which circumstances it will provide insurance coverage for.

7. Conditions

The conditions section explains the duties and responsibilities of the insured and the insurer. For example, you are obligated to pay a premium and the insurer is obligated to provide coverage in exchange for that premium. 

8. Exclusions

The exclusions section lists the type of loss, events, or risks that the insurer will not provide coverage for. 

 

9. Coverage

Coverage is the specific protections or benefits an insurance policy provides.   

10. Policy period

The time your policy is in force, from the effective date to the expiration date. 

11. Quote

An insurance agent or carrier will provide you with a quote for a new insurance policy. This quote is an estimate of the premium you’ll pay based on information you provide to the insurance agent or carrier. 

12. Insurance Application  

An insurance application is a form issued by an insurance company that you must fill out to determine if you are eligible for insurance.   

13. Underwriting  

Underwriting is the process an insurance company uses to decide whether to accept or reject an application for an insurance policy.  

14. Underwriter  

An underwriter is responsible for reviewing an application for insurance and deciding if the applicant is accepted. The underwriter also determines the premium rate for the policy. 

15. Premium 

A premium is the price you pay to buy an insurance policy. This may be paid monthly, annually, or semiannually depending on the terms outlined in your policy. If you fail to pay your premiums, you risk having your policy canceled.  

16. Deductible  

A deductible is what you pay out-of-pocket on a claim before your insurance covers the rest. You typically get to choose your deductible amount when you purchase a policy.   

If you opt for a higher deductible, you’ll be paying a lower premium, but will likely pay more out-of-pocket when you make a claim. Conversely, if you choose a lower deductible, your premium will be higher, but it will reduce the out-of-pocket amount you pay when you file a claim.   

17. Insurance Claim 

A claim is the request you make to the insurer to reimburse you after a loss.

18. Peril  

A peril is any event, situation, or incident that causes property damage or loss. It is the reason why you are filing a claim. Fire, flood, theft, vandalism, and vehicle impact are all examples of common perils an insurance policy may cover.  

19. Named Peril Coverage 

"Named perils coverage" means your policy only covers specific or "named" perils listed in your policy. If you file a claim, the damage must result from a listed covered peril. 

20. Open Perils Coverage or All-Risk Coverage 

"Open perils coverage," also called "all risks coverage," means you're covered against a peril unless your policy specifically excludes the loss. 

21. Policy limits 

The maximum amount of money an insurer will pay for a claim. This amount is set before the policy is issued and can be found on the declaration page. 

22. Rider

A rider, also referred to as an endorsement, amendment, or “scheduling an item,” allows you to purchase extra coverage for an item your policy does not cover or does not cover sufficiently. For example, if you have a piece of artwork or a collectible that is worth more than the sub-limit on your policy, you can add a rider to make sure it is covered for its full value. In addition to homeowners, riders can be added to auto and life insurance policies.  

23. Appraisal 

An appraisal is a professional assessment of an item you want to insure to determine its value. Getting an appraisal is important because it helps to calculate what it costs to replace your item or estimate the amount of damage after a covered loss.  

24. Replacement Cost 

The actual cost of replacing damaged or destroyed property with new property, in contrast to Actual Cash Value (RCV).  

25. Actual Cash Value 

The value of any property that is lost or damaged at the time of the loss, in contrast to Replacement Cost (ACV). 

 

Phew! You survived a blog post on insurance terminology! It’s ok if you still don’t feel like an expert. The goal was simply to familiarize yourself with terms you may encounter in your insurance policies, so you feel empowered  

Before we let you go... 

There’s one type of insurance policy you may not have considered or even been aware of: jewelry insurance. Jewelry insurance is an excellent way to protect sentimental valuables like an engagement ring or family heirloom and provides additional coverage than many other types of insurance.  

At Jewelers Mutual, we want you to wear your favorite jewelry worry-free, which is why we provide coverage for almost every risk life throws at your jewelry, including: accidental loss, disappearance, theft and damage.  

See how affordable jewelry insurance is by clicking the button below to check your rate.  

 

 

 

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About Jewelers Mutual Group

Jewelers Mutual was founded in 1913 by a group of Wisconsin jewelers to meet their unique insurance needs. Later, consumers began putting their trust in Jewelers Mutual to protect their jewelry and the special memories each piece holds. Today, Jewelers Mutual continues to support and move the industry forward by listening to jewelers and consumers and offering products and services to meet their evolving needs. Beyond insurance, Jewelers Mutual’s powerful suite of innovative solutions and digital technology offerings help jewelers strengthen and grow their businesses, mitigate risk, and bring them closer to their customers. The Group insurers’ strong financial position is reflected in their 37 consecutive “A+ Superior” ratings from AM Best Company, as of November 2023. Policyholders of the Group insurers are members of Jewelers Mutual Holding Company. Jewelers Mutual is headquartered in Neenah, Wisconsin, with other Group offices in Dallas, Texas and Miami, Florida. To learn more, visit JewelersMutual.com.