Insurance Glossary

Plain-English definitions of common insurance terms. This list will grow over time — if there’s a term you’d like added, let us know.

Actual Cash Value (ACV): The value of covered property at the time of a loss — typically replacement cost minus depreciation for age and wear. Policies that pay ACV generally result in a smaller payout than Replacement Cost policies.
Replacement Cost: The cost to repair or replace damaged property with new property of similar kind and quality, without a deduction for depreciation. Usually costs more in premium than an Actual Cash Value policy but pays out more after a loss.
Deductible: The amount you pay out of pocket on a covered claim before your insurance starts paying. Higher deductibles generally lower your premium, and lower deductibles generally raise it.
Premium: The amount you pay (monthly, semi-annually, or annually) to keep an insurance policy in force.
Liability Coverage: Coverage that pays for injury or property damage you're legally responsible for causing to someone else. It does not cover your own injuries or property.
Bodily Injury Liability: Liability coverage that pays for another person's medical expenses, lost income, and related costs when you're at fault for an accident that injures them.
Property Damage Liability: Liability coverage that pays for damage you cause to someone else's property, such as their vehicle or a fence.
Collision Coverage: Optional auto coverage that pays to repair or replace your own vehicle after a collision, regardless of who was at fault.
Comprehensive Coverage: Optional auto coverage for damage to your own vehicle from non-collision events, such as theft, fire, vandalism, or weather.
Personal Injury Protection (PIP): Coverage, required in some "no-fault" states, that pays your own medical expenses and sometimes lost wages after an accident, regardless of fault.
Uninsured Motorist Coverage: Coverage that pays for your injuries (and, in some states, property damage) if you're hit by a driver who has no insurance at all.
Underinsured Motorist Coverage: Coverage that pays for your injuries when the at-fault driver has insurance, but not enough to cover your full damages.
Coinsurance: In health insurance, the percentage of a covered medical bill you pay after meeting your deductible (for example, you pay 20% and your plan pays 80%). In property insurance, a related clause can reduce a payout if a property is insured for less than a required percentage of its value.
Copay (Copayment): A fixed dollar amount you pay for a specific health service, such as $30 for a doctor visit, regardless of the service's total cost.
HMO (Health Maintenance Organization): A health plan type that generally requires you to use in-network providers and get referrals from a primary care physician to see specialists, often with lower premiums than a PPO.
PPO (Preferred Provider Organization): A health plan type that offers more flexibility to see out-of-network providers (usually at higher cost) and typically doesn't require referrals to see specialists.
Medigap: Private supplemental insurance that helps pay some of the out-of-pocket costs Original Medicare (Parts A and B) doesn't cover, such as copayments, coinsurance, and deductibles.
Beneficiary: The person or entity designated to receive the payout (death benefit, in the case of life insurance) from a policy.
Term Life Insurance: Life insurance that provides coverage for a set period (such as 10, 20, or 30 years) and pays a death benefit only if you die during that term. It has no cash value and is generally less expensive than whole life insurance.
Whole Life Insurance: Permanent life insurance that covers you for your entire life as long as premiums are paid, and builds cash value over time that you can borrow against. It generally costs significantly more than term life insurance for the same death benefit.

Last updated: September 12, 2026