Comprehensive Glossary of Insurance: 100+ Terms You Must Know
A comprehensive glossary of 100+ insurance terms with examples to understand policies, claims, risk management, and coverage fully.
Insurance is a critical tool for managing financial risk. To navigate this complex field, understanding key terms is essential. This comprehensive glossary explains over 100 insurance terms across life, health, auto, property, and business insurance, including examples for clarity.
Life Insurance Terms
- Agent – Licensed professional selling life policies.
- Beneficiary – Person receiving payout.
- Term Life Insurance – Coverage for a specified period.
- Whole Life Insurance – Permanent coverage with cash value.
- Universal Life Insurance – Flexible premium and death benefit.
- Variable Life Insurance – Investment-linked policy.
- Insurable Interest – Financial stake in the insured’s life.
- Rider – Additional provisions like disability or critical illness.
- Premium – Payment to maintain coverage.
- Claim Settlement – Process of paying beneficiaries after death.
Health Insurance Terms
- Co-pay – Fixed payment for services.
- Deductible – Out-of-pocket expense before coverage.
- Network Provider – Doctors/hospitals under plan.
- Pre-existing Condition – Illness before coverage start.
- Exclusion – Services not covered.
- Claim – Request for reimbursement.
- Endorsement – Policy modification.
- Policyholder – Individual owning coverage.
- HMO / PPO – Managed care plan types.
- Out-of-Pocket Maximum – Limit on personal spending.
Auto Insurance Terms
- Liability Coverage – Protects against damage/injury caused.
- Comprehensive Coverage – Non-collision damage (theft, fire).
- Collision Coverage – Covers vehicle damage in accidents.
- Deductible – Amount paid before insurer covers rest.
- Premium – Payment for policy.
- Claim – Request for repair or replacement.
- Underwriting – Risk evaluation.
- No-Fault Insurance – Insurer covers policyholder regardless of fault.
- Gap Insurance – Covers loan balance if vehicle totaled.
- Uninsured Motorist Coverage – Protects against drivers without insurance.
Property & Casualty Insurance Terms
- Fire Insurance – Covers loss/damage from fire.
- Peril – Cause of loss, like fire, theft, flood.
- Hazard – Condition increasing risk.
- Insurable Risk – Risk eligible for coverage.
- Subrogation – Insurer recovers payment from third party.
- Endorsement – Modifies original policy.
- Replacement Cost – Cost to replace damaged property.
- Actual Cash Value – Depreciated value of asset.
- Premium – Payment to maintain policy.
- Claim – Request for reimbursement or repair.
Business Insurance Terms
- Workers’ Compensation – Covers workplace injury.
- Employers’ Liability – Covers legal claims by employees.
- Business Interruption – Covers lost income during disruptions.
- Key Person Insurance – Protects against loss of critical employee.
- Liability Insurance – Protection against lawsuits.
- Professional Indemnity – Covers professional negligence claims.
- Fidelity Bond – Protects against employee fraud.
- Cyber Insurance – Covers data breaches and cybercrime.
- General Liability – Protection against third-party claims.
- Umbrella Policy – Extra coverage above primary limits.
Insurance Principles
- Utmost Good Faith – Both parties must be honest.
- Insurable Interest – Must have stake in insured asset.
- Indemnity – Compensate for loss, not profit.
- Subrogation – Recover loss from third party.
- Contribution – Multiple insurers share claim costs.
- Proximate Cause – Main event leading to loss.
- Loss Minimization – Policyholder must reduce loss where possible.
- Risk Pooling – Sharing risk among participants.
- Takaful – Islamic mutual insurance concept.
- Ex-gratia Payment – Voluntary payment not required by policy.
Claims and Underwriting Terms
- Adjuster – Assesses claims.
- Underwriting – Evaluates risk for premium.
- Risk Assessment – Analyze potential loss likelihood.
- Deductible – Policyholder contribution before coverage.
- Claim Settlement – Paying approved claims.
- Subrogation – Recovering from liable third party.
- Reinsurance – Insurer covers risk from another insurer.
- Loss Ratio – Claims paid vs premiums collected.
- Fraud – Intentional deception to claim insurance.
- Investigation – Verification of claims facts.
Additional Key Terms
- Policy – Contract between insurer and insured.
- Exclusion – Non-covered risks.
- Coverage Limit – Maximum payout.
- Rider – Additional coverage.
- Premium Financing – Borrowing to pay premium.
- Grace Period – Time allowed after premium due.
- Cancellation – Termination of policy.
- Renewal – Extending policy after expiry.
- Lapse – Policy ends due to non-payment.
- Endorsement – Policy modification.
- Hazardous Activity – Risky activities impacting coverage.
- Moral Hazard – Behavior increasing risk.
- Physical Hazard – Tangible condition increasing risk.
- Peril – Cause of loss.
- Risk Management – Planning to reduce risk impact.
- Actuary – Professional calculating risk/probabilities.
- Insurer – Company providing coverage.
- Loss Control – Measures reducing chance of claim.
- Sub-limit – Partial coverage limit within overall policy.
- Aggregate Limit – Maximum total payout for all claims.
- Retention – Amount insured retains in self-insurance.
- Coinsurance – Shared loss coverage between insurer and insured.
- Deductible Buy-Down – Reducing deductible for higher premium.
- Salvage – Recoverable property value after loss.
- Underinsured Motorist – Protection when other driver has insufficient coverage.
- Premium Adjustment – Changing premium after claim or assessment.
- Hazardous Material Coverage – Insurance for dangerous goods.
- Catastrophe Coverage – Coverage for large-scale disasters.
- Risk Transfer – Shifting risk from one party to another.
- Loss Control Inspection – Evaluating insured property to prevent claims.
Conclusion
A comprehensive understanding of insurance terminology is crucial for anyone dealing with policies, claims, and risk management. Mastering these terms ensures informed decisions, better policy selection, and effective communication with insurers.
This glossary of 100+ terms covers life, health, auto, property, and business insurance, providing a solid foundation for students, professionals, and policyholders alike.