Insurance Terms Glossary

Knowing a few key terms can greatly simplify your search for lower insurance rates. Here are definitions for the most commonly used terms.

Adjuster

Someone employed by the insurance company to assess losses and settle the claims of policyholders. Independent adjusters adjust claims for many different insurers on an independent contractor basis.

Agents

Two types of agents can sell insurance: independent agents and captive agents. Independent agents are self-employed, paid on commission, and work on behalf of multiple insurance companies. Independent agents usually offer lower insurance rates than captive agents because they are allowed to quote you multiple offers. Captive agents, on the other hand, represent only one insurer.

Auto Insurance

Liability and property coverage that protects you from losses in the event of a collision or other non-collision-related disasters.

Benefits

What the insurance policy covers or the cash amount of coverage.

Deductible

The amount of the losses for which you are responsible when you file a claim. Higher deductibles translate into lower insurance rates.

Health Insurance

A policy that usually covers emergency care and doctor visits. Some health insurance may also cover preventive care and prescription drugs.

Home Insurance

Protects you from losses and liability in the event a disaster strikes your home or someone is injured on your property.

Insurability

How acceptable you are as a policyholder to an insurance company.

Life Insurance

A policy that provides a predetermined amount of proceeds to your beneficiaries upon your death.

Premiums

The amount you pay, usually on an annual basis, for your insurance coverage. Some insurers also allow you to pay your premiums on a monthly installment plan.

Total Loss

When damage to the insured property is so extensive that the cost of repairs would exceed the value of the property.

Underwriting

Evaluating, accepting, or rejecting insurance risks and categorizing the ones that are accepted in order to determine appropriate premiums.