Insurance Jargon From A to Z

You don’t need to be a lawyer to make sense of your insurance policy.

What’s more, understanding the language used in these contracts helps you get the best products for your lifestyle.

This A to Z guide for decoding insurance jargon will get you started.

Actual Cash Value

The calculated worth of insured property at the time of loss or damage. Replacement cost minus depreciation = actual cash value.

Beneficiary

The person who receives the payout from a will, life insurance policy, annuity or similar contract.

Captive Agent 

An individual who sells insurance contracts for a specific insurer.

Deductible

The portion of the loss you pay for before your policy kicks in.

Endorsement 

An addition to an insurance policy that adds to or changes the terms. Also called a rider.

Flood

Not typically included in a homeowners policy, this extra coverage protects your property from floods.

Hazard

A circumstance that increases the likelihood of loss.

Independent Agent

An agent who represents multiple insurance companies.

Liability Coverage

The part of your policy that will pay out if you’re found responsible for someone else’s injuries.

Named Perils

Hazards specifically named in a policy.

Occasional Driver

Someone who is not the main driver of the car he or she usually operates.

Personal Injury Protection

Coverage that pays for the insured’s medical expenses regardless of who is at fault for a crash.

Quote

An estimate of what your insurance premium would be with a given insurance provider.

Renters Insurance 

An affordable insurance policy that protects a renter and their belongings.

Standard Risk

Someone who is insurable at standard insurance rates. High- or low-risk policyholders may pay higher or lower rates based on such risk.

Term

The period when an insurance policy is in effect.

Umbrella Policy

Excess liability insurance that could also cover losses not covered by other insurance policies.

Whole Life 

A life insurance policy that remains in effect for a person’s entire lifetime with guaranteed cash value and a payout upon their death. In contrast, a term life insurance policy is cheaper but has no cash value when the term ends. Learn more.

Need more help? Talk to your AAA insurance agent about the specific terms of your policy.