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Glossary of Insurance Terms
Insurance policies often include complex terms that may be unfamiliar. This glossary is
provided to help explain commonly used insurance words and phrases in plain
language.
Note: Definitions on this page are for general educational purposes only and do not replace the terms, conditions, exclusions, or endorsements contained in an issued insurance policy. Policy language issued by the insurance carrier governs coverage.
Jump to Letter
A
Actual Cash Value (ACV)
The value of property after depreciation for age, wear, or condition has been applied.
Additional Insured
A person or organization added to a policy who receives limited coverage.
Aggregate Limit
The maximum amount an insurance policy will pay during a policy period.
Application
A formal request for insurance containing information used for underwriting.
Audit
A review conducted by an insurance carrier to verify exposure information such as payroll, sales, or operations.
B
Binder
A temporary agreement that provides coverage until a policy is issued.
Bodily Injury
Physical injury, sickness, or disease sustained by a person.
Business Income (Business Interruption)
Coverage that helps replace lost income when business operations are suspended due to a covered loss.
C
Carrier
The insurance company providing coverage.
Certificate of Insurance (COI)
A document showing proof of insurance. It does not change policy coverage.
Claim
A request for payment or coverage under an insurance policy.
Coinsurance
A requirement to insure property to a certain percentage of its value to avoid reduced claim payments.
Commercial Auto
Coverage for vehicles used in business operations.
Commercial General Liability (CGL)
Coverage for bodily injury, property damage, and certain personal injury claims.
Completed Operations
Coverage for liability arising after work has been completed.
Coverage
Protection provided by an insurance policy.
D
Declarations Page
The summary page of a policy showing key information such as limits, deductibles, and insured parties.
Deductible
The amount the insured must pay before insurance responds.
Depreciation
Reduction in value due to age, wear, or obsolescence.
E
Earned Premium
The portion of the premium that has been used during the policy period.
Endorsement
A written change to a policy that modifies coverage.
Errors & Omissions (E&O)
Coverage for professional liability arising from mistakes or failures to perform services.
Exclusion
A policy provision that removes certain risks from coverage.
Exposure
Any condition that increases the chance of loss.
F
First-Party Claim
A claim made by the insured for their own loss.
Flood Insurance
Coverage for flood damage, typically provided through separate policies.
G
General Liability
Coverage for third-party bodily injury or property damage claims.
Gross Receipts
Total revenue before expenses, often used for underwriting.
H
Hazard
A condition that increases the likelihood of loss.
Hired & Non-Owned Auto
Coverage for vehicles not owned by the business but used for business purposes.
I
Indemnity
Compensation for loss or damage.
Insured
The person or entity protected by an insurance policy.
Insurer
The insurance carrier providing coverage.
Insurance-to-Value
The relationship between insured limits and actual property value.
L
Liability
Legal responsibility for damages or injury.
Limit of Insurance
The maximum amount payable under a policy.
Loss
Damage or injury that may be covered by insurance.
Loss Control / Risk Management
Services designed to reduce the frequency or severity of claims.
M
Material Change
A change in operations or exposure that may affect coverage.
Medical Payments
Coverage for medical expenses regardless of fault.
N
Named Insured
The primary person or entity listed on the policy.
Non-Owned Auto
Vehicles not owned by the insured but used in business operations.
O
Occurrence
An accident or event resulting in loss during the policy period.
Occurrence Limit
The maximum amount payable for a single covered event.
P
Payroll
Employee compensation used for underwriting workers’ compensation.
Policy
The insurance contract.
Premium
The amount paid for insurance coverage.
Professional Liability
Coverage for claims arising from professional services.
Property Insurance
Coverage for buildings, equipment, and business personal property.
Q
Quote
An estimate of insurance cost. Quotes are not binding.
R
Replacement Cost
The cost to replace property without depreciation.
Risk Assessment
Evaluation of exposures to identify potential loss.
Risk Transfer
Shifting risk through insurance contracts.
S
Scheduled Property
Property specifically listed with assigned values.
Self-Insured Retention (SIR)
An amount the insured pays before insurance applies.
Subrogation
The insurer’s right to recover payments from responsible parties.
T
Third-Party Claim
A claim made by someone other than the insured.
Total Insured Value (TIV)
The total value of insured property.
Subrogation
The insurer’s right to recover payments from responsible parties.
U
Umbrella Policy
Additional liability coverage above underlying limits.
Underwriting
The process used by carriers to evaluate risk.
V
Vacancy
A property condition that may limit coverage.
W
Workers’ Compensation
Coverage for employee work-related injuries or illnesses.
Y
Year-End Audit
A review conducted after policy expiration to reconcile exposures.
Insurance products are offered through Wasatch Preferred. Coverage availability and eligibility vary by carrier and state. CEPA advisory services are provided in a non-fiduciary, non-investment advisory capacity and do not include legal, tax, or investment advice. Insurance services are provided by properly licensed agents. Licensure information is available upon request and varies by state.
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