Insurance Glossary

A 1035 exchange, named after IRC Section 1035, allows the tax-deferred rollover of cash value from an existing life insurance policy to a new life insurance policy or annuity—or from an annuity to another annuity—without triggering a taxable event on the transferred gain.

The ACA established consumer protections including guaranteed issue, coverage of preexisting conditions, and subsidized marketplace insurance for millions of Americans.

An accelerated death benefit (ADB) rider allows a policyholder diagnosed with a terminal illness—typically defined as a life expectancy of 12–24 months—to receive a portion of their life insurance death benefit in advance, income-tax-free under most circumstances.

A policy feature that prevents your first at-fault accident from raising your premium at renewal.

Accidental death and dismemberment (AD&D) insurance pays a lump-sum benefit if the insured dies as a direct result of an accident, and proportional benefits for qualifying dismemberment injuries such as loss of a limb or eyesight.

The depreciated value of property at the time of loss — what your insurer pays minus age and wear.

An additional insured endorsement extends the named insured's liability coverage to protect a third party — typically a client, landlord, or general contractor — from claims related to the named insured's work.

An additional named insured is granted broad policy rights — including the ability to make changes or receive cancellation notices — unlike an additional insured, who has narrower, loss-specific protections.

A licensed professional who investigates and settles insurance claims for the insurer or for the policyholder.

Admitted carriers have met state licensing, financial, and regulatory requirements and are subject to state oversight of their rates, forms, and claims practices—giving policyholders access to state guaranty fund protection.

Adverse selection occurs when people with a greater likelihood of loss are more motivated to buy or maintain insurance, skewing the risk pool toward worse-than-average outcomes.

Non-OEM replacement parts used in repairs — insurers often default to these to reduce claim costs.

A policy where insurer and owner agree on the vehicle's value upfront — full amount paid at total loss, no depreciation.

The broadest condo master policy type, covering the building plus all interior fixtures and improvements within each unit.

AM Best ratings are the insurance industry's leading measure of insurer financial strength, with ratings ranging from A++ (Superior) to D (Poor), used by consumers, brokers, and regulators to assess carrier stability.

The AEP is the primary annual opportunity for Medicare beneficiaries to change their Medicare Advantage or Part D drug plan, with changes taking effect January 1.

The appraisal clause provides an alternative dispute resolution mechanism for disagreements about the dollar value of a loss—without going to court.

Arbitration is a more formal alternative to mediation in which a neutral arbitrator (or panel) hears evidence from both sides and renders a decision—which may be final and binding.

An attending physician statement (APS) is a formal written request sent to the applicant's treating physician(s) asking for a narrative summary or copy of medical records for underwriting purposes, typically ordered when the application or paramedical exam flags a significant health condition.

Insurance bad faith occurs when a carrier fails to investigate promptly, unreasonably delays or denies a valid claim, or fails to communicate claim decisions—potentially exposing the insurer to damages beyond the policy limits.

Balance billing can result in unexpected medical bills, particularly when receiving care from out-of-network providers or facilities.

The most limited condo master policy type, covering only the building structure up to the drywall and leaving all interior finishes to unit owners.

The person, entity, or trust designated to receive the death benefit of a life insurance policy.

Temporary insurance proof that provides coverage while a full policy is being underwritten and issued.

Blanket coverage simplifies insurance administration by covering all property in a category without requiring individual scheduling, useful for businesses with large, frequently changing inventories.

A single policy limit covering all personal property in aggregate, rather than item-by-item sub-limits.

Auto liability coverage that pays for injuries you cause to other people in an at-fault accident.

A bare-bones auto policy available in a few states that covers only the named insured — not other drivers.

Builders risk insurance covers the structure, materials, and equipment at a construction site against fire, theft, vandalism, and weather damage during the build.

The additional construction cost required to bring a repaired or rebuilt home into compliance with current local codes.

Buying multiple policies (often auto + home) from one insurer to earn a multi-policy discount.

Burial insurance is a colloquial term for small whole life or final expense policies intended to cover the direct costs of a funeral, burial, or cremation, relieving family members of immediate out-of-pocket expenses.

Business income coverage is the ISO policy form name for what is commonly called business interruption insurance, providing income replacement during a forced operational shutdown.

Business interruption insurance keeps a business financially afloat during the period it cannot operate due to a covered physical loss such as fire, windstorm, or burst pipes.

A BOP packages general liability and commercial property insurance into one affordable policy, designed specifically for small to mid-sized businesses.

A buy-sell agreement is a legally binding contract that dictates how a business owner's interest will be transferred upon death, disability, or departure—often funded by life insurance so that surviving owners or the business entity have immediate cash to buy out the deceased owner's heirs.

Cancellation ends a policy mid-term and can be initiated by either party, subject to state-mandated notice requirements and rules about permissible grounds.

A captive insurer is a wholly owned subsidiary or association-owned insurer formed to self-insure the risks of its parent or member organizations, providing an alternative to commercial insurance markets.

The savings component inside permanent life insurance policies that can be borrowed against or withdrawn.

Catastrophe reinsurance (cat reinsurance) covers the excess losses primary insurers experience when a single event—hurricane, earthquake, wildfire—generates claims far beyond normal expectations, protecting insurer solvency.

Once a Part D enrollee spends $2,100 out-of-pocket on covered drugs in 2026, they enter the catastrophic phase and pay nothing for the rest of the year.

Catastrophic plans offer minimal day-to-day coverage and a very high deductible but cap your exposure to financial ruin from a serious illness or accident.

Ceded reinsurance represents the insurance coverage and associated premiums that a primary insurer passes (cedes) to its reinsurers, reducing the insurer's net retained risk.

A certificate of insurance (COI) provides third parties — landlords, clients, general contractors — with evidence of a business's insurance without sharing the full policy.

A child term rider adds a modest term life insurance benefit—typically $10,000–$25,000 per child—to a parent's policy for a flat annual cost, covering all current and future children under one rider without individual underwriting for each child.

A chronic illness rider allows a policyholder to access the life insurance death benefit on an accelerated basis—typically monthly installments—if they become permanently unable to perform two of six activities of daily living or require substantial supervision due to cognitive impairment.

A claim denial is the insurer's written notification that it will not pay a claim, citing specific policy provisions, exclusions, or conditions as the basis for the denial.

Claims-made policies tie coverage to when a claim is reported rather than when the incident happened, making continuous coverage and retroactive dates critically important.

Specialty auto insurance for collector, antique, and vintage vehicles with agreed-value coverage and mileage restrictions.

A 7-year claims history database insurers use to set rates for property and auto policies.

COBRA continuation coverage preserves your existing group health plan after a qualifying event but requires you to pay the full premium — both employee and employer shares — plus an administrative fee.

Your percentage share of a covered cost after the deductible — common in health and some property policies.

A property coinsurance clause — typically 80% or 90% of replacement cost — penalizes underinsurance by making the policyholder a co-insurer for the uninsured portion of any loss.

Optional auto coverage that pays to repair your vehicle after a crash, regardless of fault.

Commercial auto insurance covers vehicles owned or regularly used by a business, providing liability protection and physical damage coverage that personal auto policies explicitly exclude for business use.

A Commercial Package Policy (CPP) offers mid-sized and larger businesses a flexible framework to bundle multiple coverage lines into one policy, providing broader customization than a standard BOP.

A single dollar cap covering both bodily injury and property damage liability in one combined amount.

The common fund doctrine applies when an attorney's work creates a monetary benefit that all claimants share; the attorney can seek fees from that fund even from parties who didn't agree to fee-sharing.

A fault-allocation system that reduces your damages award by your percentage of fault in an accident.

The complaint ratio measures the frequency of regulatory complaints against an insurer relative to its size, providing a normalized benchmark for comparing complaint performance across carriers of different scale.

Completed operations coverage protects contractors and service businesses from injury or damage claims that arise after a job is done, not just while work is in progress.

Optional auto coverage for non-collision damage: theft, fire, hail, vandalism, animal strikes.

Concealment is deliberate silence about something significant — distinct from innocent non-disclosure — and can give an insurer grounds to void a policy or deny a claim.

The contestability period is typically the first two years of a life insurance policy during which the insurer has the right to investigate claims and deny payment—or rescind the policy—if the application contained material misrepresentations, fraud, or omissions.

A contingent beneficiary—also called a secondary beneficiary—is designated to receive the life insurance death benefit only if all primary beneficiaries have predeceased the insured or disclaim their interest at the time of claim.

Contractual liability insurance covers liability a business voluntarily assumes in contracts, protecting the business from costs and legal fees arising from contractual indemnification obligations.

A strict fault rule in a handful of states where any fault on your part bars you from recovering damages.

A convertible term policy gives the policyholder the right to convert all or part of the term coverage to a permanent life insurance policy—such as whole life or universal life—before a specified conversion deadline, without proving insurability.

A fixed dollar amount you pay for a specific covered health service (e.g. $30 for a doctor visit).

Copays are flat per-visit fees — typically $10-$50 for primary care, $30-$80 for specialists, $5-$15 for generic prescriptions.

CSRs reduce out-of-pocket costs for Silver plan enrollees with household incomes between 100% and 250% of the federal poverty level.

The homeowners policy section that covers the main structure of the home against damage from covered perils.

The homeowners policy section covering structures on the property that are not attached to the main dwelling, such as detached garages, fences, and sheds.

The homeowners policy section that reimburses the policyholder for damaged or stolen personal belongings, such as furniture, electronics, and clothing.

The homeowners policy section paying for additional living expenses when a covered loss makes the home temporarily uninhabitable.

The homeowners policy section that pays legal defense costs and judgments if the policyholder is found liable for bodily injury or property damage to others.

The homeowners policy section that pays minor medical bills for guests injured on the property regardless of fault.

A critical illness rider accelerates or adds a lump-sum payment to a life insurance policy upon first diagnosis of a covered critical illness—commonly cancer, heart attack, or stroke—giving the insured cash to use for any purpose including medical bills, lost income, or home modifications.

Cyber liability insurance pays for breach response, regulatory fines, ransomware payments, and lawsuits stemming from a business's data security failure.

The summary page ("dec page") of your policy listing coverage limits, deductibles, premium, and insureds.

Decreasing term insurance features a death benefit that reduces incrementally each year throughout the policy term while premiums remain level, making it cost-efficient for covering obligations like a mortgage that diminish over time.

The out-of-pocket amount you pay before insurance starts covering a claim or health expense.

Deductible recovery occurs when the insurer successfully pursues subrogation against an at-fault third party and returns the policyholder's deductible from the recovered funds.

The reduction in value of property over time due to age, wear, and obsolescence, used to calculate actual cash value settlements.

A depreciation holdback is the difference between the Replacement Cost Value (RCV) and the Actual Cash Value (ACV) paid initially on a property claim—released only after the insured completes and documents the repairs.

A claim for the reduction in a vehicle's resale value even after proper repairs following an accident.

D&O insurance shields executives and board members from lawsuits alleging wrongful acts in managing the organization, covering legal costs and settlements.

Life insurance dividends are a return of surplus premium paid by mutual insurers to owners of participating whole life policies when actual mortality, investment, and expense experience is more favorable than the conservative assumptions priced into the policy.

The Part D coverage gap (donut hole) was effectively closed by the Inflation Reduction Act, which capped out-of-pocket drug costs at $2,100 starting in 2025.

The most basic dwelling fire policy, covering only fire, lightning, and internal explosion on a landlord or non-owner-occupied property.

A mid-tier dwelling policy covering a broader list of named perils than DP-1 and settling most claims on a replacement-cost basis.

The broadest dwelling policy form, providing open-perils coverage on the structure and named-perils coverage on personal property.

Dram shop laws allow injury victims to sue the bar or restaurant that over-served the at-fault driver or aggressor, making liquor liability insurance essential for alcohol-serving businesses.

Allstate's telematics program offering discounts and cash back rewards for safe driving behavior.

Drug tiers rank medications from cheapest (generics) to most expensive (specialty drugs), with your copay or coinsurance rising as tiers increase.

Dual-eligible beneficiaries receive Medicare for primary coverage and Medicaid for cost-sharing assistance, long-term care, and services Medicare does not cover.

Coverage A on a homeowners policy — pays to repair or rebuild your home's physical structure.

A standard policy exclusion barring coverage for damage caused by earthquakes, landslides, mudslides, sinkholes, and other ground movement.

EPLI protects employers from the costly legal battles that arise when current, former, or prospective employees allege violations of their employment rights.

A written modification to a policy that adds, removes, or changes coverage — same as a rider.

An EOB is not a bill — it is an informational document that breaks down how your insurer processed a claim and what portion remains your responsibility.

An EPO combines the cost savings of an HMO with slightly more flexibility, but locks you into a defined provider network.

An endorsement paying to repair or replace home systems and appliances damaged by mechanical or electrical breakdown.

ERISA sets minimum standards for employer-sponsored health plans and generally shields self-funded plans from state insurance mandates.

E&O insurance protects businesses and professionals from claims arising from mistakes, oversights, or failure to deliver promised services.

ESRD is one of the few conditions that grants Medicare eligibility regardless of age, requiring a three-month waiting period before coverage begins for most dialysis patients.

Essential Health Benefits ensure that all ACA-compliant plans cover a baseline of care including emergency services, mental health, maternity, and prescription drugs.

An Examination Under Oath is a powerful insurer investigative tool—analogous to a deposition—that the insured is contractually required to submit to as a condition of policy coverage.

A household member specifically removed from an auto policy — coverage does not apply if they drive the car.

A specific loss or condition that your policy explicitly does NOT cover.

The exclusive remedy doctrine is the cornerstone of the workers compensation system, trading workers' right to sue for guaranteed no-fault benefits regardless of fault.

The experience modifier (EMR or ex-mod) rewards businesses with below-average workers comp losses with lower premiums and penalizes those with above-average losses.

A policy feature that pays up to a set percentage above the stated dwelling limit if rebuilding costs exceed that limit after a major loss.

Extra expense coverage compensates businesses for the additional costs — temporary space rental, expedited shipping, overtime labor — needed to keep operating during recovery from a covered property loss.

Extra Help (also called the Low-Income Subsidy or LIS) dramatically lowers prescription drug costs for Medicare beneficiaries with limited income and resources.

State-mandated insurer of last resort for properties that cannot find coverage in the private market.

The IRS fixed the family glitch in 2023, allowing family members to access marketplace premium tax credits when employer family coverage is unaffordable.

In file-and-use states, insurers file rate and form changes with the insurance department and may implement them immediately—subject to the department's right to later review and disapprove if non-compliant.

Final expense insurance is a type of whole life policy with face amounts typically ranging from $2,000 to $25,000, marketed to seniors primarily to cover funeral costs, medical bills, and other end-of-life expenses.

Financial examinations are periodic solvency reviews conducted by state insurance departments to verify that insurers maintain adequate reserves, capital, and surplus to meet their obligations to policyholders.

First-party claims involve the insured seeking compensation from their own insurer for covered losses—such as a homeowner claiming for storm damage or an auto owner claiming for a collision under their own policy.

A universal homeowners policy exclusion barring coverage for damage caused by rising surface water, storm surge, and overflow from water bodies.

A formulary determines which medications your insurance covers and at what cost-sharing level, making it critical to review before choosing a plan.

A high-limit financial responsibility certificate required in Florida and Virginia after serious driving violations.

An FSA reduces your taxable income by letting you set aside pre-tax money for predictable medical costs, but unspent funds generally expire at year-end.

Industry shorthand for a policy with liability plus collision and comprehensive — not a specific policy type.

In a fully insured plan, the insurance carrier guarantees payment of covered claims in exchange for a fixed monthly premium, transferring all financial risk from the employer.

Auto coverage that pays the difference between what you owe and your car's value after a total loss.

Garage keepers insurance protects auto dealers, repair shops, and parking facilities from liability when a customer's vehicle is damaged or stolen while in their possession.

The location where a vehicle is primarily kept overnight — a key rating factor for auto premiums.

General liability insurance is the foundational business policy covering lawsuits from customers, vendors, or bystanders injured on your premises or by your operations.

A short window after a missed payment during which your coverage stays in force.

Group life insurance is a single master policy—typically issued to an employer—that provides term life coverage to all eligible employees, usually at one to two times their annual salary, with premiums often paid fully or partly by the employer and no individual medical underwriting required.

A policy that insurers must offer regardless of health status — no medical underwriting.

A policy provision promising to pay whatever it actually costs to rebuild a home after a covered total loss, with no dollar cap.

A condition or circumstance that increases the likelihood or severity of a loss from a given peril.

An HDHP trades a lower monthly premium for a higher deductible, making it pairable with a tax-advantaged HSA.

The marketplace, also called the exchange, is where most people shop for ACA plans and access premium tax credits to reduce their monthly premium.

Federal law protecting medical privacy and ensuring portability of health coverage between jobs.

Hired and non-owned auto (HNOA) coverage protects a business from liability claims when employees use their personal or rented vehicles for company business.

A health plan with a tight network and required referrals from a primary care physician.

The most common homeowners insurance form, providing open-perils coverage on the dwelling and named-perils coverage on personal property.

The standard renters insurance policy covering personal property, liability, and additional living expenses for tenants.

A premium homeowners form that extends open-perils coverage to both the dwelling and personal property.

The standard condo unit-owner insurance policy, covering interior improvements, personal property, and liability.

A modified homeowners form for older or high-risk homes that pays on actual cash value rather than replacement cost.

Hold-harmless agreements shift legal responsibility from one party to another, commonly used in construction, events, rentals, and service contracts to limit liability exposure.

Unlike an HSA or FSA, an HRA is funded entirely by the employer and reimburses employees for medical costs up to a set annual limit.

An HSA lets you contribute pre-tax dollars, grow them tax-free, and withdraw tax-free for medical costs — often called the triple tax advantage.

A percentage-based deductible triggered specifically when a named hurricane causes property damage, common in Gulf and Atlantic coastal states.

Seeing an in-network provider activates your plan's cost-sharing benefits and typically results in the lowest out-of-pocket costs.

The incontestability clause is a standard life insurance provision that bars the insurer from contesting the validity of a policy—or denying a claim for misrepresentation—after the policy has been in force for two years, providing security to policyholders and beneficiaries.

Indemnification is a legal duty (often contractual) to make another party whole for losses they suffer, commonly used in business contracts to allocate risk and liability.

An indemnification clause creates a contractual duty to make another party whole for designated harms, and it directly shapes what insurance coverage the indemnifying party needs to carry.

The principle of restoring an insured to their financial position before a loss — no better, no worse.

Independent adjusters are self-employed or work for independent adjusting firms, hired by insurance companies to investigate and evaluate claims without being on the insurer's permanent payroll.

Indexed universal life insurance credits interest based on the performance of a market index such as the S&P 500, subject to a cap and a floor—typically 0%—so cash value cannot lose value due to index declines.

Your IEP spans three months before, the month of, and three months after your 65th birthday — missing it can result in permanent late enrollment penalties.

Inland marine insurance fills gaps in commercial property coverage by insuring property that moves, is stored off-site, or requires specialized valuation.

Insurable interest is the legal requirement that a policyholder stand to suffer a real financial loss if the insured property is damaged or the insured person dies or is injured.

IRMAA requires higher-income Medicare beneficiaries to pay surcharges on top of standard Part B and Part D premiums, with the amount based on income reported two years earlier.

An irrevocable beneficiary designation gives the named beneficiary a vested interest in the life insurance policy, meaning the policyholder cannot change the beneficiary, take a policy loan, surrender the policy, or make other material changes without the irrevocable beneficiary's written agreement.

A scheduled endorsement that insures individual jewelry pieces at their full appraised value, including mysterious disappearance.

Joint Underwriting Associations (JUAs) are state-created entities funded by participating insurers that provide coverage for high-risk policies the voluntary market won't write—acting as a residual market mechanism.

Key person insurance—also called key man insurance—is a life insurance policy owned by a business entity on the life of an individual whose death would cause significant financial loss to the company, with the business named as beneficiary to offset recruitment costs, lost revenue, or loan repayment obligations.

A lapse occurs when a policyholder fails to pay their premium by the due date and the grace period expires, causing coverage to end automatically.

A policy endorsement that directs personal-property loss payments to a creditor — such as a lender financing a vehicle or equipment — up to the loan balance.

Level term life insurance provides a fixed death benefit and a guaranteed level premium for a set period—commonly 10, 20, or 30 years—making it the most straightforward and popular form of term coverage.

Coverage that pays for bodily injury and property damage you cause to others — protects your assets.

The lowest legal auto insurance level — just the state-mandated liability limits, no coverage for your own vehicle.

Liquor liability insurance protects bars, restaurants, caterers, and event venues from lawsuits under dram shop laws when alcohol service leads to injury or death.

A long-term care rider attached to a permanent life insurance policy allows the insured to receive monthly payments from the policy's death benefit to cover qualified long-term care expenses such as nursing home or home health aide costs, blending life insurance with LTC protection.

Loss Adjustment Expenses (LAE) are the internal and external costs insurers spend to handle claims—including adjuster salaries, legal fees, and expert costs—and are tracked separately from actual claim payments in insurer financial statements.

Coverage that reimburses a condo or HOA member for their share of a special assessment levied after a major loss exceeds the master policy.

Coverage D on home/renters — pays additional living expenses if your home becomes uninhabitable.

Loss ratio is one of the key financial-health metrics for insurance carriers — it measures how much of every premium dollar is paid back to policyholders as claims.

An LPFSA lets HSA holders enjoy FSA tax benefits for dental and vision costs without disqualifying their HSA.

The made-whole doctrine protects claimants from bearing the costs of a subrogation recovery, requiring the insurer to pay the claimant's legal fees and costs before subrogating against a third party.

MAGI is your adjusted gross income plus certain additions like tax-exempt interest and foreign income, used to assess marketplace and Medicaid subsidy eligibility.

MAPD plans combine the hospital, medical, and drug benefits of Medicare Parts A, B, and D into one integrated plan from a private insurer.

Market conduct examinations are audits conducted by state insurance departments to assess whether insurers are treating policyholders fairly and complying with consumer protection laws.

The insurance policy maintained by a condominium association that covers the building exterior, common areas, and shared structures.

An insurer-offered alternative to extended warranties that covers mechanical failures in newer vehicles.

Mediation in insurance claims involves a neutral third party facilitating negotiation between the policyholder and insurer to resolve a dispute without litigation or binding arbitration.

The Medicare General Enrollment Period is a fallback enrollment window for those who missed their IEP, with coverage starting July 1 and late enrollment penalties applying.

The Medicare late enrollment penalty increases Part B premiums by 10% per year of delay and Part D premiums by 1% per month without creditable coverage — and these surcharges last for life.

Medicare Part A is premium-free for most beneficiaries and covers inpatient care, but comes with significant cost-sharing including a per-benefit-period deductible.

Medicare Part B charges a monthly premium — $202.90 in 2026 for most beneficiaries — and covers the outpatient medical services that Part A does not.

Medicare Advantage plans deliver all Original Medicare benefits through private insurers and frequently include prescription drug coverage, dental, vision, and hearing benefits.

Medicare Part D covers prescription drugs and features a $2,100 out-of-pocket cap in 2026, ending the coverage gap that previously left beneficiaries with full costs.

The M3P program, launched in 2025, smooths Part D drug costs throughout the year so beneficiaries are not hit with large out-of-pocket payments early in the year.

Medicare Savings Programs can eliminate Part B premiums and reduce other Medicare cost-sharing for qualifying low-income individuals.

A Medicare SEP lets you enroll in Medicare without late penalties when you lose qualifying employer coverage or experience other defined life events.

Private Medicare supplement insurance that fills gaps in Original Medicare's coverage.

Medigap Plan F provides first-dollar coverage with zero out-of-pocket costs for covered services, but is only available to those who became Medicare-eligible before 2020.

Medigap Plan G is the gold standard supplemental coverage for new Medicare beneficiaries, leaving only the $283 Part B deductible as out-of-pocket exposure.

Medigap Plan N offers strong coverage at a lower premium than Plan G by requiring modest copays and leaving excess charge exposure in place.

Optional auto coverage that pays medical bills for you and passengers after an accident, regardless of fault.

Metal tiers signal how a plan splits costs with you: higher tiers mean higher premiums but lower out-of-pocket costs when you need care.

An MIB report is a coded record maintained by the Medical Information Bureau—now MIB Group—that contains information disclosed on previous life, health, and disability insurance applications, used by underwriters to detect application inconsistencies and potential non-disclosure.

Mid-term cancellation ends active coverage during the policy period and triggers a calculation of the unearned premium to be refunded, using either pro rata or short rate methods.

Misrepresentation occurs when a policyholder provides incorrect information — intentionally or accidentally — that materially influences the insurer's decision to issue a policy or set a premium.

The obligation to take reasonable steps to minimize damage after a covered loss has occurred.

NAIC model laws are standardized legislative and regulatory templates designed to promote uniformity in state insurance regulation, covering everything from claims practices to solvency requirements.

The most common fault rule — you can recover damages up to a 50% or 51% fault threshold, then recovery is barred.

A modified endowment contract (MEC) is a life insurance policy that has been funded too rapidly—violating the IRS 7-pay test—causing it to lose the tax-preferred treatment that normally applies to policy loans and withdrawals, subjecting them instead to LIFO taxation and a 10% penalty.

Insurance protection for mold remediation and structural repair caused by mold growth that results from a covered water loss.

In monopolistic fund states, all employers must buy workers compensation exclusively from the state government rather than from private insurance companies.

Moral hazard describes the behavioral change — usually toward greater carelessness or deliberate misconduct — that can occur when insurance removes the financial sting of a bad outcome.

Unlike moral hazard, which involves deliberate risk-taking, morale hazard is the unintentional carelessness that can develop when people feel protected by their policy.

A policy provision that protects the lender's financial interest in an insured property by directing loss payments to the mortgagee.

Mortgage protection insurance is typically a decreasing term or level term life policy with a death benefit sized to match a homeowner's outstanding mortgage balance, ensuring the home is paid off if the policyholder dies.

The National Association of Insurance Commissioners — sets model laws and publishes complaint data.

The NAIC Complaint Index measures how an insurer's complaint volume compares to its market share—a score above 1.0 means the insurer received more complaints than average relative to the premiums it writes.

A specific person listed on an auto policy who is covered to drive the insured vehicle.

The named insured is the primary policyholder shown on the declarations page of an insurance policy, distinguished from additional insureds or other interested parties.

Auto liability coverage for drivers who don't own a vehicle — covers rentals, borrowed cars, and SR-22 filings.

A coverage approach where only the specific causes of loss listed in the policy are covered.

A percentage-based deductible activated when any officially named tropical storm or hurricane causes property damage.

A plan's network determines which providers you can see at the lowest cost-sharing, and using out-of-network providers can dramatically increase your expenses.

Pays to replace a totaled new car with a brand-new equivalent model instead of paying only its depreciated value.

The No Surprises Act limits what patients can be billed when they unknowingly receive care from out-of-network providers in emergency or in-network facility settings.

An auto insurance system where each driver's own insurance pays their injuries regardless of fault.

Non-admitted carriers write coverage for risks the standard market declines, operating outside normal state rate and form regulation—but policyholders forgo state guaranty fund protection.

Non-participating life insurance policies offer fixed, guaranteed premiums and death benefits but do not share in the insurer's surplus—there are no dividends, but premiums are typically lower than comparable participating policies.

Non-renewal means the insurer will not continue coverage beyond the current policy period, typically requiring advance notice to give the policyholder time to find alternative coverage.

A policy condition requiring the insured property to be used as the policyholder's primary or intended residence.

Occurrence-based policies provide permanent coverage for events that took place while the policy was active, even if the claim is made years after the policy expires.

Original Equipment Manufacturer parts — factory-made components used in covered vehicle repairs.

Open enrollment is your primary annual opportunity to choose or update health coverage; missing it typically means waiting another year without a qualifying life event.

A coverage approach where all causes of loss are covered unless explicitly excluded in the policy.

An endorsement that pays the additional cost to rebuild or repair a home to current building codes after a covered loss.

Original Medicare provides broad provider access nationwide with no referrals required but lacks an out-of-pocket maximum, making supplemental coverage important.

Using an out-of-network provider typically triggers higher cost-sharing, a separate deductible, or no coverage depending on your plan type.

Once you hit your out-of-pocket maximum, your insurer pays all covered in-network claims for the rest of the plan year — protecting you from catastrophic medical debt.

Paid-up insurance is a permanent life insurance policy that requires no additional premium payments to remain in force, either because the insured has completed a scheduled premium period or because accumulated dividends or cash value have been used to purchase paid-up additions.

A paramedical exam is a simplified medical examination—typically 20–30 minutes, conducted at the applicant's home or workplace by a trained paramedical technician—used by life insurance underwriters to collect blood, urine, and vital sign data to assess the applicant's health and mortality risk.

A participating policy entitles the policyholder to share in the insurer's divisible surplus through annual dividend payments, a feature most commonly associated with whole life policies issued by mutual insurance companies.

Auto insurance where you pay a low base rate plus a per-mile charge — ideal for low-mileage drivers.

A per-occurrence limit defines the ceiling on what your policy pays out for one distinct incident, separate from the annual aggregate cap.

A specific cause of loss — such as fire, windstorm, or theft — that triggers an insurance claim when it damages covered property.

Auto coverage that pays your medical bills and lost wages after an accident regardless of fault.

The aggregate limit caps your insurer's total payout across all losses in the policy term, regardless of how many separate incidents occur.

The policy period, also called the policy term, defines the start and end dates of your coverage — losses occurring outside this window are generally not covered.

Policyholder surplus is the insurance industry's equivalent of stockholders' equity, representing the financial cushion that protects policyholders and enables the insurer to absorb unexpected losses beyond its reserves.

A POS plan gives you the structured primary-care model of an HMO with the escape valve of limited out-of-network benefits.

A flexible health plan that lets you see any doctor, with lower costs in-network and no referrals.

Preferred Plus (also called Preferred Best or Super Preferred) is the top underwriting risk class offered by most life insurers, awarded to applicants with excellent health, favorable family history, ideal height-weight proportions, and clean driving and lifestyle records—qualifying them for the lowest available premium rates.

Premises liability holds property owners and occupiers responsible for keeping their premises safe and covers injury claims arising from hazardous conditions.

The amount you pay for insurance coverage — monthly, quarterly, semi-annually, or annually.

Premium financing is an advanced planning strategy used by high-net-worth individuals to purchase large permanent life insurance policies—often $5 million or more in coverage—by borrowing the annual premium from a bank or specialty lender at a competitive rate rather than liquidating assets.

The premium tax credit (PTC) makes marketplace coverage affordable by offsetting a portion of your monthly premium based on your income and the cost of the benchmark Silver plan.

A primary and noncontributory requirement — common in construction and service contracts — ensures that one party's insurance pays before and independently of the other party's coverage.

Prior acts (nose) coverage sets the retroactive date on a new claims-made policy to match the old insurer's retroactive date, covering incidents from before the new policy started.

In prior approval states, insurance companies must file proposed rate or form changes and receive the department's affirmative approval before implementing them in the market.

Prior authorization is an insurer's cost-control mechanism that can delay care if approval is not obtained in advance.

In a pro rata cancellation, the policyholder receives back a refund that perfectly mirrors the remaining policy time — no penalty is applied.

Product liability insurance protects businesses throughout the supply chain from lawsuits alleging a defective product harmed a consumer or damaged their property.

Professional liability insurance, sometimes called E&O, protects consultants, attorneys, accountants, and other professionals from negligence claims tied to the services they provide.

A Proof of Loss is a required claims document—often notarized—that the policyholder submits to provide a formal accounting of their loss, triggering the insurer's obligation to pay or deny.

Auto liability coverage that pays for damage you cause to another person's vehicle or property.

A public adjuster works exclusively for the insured—not the insurance company—to document losses, interpret policy language, and maximize claim settlements.

A fault rule allowing accident victims to recover damages even if they are mostly at fault.

QMB status eliminates virtually all Medicare out-of-pocket costs for qualifying beneficiaries and providers cannot bill QMB-enrolled patients for cost-sharing.

Qualifying life events — like losing coverage, getting married, or having a baby — trigger a limited window to enroll in or change health insurance plans.

Risk-Based Capital (RBC) is the NAIC's statutory solvency framework that determines how much capital an insurer must hold, scaled to the types and levels of risk in its business—triggering regulatory intervention when capital falls too low.

A title for a previously salvaged vehicle that has been repaired and passed a state safety inspection.

The withheld depreciation amount that a policyholder can claim back after completing repairs under a replacement-cost policy.

Reinstatement allows a policyholder to revive coverage that lapsed due to nonpayment, typically subject to conditions set by the insurer such as paying back premiums and providing evidence of insurability.

Reinsurance allows primary insurers to limit their exposure to large or catastrophic losses by ceding a portion of premium and liability to reinsurers—enabling them to underwrite more risk than their capital alone could support.

Renewable term policies grant the policyholder the right to renew coverage at the end of the term without new underwriting, though premiums reset to the insured's attained age at each renewal and can increase substantially.

Optional add-on that pays for a rental car while your vehicle is being repaired after a covered claim.

The cost to replace lost property with new items of similar kind and quality — no depreciation.

A representation is a material statement provided on an insurance application that the insurer relies upon when deciding whether and at what price to offer coverage.

When an insurer rescinds a policy, it treats coverage as never having been in effect and typically refunds premiums, leaving the insured without protection for any losses that occurred.

A Reservation of Rights (ROR) letter allows an insurer to handle a claim without waiving potential coverage defenses, signaling that one or more policy provisions may limit or bar payment.

The retroactive date on a claims-made policy defines how far back in time covered incidents can originate — incidents before this date are excluded.

A return of premium (ROP) rider added to a term life policy guarantees that if the policyholder is alive at the end of the term, the insurer returns 100% of the premiums paid—in effect providing a zero-cost death benefit if death occurs, or a forced savings plan if the insured survives.

An optional add-on that modifies or expands an insurance policy — same as an endorsement.

An add-on that fills the coverage gap when driving for Uber/Lyft between accepting and completing rides.

A risk pool is the collective group of insured individuals or entities whose premiums are aggregated so that the losses of the few are paid by the contributions of the many.

The age of a home's roof surface, a major underwriting factor that affects insurability, premium rates, and settlement basis in storm-prone states.

In insurance, salvage refers to the damaged property that retains some residual value after the insurer pays a total loss claim—the insurer typically takes ownership of the salvage and sells it to offset claim costs.

A title designation for vehicles that have been declared a total loss by an insurer.

A policy endorsement that individually lists and insures high-value items — jewelry, art, collectibles — at their appraised value.

Scheduling property — jewelry, art, cameras, tools — allows businesses to specify exact values and ensure full coverage for valuable items that would otherwise be subject to restrictive sublimits.

The scope of loss is the comprehensive inventory of all damaged items, affected areas, and required repairs that forms the foundation of a property insurance claim estimate.

In a self-funded plan, the employer functions as the insurer — paying claims from its own funds — while typically contracting with a TPA or insurer for administrative services.

An endorsement covering the cost to repair or replace underground utility lines — water, sewer, electric, and gas — that run from the street to the home.

The reverse flow of wastewater into a home through drain pipes, typically caused by blockages, heavy rain, or municipal system overload.

Short rate cancellation retains a portion of the unearned premium beyond the pro rata amount as compensation for the insurer's fixed underwriting and administrative costs.

A condo master policy type that covers the building plus original fixtures and built-ins in each unit as they were first constructed.

A single limit combines what would otherwise be separate sublimits into one pool of coverage, giving claimants flexibility in how the money is allocated.

Coverage for structural damage caused by the sudden collapse of the ground beneath a property into underground cavities.

SLMB covers the monthly Part B premium for qualifying low-income Medicare beneficiaries whose income exceeds the QMB limit but remains below 120% of FPL.

Progressive's telematics program that monitors driving behavior to earn discounts of up to 30%.

An SEP gives you typically 60 days after a qualifying life event to get health coverage without waiting for open enrollment.

An auto liability structure with separate caps for per-person BI, per-accident BI, and property damage.

Split-dollar life insurance is an arrangement in which two parties—typically an employer and employee—agree to split the premium payments, cash value, and death benefit of a life insurance policy according to a written agreement, often used as an executive benefit.

A certificate of financial responsibility filed by your insurer with the DMV — typically after a DUI.

Stacking allows policyholders to add together the limits of separate policies or separate vehicles on the same policy to create a larger pool of coverage for a single loss.

Combining UM/UIM limits across multiple vehicles or policies to increase the total protection available.

Staff adjusters are W-2 employees of a single insurer, handling claims for that carrier's policyholders as their primary job function.

Standard class is the baseline underwriting category for life insurance applicants who present average health risk, including those with minor health conditions, borderline height-weight ratios, or modest family history concerns that prevent qualification for Preferred or Preferred Plus rates.

CMS Star Ratings help Medicare beneficiaries compare plan quality and affect plan bonus payments and special enrollment eligibility.

The state insurance commissioner (or superintendent/director of insurance) is responsible for licensing insurers and agents, approving rates and policy forms, handling consumer complaints, and enforcing insurance laws within their state.

A policy where you declare the vehicle's value — but the insurer may pay only ACV at a total loss.

Statutes of limitations vary by claim type and state but generally require insurance disputes, injury claims, or contract actions to be filed within 2–6 years or become unenforceable.

Insurance statutes of limitations set a deadline—ranging from one to six years depending on state and policy type—for policyholders to initiate legal action after a claim dispute arises.

Step therapy protocols require patients to try and fail on cheaper drugs or treatments before the insurer will cover a more expensive option.

Stranger-originated life insurance (STOLI) is an arrangement—generally illegal or unenforceable—in which an investor or third party who has no insurable interest arranges for life insurance to be issued on another person's life, with the intent to profit from that person's death through a pre-planned policy sale.

Your insurer's right to recover claim payments from the third party that caused the loss.

A subrogation receipt is a document that preserves the insurer's right to sue a third party for recovery after paying an insurance claim to the policyholder.

A substandard rating is assigned to life insurance applicants whose health or lifestyle profile poses above-average mortality risk, resulting in premium surcharges—expressed as table ratings—to compensate the insurer for the elevated risk while still providing coverage.

The suicide clause in most life insurance policies excludes payment of the full death benefit if the insured dies by suicide—typically within the first one to two years of the policy—with the insurer returning only the premiums paid instead.

A claim supplement is a follow-up to the original claim settlement that captures newly discovered damage, overlooked line items, or cost increases identified during the repair process.

Surplus lines insurance fills coverage gaps in the standard market, allowing policyholders to obtain coverage from non-admitted carriers for unusual, high-risk, or newly emerging exposures.

Surrender charges are back-end fees deducted from the cash value of a permanent life insurance or annuity contract when the policyholder surrenders the policy within a specified number of years after issue, compensating the insurer for upfront acquisition costs.

Surrender value is the actual dollar amount paid to the policyholder when a permanent life insurance contract is voluntarily terminated, equal to the accumulated cash value minus any outstanding loans and applicable surrender charges.

A Sworn Proof of Loss is the formal, notarized version of a claim statement required by most insurance policies, carrying legal weight and potential perjury consequences for false statements.

The Sworn Statement in Proof of Loss is the formalized, notarized POL document that carries legal weight equivalent to sworn testimony and can expose the signer to perjury or fraud penalties if falsified.

A table rating is an underwriting designation applied to applicants who do not qualify for standard life insurance rates due to health impairments, resulting in premium surcharges typically expressed as a percentage of the standard rate or as a table letter (A–P) or number (1–16) corresponding to the severity of risk.

Tail coverage — formally called an Extended Reporting Period (ERP) — is essential when a claims-made policy is canceled or not renewed, protecting against late-emerging claims.

Telehealth allows patients to consult physicians, therapists, and specialists from home, often at lower cost-sharing than office visits.

Insurance that uses in-car devices or smartphone apps to track driving behavior and personalize premiums.

Life insurance with a fixed term (10/20/30 years) — pure death benefit, no cash value, lowest cost.

A terminal illness rider allows a policyholder diagnosed with a terminal illness—typically a life expectancy of 12–24 months—to access up to 50–100% of the policy death benefit as a living benefit, providing funds for final medical care, hospice, or personal wishes.

Third-party claims are made by injured parties or those who suffered a loss caused by the policyholder, seeking compensation from the at-fault party's liability insurer.

A state where the at-fault driver's liability insurance pays for the other party's injuries and damages.

A vehicle is declared a total loss when repair costs exceed a threshold percentage of its actual cash value.

A total loss settlement is the insurer's payment of the Actual Cash Value (ACV) of a totaled vehicle or property, replacing the item rather than funding its repair.

The total loss threshold determines when repair costs are high enough relative to the item's value that the insurer will declare it a total loss and pay the ACV rather than fund repairs.

Optional auto add-on that pays for roadside assistance: towing, flat tires, dead batteries, lockouts.

Treaty reinsurance is a blanket reinsurance arrangement where the reinsurer automatically accepts all risks within defined parameters from the cedent's book of business, without individual risk-by-risk evaluation.

Excess personal liability coverage above auto/home/boat limits — starts at $1M for $150–$400/year.

The insurer's process of assessing risk and setting price — or declining to offer coverage.

The UCSPA provides state-level legal standards for fair claims practices, allowing policyholders to sue insurers for damages if they violate the defined practices.

Auto coverage that pays your injuries and damage when the at-fault driver has no/inadequate insurance.

Universal life insurance is a type of permanent coverage that lets policyholders adjust their premium payments and death benefit amounts within certain limits, with a cash value component that earns interest.

Auto insurance priced based on actual driving behavior and miles — a broad category including telematics and pay-per-mile.

Utmost good faith, derived from the Latin 'uberrima fides,' is the bedrock legal principle requiring both parties to an insurance contract to disclose all material facts and act with total transparency.

A policy provision that restricts or eliminates coverage after a property has been unoccupied for a specified period — typically 30 or 60 consecutive days.

A feature that reduces your deductible by a set amount for each claim-free year of safe driving.

Variable universal life insurance combines the premium flexibility of universal life with investment sub-accounts similar to mutual funds, allowing cash value to grow—or shrink—based on market performance.

A delay after policy purchase before certain benefits become active (e.g. pet illness, dental major).

A waiver of premium rider keeps a life insurance policy in force without requiring any premium payments if the insured becomes totally disabled before a specified age—commonly 60 or 65—and remains disabled for the required elimination period.

A waiver of subrogation stops an insurer from pursuing the party at fault for a loss, typically required by contract so that business partners are not sued by each other's insurers.

In insurance law, a warranty is a binding contractual promise — if the warranted fact is false or the condition lapses, the insurer may void the policy regardless of whether the breach contributed to the loss.

An endorsement covering damage caused by water or sewage that backs up through drains, sewers, or sump pumps.

Permanent life insurance with lifelong coverage, fixed premiums, and a cash value component.

A licensed inspector's report documenting a home's wind-resistant features, used by insurers to calculate premium discounts in hurricane-prone states.

A separate, often percentage-based deductible that applies specifically to windstorm and hail losses instead of the standard all-peril deductible.

Workers comp class codes categorize job duties by their injury risk level, with each code carrying a rate per $100 of payroll that forms the foundation of premium calculation.

Workers comp provides no-fault benefits to injured workers while shielding employers from most personal injury lawsuits arising from workplace accidents.

Xactimate, developed by Verisk (formerly Xactware), is the dominant estimating tool in property insurance claims, used by insurers, independent adjusters, public adjusters, and contractors to price repair scopes.