Tools and ResourcesGlossary

When you're thinking about buying insurance, it's important to understand the language. For instance, what is a deductible? What does "premium" mean? What's the difference between an agent and an adjuster?

Terms

If you're looking for helpful, easy-to-understand information on some common insurance concepts, you've come to the right place. Click the appropriate letter of the alphabet below for info on insurance-related terms.

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Accident

An unforeseen event or circumstance that may result in damage or injury.

Adjuster

An insurance professional who investigates coverage and the facts of a loss to determine the compensation an insurance company pays its insured, or a third-party claimant. Also known as a field adjuster, an independent adjuster or a claims examiner.

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Agent

A representative of an insurance company who sells insurance policies, is licensed by the state and is required to complete continuing education classes.

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All other perils not enumerated

All causes of loss not listed on an insurance policy.

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Amendment

A change to the provisions of an insurance policy contract.

Auto loan calculator

An automated tool that helps estimate auto loan payments. Some companies such as financial and consumer credit institutions offer auto loan calculators on their websites for consumers so they can estimate their car payments by entering variables such as vehicle cost, interest rate and the length of the loan.

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Beneficiary

The person or organization designated to receive proceeds under the terms of a life insurance policy, college savings plan or annuity.

Benefit

The proceeds or payout from a life insurance policy, supplemental health policy or an annuity. Typically paid to the policy holder or the beneficiary.

Bond

A security representing the debt of the company or government issuing it. When a company or government issues a bond, it borrows money from you and you would then be considered a bondholder; it then uses the money to invest in its operations. In exchange, the company or government promises to repay you (the bondholder) the amount you invest, plus interest, at a set point in time called a maturity date.

Car payment calculator

See "Auto loan calculator".

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Related terms: auto loan calculator

Carrier

Term used to refer to the company that issues your insurance policy.

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Claim

A request to an insurance company for recovery for a loss.

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Collision

An event in which a vehicle comes into contact with another vehicle or an object, either stationary or moving.

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Coverage

The protection provided in an insurance policy.

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Damage

Harm or injury to an individual or property.

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Deductible

The portion of a covered loss you pay before the insurance company becomes responsible for payment under the policy.

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Related terms: premium

Driver

One who operates a motor vehicle.

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Endorsement

A change to the coverage or terms provided in your insurance policy.

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Estate

The general term used to refer to all the assets an individual owns, such as real estate, art collections, jewelry, investments and life insurance.

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Estimate

An evaluation of the cost to repair or replace damaged property covered on an insurance policy.

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Forms

The type of coverage and endorsements used on a policy. Forms are named, dated and numbered to provide continuity throughout an insured's policy.

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Home insurance

Insurance that protects the home and personal property of the policyholder against damage from certain perils, or causes of loss, and covers the homeowner's personal liability for covered injuries or damages to others.

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In force

A term used to mean the policy's coverage is in effect.

Insured

One who is covered by an insurance policy. Also called an assured in some instances, the two terms are synonymous.

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Lien holder

A person or organization with a legal claim, or lien, against a property, typically because that person or organization has loaned money or performed services for the owner of the property. The lien holder generally has the right to seize the associated property if payment is unsatisfactory and can impose certain restrictions on the borrower, such as insurance requirements on a vehicle.

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Loss

Value of damage to a person or property.

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Loss of business income coverage

A type of business insurance protection that covers the loss of business revenue due to a covered peril that causes the business to shut down or limit operations. This coverage is subject to certain time and other limitations and helps provide income until the insured business owner can get the damage repaired and get the business back into operation.

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Mortgage Calculator

An automated tool that helps estimate mortgage payments. Some companies such as financial and consumer credit institutions offer calculators on websites where mortgage shoppers can quickly estimate their loan payment by entering variables such as home cost, interest rate and length of the loan.

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Net worth

The difference between assets and liabilities. This number, which applies to both individuals and businesses, is a key measure of how much an entity or a person possesses. In business, net worth is also known as book value or shareholders' equity.

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Policy

A written contract for insurance between you and your company.

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Related terms: premium, deductible

Premium

The amount paid to procure coverage from an insurance company.

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Related terms: deductible, policy

Principal

The amount of money you invest.

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Renters insurance

A type of property insurance for individuals who rent or lease a home, condo or apartment. Such policies typically include coverage for personal property and liability.

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Replacement cost

A provision in an insurance policy that enables the customer to apply for the full cost of replacing the damaged items.

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Rider

See "Endorsement."

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Risk

An exposure of loss or harm to your property, or your potential legal responsibility.

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Salvage title

A branded, state-issued title to a vehicle indicating that, in the past, it had damage exceeding a certain percentage of its value. A state will issue such a title to a vehicle after it is repaired and passes a safety inspection, so as to warn potential new owners of its previous damage.

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Salvage vehicle

A vehicle for which a state has issued a salvage title. Such a title is generally issued when a vehicle is repaired and passes a state-recognized safety inspection after being declared a "total loss" by an insurance company, typically due to damage whose cost to repair would exceed a certain percentage of the vehicle's worth. A salvage title alerts potential buyers of the vehicle of its past damage.

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Scheduled personal property coverage

Extended optional insurance coverage for high-value appraised personal property that can be added to a homeowners, renters or condo policy.

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Stackable coverage

A type of uninsured/underinsured motorist coverage in which policyholders can "stack," or combine the limits of the uninsured/underinsured motorist coverage they purchase for each of their insured vehicles to help cover the cost of damage from an accident caused by an uninsured or underinsured driver. For example, if you have uninsured/underinsured motorist coverage with limits of $100,000 on two policies on your two vehicles, and you're injured when an uninsured motorist hits one of your vehicles, if your policy is "stackable," your costs would be covered up to the combined limit of $200,000. Coverage for stacking varies by policy and by state law. States allowing stacking may allow insurers to limit stacking through policy wording.

Stacking

An ability, allowed by some states, to combine the uninsured and underinsured motorist coverage limits from multiple cars owned and insured by the same family. For example, if you had limits of $100,000 uninsured/underinsured motorist bodily injury coverage on the policies for each of your two cars and were injured in a crash caused by an uninsured motorist while driving one of your cars, you could add the limits from your two policies together to help pay for the damages — to a combined limit of $200,000.

Stock

An investment that represents ownership in a corporation.

Term life insurance

An affordable type of policy that provides coverage for a limited period of time, or "term."

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Trust

A legal arrangement whereby control over property is transferred to a person or organization (the trustee) for the benefit of someone else (the beneficiary). Trusts are created for a variety of reasons, including tax savings and improved asset management.

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Will

A legal document containing a person's wishes for his or her property and assets upon death. Unlike trusts, wills are subject to probate proceedings and become public at time of death.

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Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2014 Allstate Insurance Company, Northbrook, IL.

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