Last updated: January 1

terms and definitions

529 college savings plan
529 college savings plan refers to a state-sponsored investment plan that helps a person save money for education costs. Its benefits include tax-free withdrawals for eligible expenses and a low minimum contribution amount.

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Accelerated benefits
This feature allows access to a portion of a life insurance policy's death benefit, or payout, usually in cases of terminal illness or catastrophic circumstances.

An unforeseen situation that may result in damage or injury.

Accident forgiveness
A program that doesn't require an accident surcharge or loss of discount for the customer following an at-fault accident.

Accidental death coverage
An added rider to some life insurance policies that pays upon the named insured's death only if that death is caused by an accident. If the named insured dies from natural causes, there is no coverage under this rider.

Actual cash value
The amount equal to the depreciated value of the replacement cost for a person's property in the event of a covered loss. For example, a fire damaged a person's TV and they need a new one. Five years ago they paid $2,000 for that TV, but today a similar TV costs $2,500. Their insurance provider determines a TV's useful life is 10 years, which means the damaged TV had 50% (five years) of its life remaining. The actual cash value is the replacement cost ($2,500) multiplied by the useful life remaining (50%), which equals $1,250.

A professional who analyzes historical data, statistics and other facts to estimate future risk.

Additional insured
"A person who is jointly insured on another person's policy. They'll be covered by the policy and can file claims themselves. For example, in auto insurance, a person could add one of their parents to their policy as co-owner of the vehicle if the parent doesn't live with them or drive the vehicle regularly. Similarly, with homeowners insurance, if a parent is a co-signer on a mortgage and moves into their child's home, the child can add their parent as an additional insured due to their financial stake and usage of the property.

See ""Additional interest insured""."

Additional interest insured
A person or entity who is protected by another person's insurance.

Additional living expenses coverage
A type of protection in a homeowners insurance policy that helps pay for reasonable extra costs that arise when a policyholder is displaced because of a covered peril.

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 can be known as a field adjuster, an independent adjuster or a claims examiner.

A representative of one or more insurance companies who sells insurance policies for a commission. They are licensed in the state where they work and must comply with all governing statutes and regulations.

All other perils (not enumerated)
All causes of loss not listed on an insurance policy.

All-terrain vehicle (ATV) insurance
ATV insurance covers your ATV if it is involved in a collision. An ATV is a three, four or six wheel motor vehicle design for off-road use.

A change to an insurance policy contract.

Annual percentage rate (APR)
The amount of interest charged each year for borrowing or achieved through investment expressed as a single percentage. The APR is the actual yearly cost of the amount financed. For example, a credit card company may claim that it only charges 2% per month, but that translates to an APR of 24% (2% at 12 months).

Annual percentage yield (APY)
The total yearly rate of return on an investment, accounting for the compounding of interest.

A type of insurance where contributions and earnings are tax-deferred. There are several types of annuities, including fixed, variable, immediate, deferred, indexed and equity linked.

Anti-lock braking system (ABS)
In car insurance, anti-lock braking system (ABS) refers to an automated vehicle braking system that helps prevent a vehicle's wheels from locking up in order to help improve driver control. ABS automatically pumps the brake system to avoid wheel lockup. Most recent-model commercial and personal autos come equipped with ABS.

A process by which an insurance carrier and a homeowner arrive at an agreed value for a loss covered by a homeowners insurance policy. In auto insurance, an appraisal is a process by which a body shop employee or auto damage appraiser estimates the cost to repair a damaged vehicle.

Any item that has financial value. This can include cars, houses and other personal belongings, like computers or jewelry. They can also be intangible items, such as patents or copyrights you may own.

Asset allocation
The strategy of investing your money among several different areas, such as stocks, bonds and cash instruments, to balance risk and return in your portfolio based on your goals, risk tolerance and time horizon. Asset allocation programs do not assure a profit or protect against loss in a declining market.

Asset class
A set of securities that are standardized and act similarly in the financial marketplace. The main financial asset classes are stocks, bonds and money market funds. However, classes can include real property (such as buildings and land) and personal property (such as office furnishings).

The policyholder and/or the individual(s) insured on a policy. Sometimes used in place of "insured" or "policyholder."

In car insurance, at-fault refers to the driver who caused an accident, either fully or partially.

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. Consumers can estimate their car payments by entering variables such as vehicle cost, interest rate and the length of the loan.

Auto safety ratings
In car insurance, auto safety ratings refer to an analysis of how vehicles stand up under various types of crash testing. The National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) are two organizations that conduct and track vehicle crash-test data and provide vehicle safety ratings that detail the ability of vehicles to withstand various types of collisions.

Automatic deposit
In claim payments, this refers to a regularly scheduled electronic deposit to an account. Also known as direct deposit.

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Balanced investment strategy
A method of investing a certain amount of money in a portfolio divided equally in high risk and low risk securities.

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

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

A temporary agreement, usually lasting 30 to 60 days, which gives a policy holder car or home insurance. Insurers may use this type of agreement when immediate policy issuance or endorsement isn't possible.

Blind spot
In car insurance, a blind spot refers to a portion of the roadway completely or partially obscured to the driver, often by part of the vehicle's body.

Boat insurance
Financial protection for a watercraft. Some insurers will add endorsements to a homeowners insurance policy to cover boats; others will require a separate boat insurance policy.

Bodily injury
A reference to the liability coverage that helps pay for injuries sustained by another person in an accident if the insured is at fault. Expenses that fall under this coverage include medical bills, legal fees and lost wages.

See "Bodily injury liability coverage".

Bodily injury liability coverage
Bodily injury liability provides coverage if a covered driver is legally liable for damages resulting from a covered auto accident in which others are injured.

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 known as a maturity date.

For example, a company wants to borrow $1,000, and decides to do this by selling $1 million worth of bonds to investors (you). The company promises to pay you, now a bondholder, 5% interest per year for five years, until its maturity date, with interest paid semi-annually.

Broad-form collision coverage (Michigan)
A type of auto insurance offered in the state of Michigan that requires the insured to pay the deductible if they are more than 50% at fault. If the insured is 50% or less or less at fault, a deductible is not required.

Building glass coverage
Business insurance coverage that provides extended protection for a property's glass, as well as coverage for temporary board-up services after a loss.

Maintaining two or more insurance policies from the same insurance company. Policyholders usually bundle insurance policies to take advantage of discounts offered by the insurance company.

Business owner policy (BOP)
A packaged business insurance policy providing small and mid-sized businesses the option to combine property, liability coverage and other insurance coverages into one policy.

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The termination of insurance coverage by either the policyholder or the insurer before the official end of the policy term.

Car payment calculator
See "Auto loan calculator".

Refers to the company that provides your insurance policy.

Cash investment
A short-term investment that typically yields a return in 90 days or less.

Cash value (life insurance)
Cash value in life insurance refers to the portion of the permanent life insurance policy that is available for withdrawals or loans.

An earning restriction for a specified period. For example, if an annuity has a 3.75 percent ceiling, the most it can earn during the specified period is 3.75 percent, even if the market return was higher.

Certificates of deposit (CD)
A savings option typically offered by banks that earns a fixed rate of interest over a specified period of time. CDs are insured by the FDIC and are used as short-range or mid-range savings options.

Certified pre-owned vehicle
In car insurance, a certified pre-owned vehicle refers to a used vehicle that has been repaired and is endorsed by a manufacturer or other authorizing body.

An insurance claim is a formal request to your insurance company to pay for a covered loss or policy event like a car accident.

A policyholder who files a claim against an individual or their insurance carrier to cover a specific loss. Usually, the insured files the claim themselves, but there are some circumstances when a third party will file the claim on behalf of the insured. An example of this is in health insurance for routine exams or other covered treatments. Typically, claimants don't need to hire an attorney to receive insurance benefits. However, it may be helpful to have one in cases where there are significant losses, or there's a risk the person (or their insurance carrier) responsible for the loss won't pay the claim.

Closing costs
In home insurance, closing costs refers to the processing fees and charges a person pays to their lender when they close a real estate transaction. These costs may include the home appraisal, searches on the home's title and the origination and underwriting of a mortgage loan.

In car insurance, a collision refers to the act of a vehicle striking another vehicle or object.

Collision coverage
Collision coverage is insurance that typically helps pay to repair or replace the insured car after a covered accident.

Combined single limit
The maximum amount that the liability coverage of an insurance policy will pay for property damage and bodily injury from a single incident.

Commercial use
In business insurance, commercial use refers to a classification for vehicles used mainly for business purposes. Commercial use does not apply to vehicles used for commuting to and from a place of business. If business-related use makes up the majority of the vehicle's driving, it is typically considered a commercial use (or business use) vehicle.

Commercial vehicle
In car insurance, a commercial vehicle refers to a vehicle used for business purposes.

Compounding interest
Interest paid on both the principal and the accumulated unpaid interest.

Comprehensive coverage/Comprehensive physical damage coverage
A type of coverage that helps pay for damages to your insured vehicle.

Condo insurance
See "Condominium insurance".

Condominium insurance
Insurance for condominiums that may include coverage for the owner's personal property and liability coverage.

The amount of money you put into a savings plan, such as a 401(k) plan, IRA for retirement or a 529 plan for college.

Contributory negligence
A standard of law in which a party cannot collect damages for a loss for which he or she is in any way at fault, even if someone else's fault is greater. Only a few states apply this standard.

Conversion allowance
A credit the insurance company provides when converting a term life insurance policy to a permanent policy that may help build the initial cash value of the new permanent policy.

Conversion date
The last day a term policy can be converted to a permanent policy.

Convertible term insurance
Term life insurance that can be exchanged for a permanent life insurance policy without needing another medical exam or risk assessment.

The amount of protection provided in an insurance policy.

Coverdell Education Savings Account (ESA)
An account defined by the Internal Revenue Code as an incentive to help taxpayers save for education expenses. A taxpayer may deposit up to $2,000 per year for each student under the age of 18. These deposits are not tax deductible, but interest on them accrues tax-free. The student will not owe tax when the funds are distributed to the extent the amount distributed is not greater than the student's qualified education expenses.

Covered loss
Loss or legal liability that an insurance company covers based on the terms and conditions of the policy.

Covered peril
In home insurance, covered peril refers to an event causing home or property damage that is covered by your insurance. Fire, lightning, and wind and hail damage are some examples of perils that are covered.

Credit score
A numerical standard by which a lender can determine an individual's likelihood of repaying a debt by the agreed terms. A credit score is affected by payment history, length of credit history, debt-to-credit ratio, debt-to-income ratio and other financial factors.

Credit union
A nonprofit financial institution offering many of the same products and services as a bank, including checking and savings accounts, certificates of deposit, mortgages and car loans.

Custodial account
An account set up at a financial institution and managed by an adult for a minor or incapacitated individual. The term also commonly refers to an Individual Retirement Account.

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In health and home insurance, damage refers to harm or injury to an individual or property.

Data compromise coverage
Business insurance protection that helps the insured business cover the cost of notifying customers affected by a breach in electronic data and providing assistance for the customers in monitoring their credit reports and restoring their identities.

Death benefit
In life insurance, death benefit refers to the payment a beneficiary receives upon the insured's or owner's death.

Death benefit options
Some life insurance may offer death benefit options, including a specific benefit that does not vary, a face amount plus the policy value, or the face amount plus premiums paid less on withdrawals and loans.

Debt financing
A way in which a company raises money, through the sale of bonds, stocks or notes to investors or individuals. The company promises the investors that it will repay the money invested plus interest.

Declaration page
The portion of an insurance policy document that contains details of the policyholder's coverage.

The portion of a covered loss you are required to pay.

Deferred annuity
A financial instrument sold by insurance companies that provides income or a stream of income to the payee at a later date of his or her choosing. Generally, the money earned on a deferred annuity is taxed only when the owner withdraws it, thus providing a tax benefit to the owner. A deferred annuity may also provide a death benefit.

The decrease in a property's value due due to age or wear and tear.

The strategy of having a variety of investments in your financial portfolio.

Dollar cost averaging
An investment strategy in which you invest with the same amount of money at regular times. For example, you may buy $1,000 in Stock A every month, regardless of Stock A's current price. Because this means you buy fewer shares when the price is high and more when the price is low, dollar-cost averaging aims to reduce the average cost of the shares you buy. Dollar cost averaging is most common with shares of a mutual fund or a retirement plan. Dollar cost averaging does not assure a profit and does not protect against loss in declining markets.

In car insurance, a driver refers to a person who operates a motor vehicle, such as a car or truck.

Driver's education
In car insurance, driver’s education refers to a formalized program of classroom and behind-the-wheel training for vehicle operators. Many states require minors to pass both sections of the training prior to taking the written and behind-the-wheel tests for a driver's license.

Duplicate claim
More than one request to an insurance company for action on an insurance policy following the same incident.

Dwelling coverage
See "Dwelling protection coverage".

Dwelling protection coverage
Dwelling protection coverage refers to an insurance for losses that result from physical damage to a home.

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Earthquake coverage
A type of insurance that covers damages caused by an earthquake. Earthquake coverage type is typically purchased as an endorsement or as a separate earthquake policy.

Effective date
The date on which insurance coverage begins.

Electric vehicle
A vehicle that is powered by one or more electric motors.

Eligible rollover distribution
Money in a retirement plan that can be moved to another qualified plan without triggering income tax or penalties.

Emergency road services
This additional car insurance pays a set amount of money toward certain types of assistance, such as towing, jump-starts and changing flat tires.

Emissions inspection
In car insurance, emissions inspection refers to a test conducted on an automobile to determine how much pollutant the automobile expels. Some states and/or local authorities test cars for carbon emissions each year prior to license plate renewal.

Employee dishonesty coverage
A type of business insurance coverage that helps protect against employee theft of money, securities or property.

Employer-sponsored retirement plan
A pre-tax benefit, such as a 401(k) plan, that may be offered to an employee to help save for retirement.

Employment practices liability coverage
Business liability insurance that covers an employer for wrongful acts arising from the employment process. Often, claims involve allegations of wrongful termination, discrimination, whistleblowing or sexual harassment. This coverage is sometimes available on a stand-alone basis or as an endorsement to a directors and officers (D&O) liability policy.

A provision that changes an insurance policy by broadening or restricting coverage.

Equipment breakdown coverage
Business insurance that covers the costs to repair or replace equipment after a breakdown.

Equity financing
A method in which a company raises money through the sale of either common or preferred stock to investors or individuals. In return for their investment, investors receive share capital or part-ownership in the corporation.

A term that refers to all the assets an individual owns, such as real estate, art collections, jewelry, investments and life insurance.

Estate planning
In life insurance, estate planning refers to tasks undertaken to manage a person's estate upon his or her death. This can include creating a will, setting up trust accounts for beneficiaries, naming guardians for dependents, funeral planning and creating a power of attorney.

In home insurance, an estimate refers to an evaluation of the cost to repair or replace damaged property.

Excluded driver
A driver who is specifically excluded from coverage under an auto insurance policy.

Any loss or damage that isn't covered by your insurance policy. This is a way for insurance companies to more narrowly define what is and isn't covered in your standard policy. They also help keep premiums fair by eliminating the possibility for insured individuals at risk for unusual disasters or catastrophes to request a large payment. You can usually find them after the main coverage sections in your policy, as well as in the definitions, conditions and endorsements sections.

Exclusions vary based on the type of insurance policy you have. For example, in home insurance, exclusions may include earth movement like landslides and sinkholes, power failures and nuclear hazards. For auto insurance, damages resulting from wear and tear and electrical or mechanical breakdowns may be listed as exclusions.

Expiry date
The last day the policy or rider(s) can be extended to.

Extended coverage on jewelry, watches and fur
Additional insurance protection that can be purchased to help cover the loss of jewelry, watches and furs with values that exceed the personal property limit on a homeowners insurance policy. This add-on coverage may not cover the valuables if they're damaged by excluded perils.

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Face amount (life insurance)
This is the amount of a life insurance policy's death benefit at the time of issue. The actual amount a beneficiary will receive may be less if they've taken out a loan or made a withdrawal. In some cases, the cash value and premium payment history can also influence the actual benefit paid.

Family liability protection coverage
Personal liability insurance coverage that helps protects the insured and family living with them against claims and lawsuits if he or she injures others or damages their property in an accident.

Fender bender
In car insurance, fender bender typically refers to a minor auto collision with little, if any, property damage.

Financed car
In car insurance, a financed car refers to a car purchased with a loan. The lender will typically require the vehicle owner to purchase collision and comprehensive coverage.

Fire and vandalism coverage
A type of business insurance coverage that helps protect against loss caused only by fire or vandalism.

Fire department charges coverage
A type of homeowners insurance protection that helps pay reasonable fees for fire department services related to a covered fire, up to a specified limit.

Fire insurance
Fire insurance provides additional coverage for damage and losses caused by a fire.

Fixed annuity
An annuity that offers a specified rate of return to the holder for a defined period of time.

Fixed interest rate (CDs and annuities)
An interest rate that does not change for a specified period of time.

Fixed interest rate (life insurance)
In life insurance, a fixed interest rate refers to an interest rate that may change over the life of the policy but offers a minimum guaranteed rate.

Flexible premium adjustable life insurance
A type of permanent life insurance policy that allows the policyholder to modify their payment. By changing the payment amount, they also affect the benefit amount, cash value and how long the policy will stay in force.

Floater policy
Also referred as contents insurance, is an insurance policy designed to cover a specific item or category of items that require a higher limit, such as jewelry.

Flood damage title
In home insurance, flood damage title refers to a certificate of title issued by the state that lists a vehicle's flood or water damage history.

Flood insurance
Flood insurance is a type of insurance that helps protect a homeowner against covered losses as a result of flooding.

The type of coverage and endorsements used on a policy. Each form has a name, date and number to provide continuity throughout an insured's policy.

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Garaging location
In car insurance, garaging location refers to the place where an insured regularly parks a car. This location may differ from the address where the insured lives.

General liability coverage
Business liability insurance coverage that helps protect businesses against customer lawsuits involving injuries and damages.

Golf cart insurance
Protection for a golf cart is usually provided through either a homeowners insurance policy or an off-road vehicle policy. Homeowners insurance adds an endorsement to the policy that may help provide limited coverage, while off-road vehicle insurance offers broader protection.

Grace period
A period during which you must make a payment to keep your policy in force. You will be notified if your policy enters into this time frame.

Graduated driver licensing
In car insurance, graduated driver licensing refers to a practice implemented by many states granting progressing stages of automobile operator permission to new drivers in the hope of improving driver safety. Under such a system, a teenager, usually around the age of 16, may obtain a provisional driver's license that allows him or her to drive, but with certain restrictions on hours and passengers. When a driver makes it through the probationary period, which varies in length by state, he or she then receives full driving privileges. Driver licensing laws vary by state.

Guaranteed Asset Protection (GAP coverage)
GAP insurance covers the difference between what the car is worth and what is still owed on it if it's declared a total the difference between what the car is worth and what is still owed on it if it's declared a total loss.

Guaranteed premium
A premium payment that is fixed and will not change.

Guest medical protection
Guest medical protection is a type of homeowners insurance coverage that pays for reasonable and necessary medical expenses if someone is injured in an accident in your residence.

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Hazard insurance
A homeowners insurance policy that covers the structure of the home only.

HOA fees
In condo insurance, HOA fees refer to monthly or annual fees collected from each resident who live in a condo or housing development. These fees go toward maintaining and improving the living conditions of the building you live in, and the amounts can vary based on factors like property type, location and number occupied or unoccupied units.

Home inspection
In home insurance, home inspection refers to a process in which an insurance inspector visits your home to check for any potential hazards.

Home insurance
Home insurance protects the home of the policyholder against damage and covers their personal liability for covered injuries, or damages to others.

Home inventory
In home insurance, home inventory refers to a list of personal property and their estimated financial value created by a homeowner.

Home loan
In home insurance, home loan refers to a mortgage agreement with a lender that provides a home buyer with funds needed to purchase a property. The lender reserves the right to take back the property if the borrower defaults on payments.

Home warranty
In home insurance, home warranty refers to a contract agreement that provides a homeowner with discounted repair and replacement services for a set period of time.

Home-based business
A business run primarily out of a dwelling. These properties may not be covered under a homeowners insurance policy. Business owners are encouraged to purchase a separate business insurance policy.

Homeowners association (HOA)
In condo insurance, the HOA is an organization that creates and enforces regulations for residents within a subdivision, planned community or condominium.

Homeowners insurance
See "Home insurance".

Hybrid electric vehicle
In car insurance, a hybrid electric vehicle refers to a vehicle that operates on two or more sources of energy, usually gasoline and electricity.

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Identity restoration coverage
Identity protection insurance coverage that reimburses out-of-pocket expenses due identity theft.

Immediate annuity
An annuity that requires a single purchase payment that distributes regular payments for the time period specified in your contract.

In force
A term used to describe a policy on which the premium is paid and the insured has met the policy conditions regarding coverage.

Income loss coverage
Homeowners insurance that helps replace a landlord's lost earnings for the period in which a tenant is unable to occupy the insured property due to a covered loss.

The amount paid to another party after a loss.

Index funds
A type of mutual fund designed to replicate the performance of established securities indices, such as the S&P 500.

Indexed annuity
A type of an annuity in which the performance is linked to a specified market index, such as the S&P 500.

The rate at which the price of goods and services rises as purchasing power declines. The central banks for most countries try to keep inflation around 2-3 percent per year. U.S. inflation rates are tracked by the Consumer Price Index and published by the U.S. Bureau of Labor Statistics.

Inland marine coverage
A type of business insurance coverage that helps protect mobile goods, including cargo transported by motor carriers.

Insurable interest
A factor, financial or otherwise, that gives a person grounds to file a claim in relation to a loss covered by an insurance policy.

Insurance fraud
Any act a person commits in order to obtain a payment falsely from an insurance company.

Insurance score
A rating calculated by insurance companies to help determine the likelihood of you filing an insurance claim while under coverage. It's based on your credit rating and affects the cost of your insurance premiums. This means lower scores are higher risk, and therefore will result in higher premiums. On the flip side, a high insurance score will result in lower premiums. Take note that some states don't allow the use of credit as a determining factor for auto and home insurance rates. The prohibited states are California, Hawaii, Massachusetts and Michigan for auto rates, and California, Massachusetts and Maryland for home rates.

Insurance scores range from 200 to 997, with scores at 770 or higher considered favorable, while scores at 500 or below are poor. Several factors determine your insurance score, including payment history, outstanding debt, credit history length, pursuit of new credit and credit mix, among others. Know that your insurance score is not permanent, and can be improved through a number of ways like paying your bills on time and limiting the number of claims you file over a certain period of time.

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

Insured (life insurance)
The person whose life is covered by the life insurance policy purchased.

The name of the insurance company that provides you with financial protection for losses covered under your policy. The insurer has many responsibilities, from designing the policy and setting agreement terms, to creating insurance quotes and handling claims. To find out who your policy's insurer is, check your policy declarations page.

Sometimes people get "insurer" confused with "insured" and "broker" but they each mean something different. The insured is the person covered under the policy, while a broker sells policies on behalf of insurers. For example, if you buy an insurance policy directly from Allstate, then Allstate would be the "insurer" and you would be the "insured." If you buy an insurance policy from someone independent of the insurance company, that person would be a "broker".

Interest rate (debt)
The percentage of money you pay on the amount you owe on debt such as credit cards, mortgages and loans.

Interest rate (earnings)
The percentage of money you earn on your investment.

An item purchased with the hope that it will generate income or increase in value in the future. In economics, investments are current purchases of goods that are not consumed, but retained to create future wealth. In finance, one purchases an investment with the expectation that it will increase in value and provide future income.

Investment property
Real estate purchased with the intent of earning a return on investment.

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Jewelry appraisal
Related to contents insurance, a detailed document that assesses a piece of jewelry to determine its montary value. The description may include the jewelry's weight, materials and markings.

Junk title
In car insurance, a junk title refers to a certificate of title that is issued by a state department of motor vehicles when the vehicle is not safe for use on the road. A vehicle with a junk title typically has no resale value, except as a source of parts, and can usually not be re-titled for road use without overcoming significant state inspection hurdles.

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In home insurance, the landlord refers to the owner of a building who rents the building, or portions of it, to tenants.

Landlord insurance
Landlord insurance is purchased by a property owner that covers risks associated with landlords.

In renters insurance, the lessee refers to one who leases or rents property but does not own it. In real estate, such a person is commonly known as a tenant.

Legal responsibility for damage to property or injury to another person.

Liability coverage
Liability coverage covers damages to others that the insured is legally obligated to pay.

A legal claim against an asset that is typically used as collateral to satisfy a debt. Some examples where a lien can be enforced include a loan on an automobile by a credit union or a mortgage loan held by a bank.

Lien holder
A person or company with a legal claim, or lien, against a property due to lack of payment.

Life insurance
Life insurance provides payment to a beneficiary after the death of the insured.

The highest amount your insurance company will pay under a policy for a covered loss. Some limits apply to each person or occurrence, or to an item or group of items. While certain coverages allow you to choose your limits, some states require you to buy specific minimum levels of car insurance coverage.

An asset's ability to be bought or sold in the market at its existing value.

Refers to how easily and quickly an investment, asset or security can be converted into cash.

Living trust
An agreement that names a trustee who holds legal possession of a fund or an asset for the benefit of another person or entity, known as the beneficiary.

Loan estimate
A form that provides important details on a mortgage you've requested, including the loan terms, projected payments, costs at closing and other considerations. This can be obtained by using a home loan calculator.

Long-term care insurance
Long-term care insurance refers to a type of life insurance protection that helps cover the cost of qualified assisted living, nursing homes and home health care for the insured.

Long-term investment vehicle
An investment that is not planned for use for at least 10 or more years.

The value of damage to a person or property.

Loss assessment coverage
Loss assessment coverage helps with a portion of damage or loss in a common area if living in a community with an HOA.

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 damage is repaired and the business is back and operating.

Loss of use
In property insurance, a type of coverage that can help by reimbursing you for reasonable increases in living expenses when a covered loss makes your home uninhabitable. This may include payments for the cost of rent, hotel, food and other expenses. Loss of use coverage in a property policy may refer to additional living expense (homeowners, renters or condo insurance) or fair rental value (landlord insurance policy).

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Manufactured home
In home insurance, a manufactured home, commonly known as mobile homes, is a home dwelling unit assembled in a factory and shipped to the building site. Manufactured homes may also be referred to as prefabricated, or prefab, homes and have a permanently attached, wheeled chassis, which allows them to be moved from the manufacturer to the site, or from site to site.

Manufactured home insurance
A policy that provides protection for a manufactured home. Also known as mobile home insurance.

Medical payments coverage
Insurance that pays for the insured, covered family members and covered passengers for their reasonable and necessary medical treatment for bodily injury or funeral expenses caused by a covered car accident.

Mobile home
In home insurance, mobile home refers to homes built before the introduction of the federal Manufactured Home Construction and Safety Standards (also known as HUD Code).

Modal factors
A multiplier used by a life insurance company to determine your premium payment based on how often you wish to pay-monthly, quarterly or annually.

Money market fund
The lowest-risk type of mutual fund that invests in Treasury bills, negotiable certificates of deposit and similar short-term investments.

Moral hazard
Describes situations in which an insured person may take bigger risks that they otherwise wouldn't take if they weren't insured. This arises when the insured person has limited responsibility for any negative outcomes that occur. For example, a property owner buys home insurance for their property with the understanding that they will avoid situations that may damage it. Because they have insurance, they may be less inclined to protect the property since the insurance company will cover any losses if the property is damaged in a disaster. This creates a moral hazard.

Mortgage calculator
Mortgage calculator refers to an automated tool that helps estimate mortgage payments.

Mortgagee clause
A provision on a homeowners insurance policy that lists any lenders, or mortgagees, on a home. Should the insured void the policy by some act, such as arson, this clause can help protect the lender's investment.

Motor vehicle insurance
Insurance that covers risks associated with cars, trucks, motorcycles, and other road vehicles. The definition of a motor vehicle may vary by state. A policy may include liability coverage (which helps cover damages caused as a result of the driver's negligence); comprehensive and/or collision coverage, for damage to the motor vehicle itself; medical payments coverage; and/or uninsured motorist coverage.

Motor vehicle repair estimate
In car insurance, a motor vehicle repair estimate refers to a document that provides a description of the services performed, parts used to repair, and the estimated cost for parts and labor necessary to repair the vehicle.

Motorcycle insurance
Motorcycle insurance that covers a motorcycle, scooter or three-wheeled vehicle and its driver in the event of a collision.

Motorhome insurance
Insurance that helps protect a self-propelled vehicle equipped for living arrangements. Motorhome insurance policies may include: liability, collision, comprehensive, personal property, medical payments and personal injury protection.

Mysterious disappearance (off premises)
In home insurance, mysterious disappearance refers to a loss of personal property by theft while away from the insured home.

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Named peril policy
An insurance policy that helps protect against only certain perils or causes of loss that are stated in the policy.

The failure to use reasonable care, which may result in injury or damage to people or property.

Net worth
The total wealth of a person or entity minus all liabilities. This is a key measure of how much an entity or a person has. In business, net worth is also known as book value or shareholders' equity.

No-fault insurance
A type of car insurance that will help pay for damages incurred by an insured as a result of an accident, regardless of fault.

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The constant exposure to a harmful or hazardous condition that is likely to cause an accident.

Open peril
A term describing an insurance policy that covers losses caused by any peril, unless it is specifically excluded or limited in the policy. Also known as "all-risk".

Original equipment manufacturer (OEM)
The manufacturer that produced a vehicle's original parts.

Original equipment manufacturer parts
In car insurance, this refers to auto or commercial vehicle parts made by the manufacturer of the original vehicle.

Other structures coverage
Other structures coverage helps protect buildings or structures on an insured residential property that are separate from the home, such as detached garages, storage sheds and fences.

A person who controls the insurance policy. The owner is different from the insured, although the owner and insured can be the same person.

Owner (life insurance)
The same as the insured if no other person is named in the application as the owner. The owner controls the life insurance policy during the lifetime of the insured.

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Paid-up life insurance
In life insurance, this refers to a contract that establishes a point in time when premium payments end but coverage does not continue.

Payment class
A premium payment category determined by the insured's application and a medical exam.

An employer funded benefit that provides retirement income.

Any hazard that can cause a loss to a home, business or vehicle.

Permanent life insurance
Permanent life insurance refers to a policy that doesn't expire during the life of the insured and combines a death benefit with a savings portion that can build cash value.

Permissive use
In car insurance, this refers to granting someone the right to use your vehicle.

Personal injury protection
Personal injury protection (PIP) refers to a coverage for an insured person, covered family members and covered passengers for certain reasonable and necessary expenses caused by a covered accident.

Personal liability
Personal liability refers to a type of insurance coverage that protects you financially if you're legally responsible to pay for injuries or damages done to other people or property. It covers expenses like medical bills, legal fees and repair costs.

Personal property
Items within or attached to a home that a person owns, including clothing, furniture, electronics and kitchenware. Property insurance, like homeowners or renters, typically includes protection for a person's personal property if it's destroyed, damaged or stolen due to a covered peril.

Personal property coverage
Personal property coverage refers to an insurance that provides protection against covered losses for damage to personal property.

Personal Umbrella Policy
Personal Umbrella Policy (PUP) is an insurance that covers a person for liabilities that either may exceed the limits on the residential or vehicle insurance policy, or may cover risks not covered by the underlying policy.

Personal watercraft
A watercraft, typically smaller than a boat, that is powered by a jet drive engine. These vehicles are often covered under boat insurance policies.

Phishing scam
A fake message in which the perpetrator sends an email that purports to be from a lawful business, for example a person's bank. The recipient is directed to a fraudulent website that instructs the person to enter personal information, such as a Social Security Number or bank account number. The perpetrator then uses this information to commit identity theft.

A written insurance contract between you and your insurance company.

Policy owner (life insurance)
The person who has the right to all privileges under the contract of life insurance and controls the policy. Generally, the owner and the insured are the same person.

Policy term
The length of time during which an insurance policy is valid, unless renewed.

Policy value (life insurance)
The total of your premiums paid, plus interest, minus any policy charges in your life insurance policy.

Refers to the person who owns and is protected under an insurance policy. Most car, home and renters insurance policies automatically cover the policy holder's immediate family members. If they don't, the policyholder may be able to add others to their policy as additional insured.

Power sports
A term for vehicles that are not automobiles, including motorcycles, off-road vehicles, recreational vehicles, watercraft and snowmobiles. Specialized insurance policies can be purchased to help protect a power sports vehicle.

The amount you pay an insurance company in exchange for coverage.

Pre-tax contribution
A type of contribution made to a retirement plan that doesn't require taxes to be paid on contributions in the year they are made. Taxes are deferred until withdrawal. Pre-tax contributions are typically made to traditional IRAs and most 401(k) plans.

Primary driver
The person indicated on an auto insurance application as the person who will drive the insured vehicle most often.

Primary policyholder
The person to whom an insurance policy is issued.

Primary residence
The location where a policyholder lives most of the time.

The amount of money you invest.

Proof of insurance card
A document from an insurance company with policy information to show proof of insurance. This may include the name of the policyholder, the insured property, the policy number, and the name of the insurance company providing coverage.

Property and casualty insurance
Property and casualty insurance covers the insured's structure, property, and belongings in the event of vandalism or theft.

Property damage liability coverage
A type of liability coverage that helps financially protect the insured against damages accidentally caused against another person's property.

Property insurance
A type of insurance that protects the property a person owns, as well as the contents within. Examples of property insurance include homeowners and renters insurance, and covers perils like fire, hail, vandalism and theft.

A legal document which is required by and filed with the Securities and Exchange Commission. It provides details and facts about an investment offering for sale to the public so that a consumer can make an informed decision at purchase.

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The insurance company's estimated cost for an insurance policy. Factors such as type of coverage and personal details can affect the cost. For example, when getting a home insurance quote, you may be asked where the home is located, the type of plumbing system, and other specifics.

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Rate of return
The amount of money an investment generates over a given period of time as a percentage of the amount of principal originally invested.

Real property
A term in homeowners insurance that refers to the land and any structures attached to it, such as your house, garage and fence.

The changing of the percentages of different types of investments in a portfolio.

Rebuilt/Reconstructed title
A state-issued certificate of title that informs consumers that the named vehicle was previously a salvaged title, but has been rebuilt or restored. To have this title, the named vehicle must have passed the state's department of motor vehicle inspection standards.

Rental car coverage
Additional coverage purchased from the rental company to cover the renter of a vehicle against damage to the vehicle and/or liability arising from an incident that occurs while the renter is in possession of the vehicle. A driver's personal auto policy generally provides liability coverage and may cover damage to the rented vehicle, and the renter's own comprehensive and collision coverage may cover damage to the rented vehicle. However, if there is not sufficient auto insurance or coverage, the driver may need to buy coverage from the rental car company.

Rental reimbursement
In renters insurance, this refers to an optional coverage that pays for a rental for a specified time period.

Renters coverage
See "Renters Insurance".

Renters insurance
Renters insurance refers to a policy for individuals who rent or lease a home, condo or apartment.

Replacement cost
The amount your insurance company pays to replace a lost or damaged item with a new, equally valued or similar item at the current market price. For example, your TV and stereo were stolen. You paid $,8.000 for them 10 years ago, but new models of similar kind cost $11,000 today. With replacement cost, your insurance company pays you $11,000 (minus your deductible) to replace the stolen TV and stereo.

See "Endorsement".

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

Rollover IRA
Rollover IRA refers to a retirement account that is funded with a lump-sum distribution from your IRA when you change jobs or you retire.

Roth IRA
A Roth IRA is an individual retirement account with non-deductible contributions up to a certain limit throughout your working life where earnings grow tax-deferred. Unlike traditional IRAs, withdrawals are tax-free but contributions are not deductible.

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Salvage title
In car insurance, a salvage title refers to a branded, state-issued title given to a vehicle that has been damaged in the past and is considered a total loss by an insurance company that paid the claim. The factors that determine when a salvage title is issued vary between states, but some of the more common damages requiring a salvage title include collision, fire and flooding. A salvage title can also apply to vehicles that were stolen and have missing parts.

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. But there are still significant risks that come with buying a salvage title car, including difficulty financing, the vehicle's unknown history, its low trade-in and insurance values, high interest and short-loan terms. It's important to thoroughly research a salvage title car before buying it to avoid any unpleasant surprises.

Salvage vehicle
In car insurance, this term refers to a vehicle with a state-issued salvage title. This title is issued when a vehicle is repaired and passes a state-recognized safety inspection after being declared a "total loss" by an insurance company.

A list of various add-ons, exclusions or clarifications in your policy, such as mold protections.

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.

Scooter insurance
Scooter insurance helps protect a motorized scooter, or small motorcycle. Scooters are often covered by motorcycle insurance policies.

Second home
In home insurance, this refers to a residence that is not the homeowner's primary residence.

Secondary driver
In car insurance, this term refers to a person who is not the primary driver of a vehicle. Adding a secondary driver to your auto policy may affect your premium rates.

Sewer backup
In home insurance, this refers to an event in which water or waste water backs up or overflows from a home's main sewer line. Examples where sewer backups occur include sinks, toilets, bathtubs or drains. Clogged pipes and other various plumbing issues can cause sewer backups.

Sewer backup coverage
Home insurance that helps protect against damage caused by the backup of sewers into a home.

Sign coverage
Business insurance coverage that helps protect owned and lighted signs.

Snowmobile insurance
Snowmobile insurance refers to a type of insurance protection for a snowmobile, which is a motorized vehicle that runs over the snow or ice on tracks and typically carries up to two people.

Spoilage coverage
Additional business insurance protection to help cover, up to a certain limit, the cost of food that spoils in a refrigerator due to a power outage caused by a covered peril.

SR-22 form
A DMV form that proves the insured meets the state's minimum liability insurance requirements. SR-22 requirements vary by state, but often states require an SR-22 of drivers convicted of certain offenses, such as driving without insurance.

SR-22 insurance
SR-22 insurance refers to a policy that a state requires for a driver who has been convicted of certain offenses (e.g. driving without insurance or being convicted of a DUI), also known as Certified Risk or Certified Policy.

SR-26 form
A form filed by an insurer to cancel an SR-22 when the policy is cancelled or is not renewed.

Stackable coverage
A type of uninsured/underinsured motorist coverage in which policyholders combine the limits of their coverage for each of their insured vehicles, also known as "stacking." For example, a policyholder has uninsured/underinsured motorist coverage with limits of $100,000 on two policies on two vehicles. If they're injured when an uninsured motorist hits one of the vehicles, a "stackable" policy will cover the costs up to the combined limit of $200,000. Coverage for stacking varies by policy and state law. States with stacking may allow insurers to limit stacking through policy wording.

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.

An investment that represents partial ownership in a company.

When an insurance company seeks reimbursement for damages from the responsible party after paying a claim.

Supplemental health insurance
Supplemental health insurance is designed to cover various out-of-pocket expenses beyond regular health insurance coverage.

Surrender charge
The cost for early termination of a life insurance policy, annuity contract or other investment.

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Target-date fund
A mutual fund that allocates assets and rebalances on the owner's behalf for a set period of time.

Earnings on an investment that is taxed at a later point in time, usually when the money is withdrawn.

Income or transactions that are free from tax at the federal, state or local level.

Tax-filing date
The last date in which preparation paperwork can be sent to the government for review unless an extension is secured.

Goods or services that don't require taxes to be paid.

An account that qualifies for favorable tax treatment from the IRS.

Term life insurance
Term life insurance refers to an affordable type of policy that provides coverage for a limited period of time, or "term".

Testamentary trust
A trust, usually established through instructions in a person's will or through the provisions of a living trust, that becomes effective upon an individual's death.

A type of insurance coverage that protects you against losses or damage caused when someone steals your property. This coverage is included in most homeowners insurance policies.

Time horizon
The amount of time an individual anticipates leaving their money invested.

Title insurance
A form of indemnity insurance that protects lenders and homebuyers from financial loss due to defects in a title to a property. Some of the risks it covers include flawed records, incorrect ownership and falsified documents. The most common claims filed against title insurance are back taxes, liens from mortgage loans, home equity lines of credit (HELOC) and easements, and conflicting wills.

There are two types of title insurance: lender's title insurance and owner's title insurance. Lender's title insurance is the more common of the two types of title insurance, and it's bought by the borrower to protect the lender in situations where the seller wasn't legally able to transfer the title of ownership rights. Owner's title insurance is bought by the seller to protect the buyer's equity in the property. Lender's title insurance is required to get a mortgage loan, while owner's title insurance is optional.

Total loss
Refers to an insured property—like a car or house—that has been damaged so severely, the cost to repair or replace the property is more than the value of what it's insured for. In general, the insured should qualify to receive a payout from their insurance company for the full insured value of the lost property. However, a maximum settlement is never guaranteed, and the settlement amounts themselves depend on the type of coverage protecting the lost property.

There are two types of total loss: actual total loss and constructive total loss. The first means the property is completely destroyed, with no value or use left, while the second means the property isn't completely destroyed, but repair costs would still exceed the property's insured value. For example, in home insurance, if your house burns to the ground and there's nothing left of it, this would be an actual total loss. In the same scenario, let's say the fire destroyed only your house's ground floor and basement, but left the second floor unharmed. Although your house wasn't destroyed completely, the repair costs for the damaged parts were greater than your house's insured value, making this a constructive total loss.

Totaled car
In car insurance, a totaled car refers to a vehicle that has been deemed a total loss.

Traditional IRA
Traditional IRA is a type of individual retirement account where contributions may be tax deductible and earnings grow tax-deferred. Withdrawals may be subject to income tax.

A legal arrangement that transfers control over property to a person or organization (the trustee) for the benefit of someone else (the beneficiary). Trusts can increase tax savings and improve asset management.

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An insurance professional who evaluates a potential risk for insurance coverage. The term may also refer to an employee of a bank or other financial institution that issues and distributes securities.

A process insurers use to determine the level of risk in insuring a person or business. If they deem there is an acceptable risk, the insurance underwriter calculates the appropriate price coverage.

Uninsured motorist coverage
Insurance coverage that protects the insured if they are involved in an accident with someone who doesn't have liability insurance.

Universal life insurance
A permanent life insurance that combines a savings component (called cash value) with a lifelong death benefit.

Unscheduled personal property coverage
Protection for possessions located in a home or apartment that are not individually listed in the homeowners or renters insurance policy.

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In home insurance, vandalism refers to destruction or spoiling of property for criminal intent.

Vandalism and malicious mischief
In home insurance, these concepts refer to the willful and intentional destruction of another's property.

Variable annuity
This type of annuity is an insurance company product that is designed to accumulate tax-deferred retirement savings and allows you to participate in the markets. The return fluctuates positively or negatively based on the market performance of the underlying investment options, sometimes called investment portfolios or subaccounts. Variable annuities are sold by prospectus.

Variable universal life insurance
Permanent life insurance policy that offers death benefit coverage with the potential to accumulate cash value.

Vehicle history report
In car insurance, this refers to a document that shows if and when a used car was involved in an accident or was damaged.

Vehicle identification number (VIN)
In car insurance, the VIN refers to a standardized 17-character number unique to each vehicle, although some classic cars have less than 17 characters. The components of the number are used to identify the vehicle and include information about the manufacturer, year, model, body type and serial number. VIN numbers are the leading identifier of vehicles and are usually located in several places on a vehicle, including on the front door frame and the vehicle's dashboard.

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Water backup coverage
Water backup coverage is a type of insurance protection that covers damage caused by sudden and accidental overflow of water/waste water from sewers, drains and sump pumps.

A legal document that expresses how a person's assets should be distributed upon death.

A type of property insurance that covers your home if it's damaged by wind or hail. While most standard homeowners insurance includes windstorm coverage, people who live in a high-risk area for tornadoes and hurricanes may not have wind and hail coverage included in their policy, and will need to purchase this coverage separately.

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