Back to top

Insurance 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.

  • #
  • a
  • b
  • c
  • d
  • e
  • f
  • g
  • h
  • i
  • j
  • k
  • l
  • m
  • n
  • o
  • p
  • q
  • r
  • s
  • t
  • u
  • v
  • w
  • x
  • y
  • z

401(k) plan

A type of tax-qualified retirement savings account, offered through an employer, into which employees can put a percentage of earned wages.

More Information:

529 college savings plan

An education savings plan, sponsored by a state or institution, designed to help families set aside funds for future college costs. Any earnings in a 529 college savings plan are tax-deferred.

More Information:


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

Accidental death coverage

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

More Information:

Accident forgiveness

A program offered by some insurance companies in which customers may not lose a discount or incur an accident surcharge following an at-fault accident.

More Information:

Accelerated benefits

Usually having to do with terminal illness or catastrophic circumstances, this feature allows access to a portion of a life insurance policy's death benefit, or payout.


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

Additional interest insured

A person or entity who is protected by another person's insurance. For example, in auto insurance, a leaseholder is protected by the auto insurance of the person who is leasing out the car. Such protection is necessary because the leaseholder has a financial interest in the vehicle. In a home mortgage, protection is provided for individuals or entities that have a financial interest in the home other than mortgage companies. Typically, homeowner policies include a mortgagee provision in the policy that addresses the financial interest of mortgage companies.

More Information:

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.

More Information:


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.

More Information:


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

More Information:

All other perils not enumerated

All causes of loss not listed on an insurance policy.

More Information:

All-terrain vehicle (ATV) insurance

Insurance designed to cover off-road, all-terrain classes of vehicles.

More Information:


A change to the provisions of 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 percent per month, but that translates to an APR of 24 percent (2 percent at 12 months).

More Information:

Annual percentage yield (APY)

The total yearly rate of return on an investment, accounting for the compounding of interest. This allows for the comparison of varying interest-rate agreements by expressing yield in an annualized percentage number.

More Information:


A type of insurance vehicle issued by an insurance company where contributions and earnings are tax-deferred. There are several types of annuities: fixed, variable, immediate, deferred, indexed and equity linked. As an annuity owner, you have control over how long the annuity is invested, when you receive benefits and how often you are paid.

More Information:

Anti-lock braking system

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.

More Information:


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.

More Information:


Any item a person owns or is paying for over time. This can include real estate, personal property, automobiles or other personal possessions. In addition to such tangible items, assets can also be intangible, such as patents or copyrights the insured may own.

More Information:

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).

More Information:

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.


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

More Information:


The driver who caused an accident, either fully or partially.

More Information:

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.

More Information:

Automatic deposit

A regularly scheduled electronic deposit to an account. Also known as direct deposit.

Auto safety ratings

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.

More Information:

Balanced investment strategy

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

More Information:


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 provides a policyholder with car or home insurance. Insurers may use this type of agreement in specific situations when immediate policy issuance or endorsement is not feasible.

More Information:

Blind spot

A portion of the roadway completely or partially obscured to the driver, often by part of the vehicle's body.

More Information:

Boat insurance

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

More Information:

Bodily injury liability coverage

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.

More Information:


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.

Broad-form collision coverage (Michigan)

A type of auto insurance offered in the state of Michigan. If you are more than 50 percent at fault in an accident, your insurance could help pay, except you must pay the deductible. If you are 50 percent or less at fault in an accident, your insurance pays, and you do not have to pay the deductible.

More Information:

Building glass coverage

A type of business insurance coverage that provides extended protection for a property's glass, as well as coverage for temporary board-up services after a loss.

More Information:


The act of obtaining more than one type of insurance policy from the same insurance company. Policyholders usually bundle insurance policies to take advantage of discounts offered by the insurance company. Bundling can apply to obtaining two or more policies, for example, homeowners insurance and auto insurance, or a business owners insurance policy covering both liability and property, to obtain savings.

More Information:

Business owner policy (BOP)

A packaged insurance policy providing small and mid-sized businesses the option to combine property, liability and other insurance coverages into one policy.

More Information:


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

More Information:

Car payment calculator

See "Auto loan calculator".

More Information:

Related terms: auto loan calculator


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

More Information:

Cash investment

A short-term, generally liquid, investment into which you invest cash and typically receive a return in 90 days or less. Examples include money market funds and certificates of deposit (CDs).

Cash value (life insurance)

The portion of the permanent life insurance policy that is available for withdrawals or loans. The cash value earns tax-deferred interest.

More Information:


A restriction put on certain financial products indicating the highest level of earning permitted 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 vehicle offered by a financial institution 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

A used, usually late-model, vehicle that has been inspected for damage, had necessary repairs and is endorsed by a manufacturer or other authorizing body. These vehicles typically carry a limited warranty and as a class are generally under a certain age and mileage.

More Information:


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

More Information:


An individual, business or legal representative presenting a third-party insurance claim against an individual or his or her insurance carrier.

More Information:


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

More Information:

Collision coverage

An auto insurance coverage that typically helps pay to repair or replace your insured car after a covered accident

More Information:

Combined single limit

One number that expresses the maximum amount that the liability coverage of an insurance policy will pay for property damage and bodily injury from a single incident.

More Information:

Commercial use

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.

More Information:

Commercial vehicle

A vehicle used for business purposes.

More Information:

Compounding interest

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

Comprehensive coverage/Comprehensive physical damage coverage

Typically helps pay for covered damages to your insured car resulting from a peril other than a collision, such as theft, windstorm or flood, to name a few.

More Information:

Condominium insurance

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

More Information:


The amount of money you put into a savings plan, such as a 401(k) or 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. In many instances, it can also help build the initial cash value amount in the new permanent policy.

More Information:

Conversion date

The last day you are able to convert your term policy to a permanent policy.

More Information:

Convertible term insurance

Term life insurance that can be exchanged (converted) for a permanent life insurance policy without having to qualify for coverage with another medical exam or risk assessment.

More Information:


The protection provided in an insurance policy.

More Information:

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.

More Information:

Covered loss

Loss or legal liability for which an insurance company will pay benefits pursuant to the terms and conditions of a policy.

More Information:

Covered peril

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

More Information:

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.

More Information:

Credit union

A nonprofit financial institution offering many of the same products and services as a bank. These services include checking and savings accounts, certificates of deposit, mortgages and car loans. Membership in credit unions is sometimes restricted to those in a certain group, such as employees of a company or those in a trade, such as a teachers union. However, many credit unions have relaxed membership requirements over the years, and many people may be eligible to join a credit union based on their location.

More Information:

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.

More Information:


Harm or injury to an individual or property.

More Information:

Data compromise coverage

A type of 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.

More Information:

Death benefit

The payment a beneficiary receives upon the insured's or owner's death.

More Information:

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 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.

More Information:

Declaration page

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

More Information:


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

More Information:

Related terms: premium

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.

More Information:


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

More Information:


The strategy of having a variety of investments in your financial portfolio to hedge and balance against the investments already in it. Ideally, this minimizes the risk inherent in any one investment and increases the possibility of optimizing a return overall. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

More Information:

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.

More Information:


One who operates a motor vehicle.

More Information:

Driver's education

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.

More Information:

Duplicate claim

When the same person makes more than one request to an insurance company for action on an insurance policy following the same incident.

Dwelling protection coverage

Insurance for covered losses stemming from physical damage to a home, subject to certain limitations.

More Information:

Earthquake coverage

A type of insurance protection for damages caused by an earthquake. This is generally not offered as part of a typical homeowners insurance policy and must be purchased as an endorsement, or rider, or as a separate earthquake policy.

More Information:

Effective date

The date on which insurance coverage begins.

More Information:

Eligible rollover distribution

The money in a retirement plan, such as a 401(k), that can be moved to another qualified plan such as an Individual Retirement Account (IRA) without triggering income tax or penalties.

Emergency road services

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

More Information:

Emissions inspection

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.

More Information:

Employee dishonesty coverage

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

More Information:

Employer-sponsored retirement plan

A valuable benefit such as a 401(k) plan that may be offered to you as an employee that may help you save for retirement in a tax-advantaged way.

More Information:

Employment practices liability coverage

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.

More Information:


A provision that changes an insurance policy. Endorsements amend or change coverage in some manner, usually by broadening or restricting coverage.

More Information:

Equipment breakdown coverage

A type of business insurance protection that helps cover costs to repair or replace equipment after a breakdown. Coverage may also include damage done to other property caused by the breakdown, lost business income and extra expenses.

More Information:

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.

More Information:


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

More Information:

Estate planning

Tasks undertaken to efficiently manage a person's estate upon his or her death. Such tasks may include creating a will, setting up trust accounts for beneficiaries, naming guardians for dependents, funeral planning and creating a durable power of attorney to direct the assets and investments. Everyone needs some estate planning, even for a modest estate.

More Information:


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

More Information:

Excluded driver

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


Listed causes of loss, property, locations or endeavors that are not covered under an insurance policy. Insureds may be able to buy coverage for excluded perils separately or by endorsement.

More Information:

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. However, this add-on coverage may not cover the valuables if they're damaged by excluded perils.

More Information:

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 you'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.

More Information:

Fender bender

Typically refers to a minor auto collision which results in little, if any, damage to property.

More Information:

Financed car

A car purchased with a loan. In the case of a financed car, the loan holder (the bank or the finance company) typically requires the vehicle owner to purchase collision and comprehensive coverage.

More Information:

Fire and vandalism coverage

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

More Information:

Fire department charges coverage

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

More Information:

Fixed annuity

This type of annuity offers a specified rate of return to the holder for a defined period of time.

More Information:

Fixed interest rate (CDs and annuities)

An interest rate that does not change for a specified period of time.

Fixed interest rate (life insurance)

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 you to modify your payment. By changing the amount you pay, you also affect the benefit amount, cash value and how long the policy will stay in force.

Floater policy

An insurance policy designed to cover a specific item or category of items. This provides enhanced protection or higher limits for specific items like jewelry, computers or tools.

More Information:

Flood damage title

A branded certificate of title issued, by a state, alerting consumers of a vehicle's flood or water damage history. Criteria for issuing such a title vary by state.

More Information:

Flood insurance

A type of insurance coverage that helps protects a homeowner against covered losses as a result of flooding. Property insurance policies typically do not cover damage caused by flooding. Homeowners can purchase flood insurance through the federal government-run National Flood Insurance Program. A local insurance agent may be able to assist with this purchase.

More Information:


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

GAP coverage

Guaranteed Asset Protection coverage. A type of insurance that typically covers the difference between what your car is worth and what you still owe on it, in the event that your car is declared a total loss due to an accident or theft.

More Information:

Garaging location

The place where an insured regularly parks a car, which may be a location different from the address where the insured lives. The garaging location can affect insurance premium costs.

More Information:

General liability coverage

A type of business insurance coverage that helps protect against customer lawsuits involving injuries and damages.

More Information:

Golf cart insurance

There are typically two ways to insure a golf cart. An endorsement added to a homeowners insurance policy may help provide limited coverage, while broader protection is usually provided through an off-road vehicle policy. Owners should consider the coverages offered by both options and choose the one that better fits their needs.

More Information:

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

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.

More Information:

Guaranteed premium

Your premium payments are fixed and will not change.

Guest medical protection

Can help pay for reasonable and necessary medical expenses if someone is injured in an accident in your residence.

More Information:

Home-based business

A business run primarily out of a dwelling. The property of such businesses may not be covered under a homeowners insurance policy; the business owner may want to consider purchasing a separate business insurance policy.

More Information:

Home inventory

A list of personal property created by a homeowner.

More Information:

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.

More Information:

Hybrid electric vehicle

An automobile operating on two or more sources of energy, usually gasoline and electricity. Typically, the electric motor operates when the car is stopped, thus using less gasoline.

More Information:

Identity restoration coverage

A type of insurance coverage that provides expense reimbursement for out-of-pocket expenses, such as lost wages, mailing costs, and notary fees due to an incident of identity theft. This coverage may be an add-on to a homeowners or auto policy, depending on the insurer.

More Information:

Immediate annuity

This type of annuity requires a single purchase payment upon which you'll begin receiving regular payments for the time period specified in your contract, which could last your lifetime. It is typically purchased by those entering retirement who want a predictable, steady stream of income, regardless of market activity. Also known as an income annuity.

More Information:


The amount paid to another party after a loss.

More Information:

Index funds

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

More Information:

Income loss coverage

A type of 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 loss covered by the policy.

More Information:

Indexed annuity

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

More Information:

Individual Retirement Account (IRA)

A type of savings plan that helps you save for retirement during your working years by allowing you to make contributions up to a certain limit each year and offers certain tax advantages. Two types of IRAs are: (1) traditional IRA, which allows for tax deductible contributions and (2) a non-deductible IRA, which has non-deductible contributions.

More Information:


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

More Information:

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.

Inland marine coverage

A type of business insurance coverage that helps protect mobile goods, such as cargo transported by motor carriers.

More Information:

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.

More Information:

Insurance fraud

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

More Information:

Insurance score

A number representing a combination of factors that can help determine a person's likelihood to incur losses.

More Information:


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

More Information:

Insured (life insurance)

The person whose life is covered by the policy purchased.

Interest rate (debt)

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

More Information:

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.

More Information:

Investment property

Real estate, such as a house or apartment building, purchased with the intent of earning a return on investment. That return can originate either through rents, the property's appreciation in value, or both.

More Information:

Junk title

A branded 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.

More Information:

Currently, there are no terms to display for this letter.


The owner of a building who rents the building, or portions of it, to tenants.

More Information:

Landlord insurance

A type of insurance purchased by property owners that covers risks typical to landlords.

More Information:


One who leases or rents property but does not own it. In real estate, such a person is commonly known as a tenant.

More Information:


A person's legal responsibility for damage to property or injury to another.

More Information:

Liability coverage

Typically helps protect you for damages to others that you're legally obligated to pay.

More Information:


A legal claim against an asset in which the asset can (usually) be confiscated or held if payment of a loan is unsatisfactory. 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.

More Information:

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.

More Information:

Life insurance

Provides payment to a beneficiary that can be the basis of financial stability and security after the death of the insured.

More Information:


A coverage limit determines the most an insurance company will pay for a covered loss under a particular coverage. Some limits apply to each person or occurrence, or to an item or group of items.

More Information:


An asset's ability to be bought or sold in the market without affecting the asset's price.
Assets that can be easily bought or sold are known as liquid assets.

More Information:

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. A person creates a living trust while alive, often to help seamlessly transfer assets to beneficiaries upon the person's death.

More Information:

Long-term care insurance

A type of insurance protection that helps cover the cost of qualified assisted living, nursing homes and home health care for the insured.

More Information:

Long-term investment vehicle

An investment that you do not plan to use for at least 10 or more years.


Value of damage to a person or property.

More Information:

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.

More Information:

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).

More Information:

Manufactured home

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.

More Information:

Manufactured home insurance

A type of insurance policy that provides protection for a manufactured home.

More Information:

Medical payments coverage

A type of auto insurance coverage that typically provides payment, up to specified coverage limits, 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.

More Information:

Mobile home

A term often applied to manufactured homes; however, the terms should not be used interchangeably. "Mobile home" is the term used for homes built before the introduction of the federal Manufactured Home Construction and Safety Standards (also known as HUD Code). Starting in 1976, "manufactured homes" are required to be built to these construction and safety standards. Some insurers may offer insurance policies for manufactured homes but not for mobile homes.

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.

More Information:


Money market fund

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

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.

More Information:

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.

More Information:

Motorcycle insurance

A type of financial protection that covers the owner of a motorcycle against financial loss arising from use of or damage to the vehicle.

More Information:

Motorhome insurance

A type of insurance that helps protect a self-propelled vehicle equipped for living arrangements. The following coverages may be offered in a motorhome insurance policy: liability, collision, comprehensive, personal property, medical payments and personal injury protection.

Motor vehicle repair estimate

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.

More Information:

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.

More Information:

Mysterious disappearance (off premises)

An event in which one loses a piece of personal property while away from the covered home. Coverage would likely be triggered if the only possible explanation for the loss was theft.

More Information:

Named peril policy

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

More Information:


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

More Information:

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.

No-fault insurance

A type of car insurance under which the insurer will help pay to cover damages incurred by an insured as a result of an accident, regardless of fault.

More Information:

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."

More Information:

Original equipment manufacturer

The manufacturer that produced a vehicle's original parts.

More Information:

Original equipment manufacturer parts

Auto or commercial vehicle parts made by the manufacturer of the original vehicle.

More Information:

Other structures coverage

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

More Information:

Owner (life insurance)

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

Paid-up life insurance

A type of contract that establishes a point in time when premium payments cease, but coverage does not.

Payment class

Your payment class is determined by the information in your application and a medical exam. The amount you pay for your annual premium is based in part on your payment class.


A benefit, usually funded by an employer which provides employees a stream of income during retirement.


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

More Information:

Permanent life insurance

A type of policy that does not expire during the life of the insured and combines a death benefit with a savings portion that can build cash value. It is typically more expensive than term life insurance.

More Information:

Permissive use

Granting someone the right to use your vehicle.

More Information:

Personal injury protection

Typically provides coverage for an insured person, covered family members and covered passengers for certain reasonable and necessary expenses, such as medical and hospital expenses, income continuation, loss of services, and funeral expenses for bodily injury caused by a covered accident, regardless of who was at fault.

More Information:

Personal property coverage

Insurance that provides protection against covered losses for damage to personal property.

More Information:

Personal Umbrella Policy

An insurance policy that helps cover 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. This type of policy is sometimes referred to as umbrella insurance.

More Information:

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.

More Information:

Phishing scam

A swindle 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.

More Information:


A written contract for insurance between you and your company.

More Information:

Related terms: premium, deductible

Policy owner (life insurance)

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

Policy term

The length of time for which an insurance policy is valid, unless renewed.

More Information:

Policy value (life insurance)

The total of your premiums paid plus interest minus any policy charges. If you surrender your policy, the value is reduced by any withdrawals, outstanding loans and surrender charges.

Power sports

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

More Information:

Pre-tax contribution

A type of contribution made to a retirement plan. You do not pay taxes on the contributions in the year they are made, but defer taxes until you begin withdrawing from the plan. Usually pre-tax contributions are made to traditional IRAs and most 401(k)s.


The amount paid to procure coverage from an insurance company.

More Information:

Related terms: deductible, policy

Primary driver

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

More Information:

Primary policyholder

The person to whom an insurance policy is issued.

More Information:

Primary residence

The location where a policyholder lives most of the time.

More Information:


The amount of money you invest.

More Information:

Proof of insurance card

A document from an insurance company with policy information, such as the name of the policyholder, the insured property, the policy number and the name of the insurance company providing coverage, that may be used as evidence of insurance.

More Information:

Property damage liability coverage

A term used to describe a type of liability coverage that helps financially protect the insured against damages he or she accidentally cause to another person's property. This type of coverage is typically found in various types of insurance policies, including homeowners, renters and auto

More Information:


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.

Currently, there are no terms to display for this letter.

Rebuilt/Reconstructed title

A branded certificate of title, issued by the state, to inform consumers that the named vehicle had previously been deemed a salvaged vehicle, but has been rebuilt or restored to an operational state and has passed the state's department of motor vehicle inspection standards. Most states insist that rebuilt vehicles meet rigorous standards prior to issuance of a rebuilt or reconstructed title.

More Information:

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.


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

Rebuilt/Reconstructed title

A branded certificate of title, issued by the state, to inform consumers that the named vehicle had previously been deemed a salvaged vehicle, but has been rebuilt or restored to an operational state and has passed the state's department of motor vehicle inspection standards. Most states insist that rebuilt vehicles meet rigorous standards prior to issuance of a rebuilt or reconstructed title.

More Information:

Rental car coverage

Additional coverage purchased from the rental company to cover the renter of a vehicle against damage to the rented vehicle and/or liability arising from an incident that occurs while he or she is in possession of the rented 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 he or she does not carry auto insurance or enough coverage, the driver may need to buy coverage from the rental car company.

More Information:

Rental reimbursement

An optional coverage available with an auto insurance policy that pays a set amount per day for a specific period of time, to rent a vehicle while the insured vehicle is in the process of being repaired or replaced as a result of a covered loss.

More Information:

Renters coverage

See "Renters Insurance"

More Information:

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.

More Information:

Replacement cost

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

More Information:


See "Endorsement."

More Information:


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

More Information:

Rollover IRA

A type of individual retirement account that you fund with a lump-sum distribution from your IRA, employer's retirement plan such as a 401(k), when you change jobs or when you retire. The lump-sum distribution must be deposited in an IRA rollover account within 60 days of job separation to avoid taxes.

More Information:

Roth IRA

A type of individual retirement account that you make 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.

More Information:

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.

More Information:

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.

More Information:

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.

More Information:

Scooter insurance

Insurance coverage that helps protect a motorized scooter, which resembles a small motorcycle. Scooters are often covered by motorcycle insurance policies.

More Information:

Secondary driver

A person who is not the primary driver of a vehicle. Adding a secondary driver to your auto policy may affect your premium rates.

More Information:

Second home

A residence that is not the homeowner's primary residence.

More Information:

Sewer backup

An event that occurs when water or waste water overflows from a sewer in your home (for example a toilet bowl) or backs-up from a drain in your home (for instance a floor drain or sinks), plumbing or other waterways in the home (for example, a bathtub). Sewer backups can occur for a variety of reasons, such as a clog in the homeowner's drain or other plumbing issues

More Information:

Sewer backup coverage

Insurance that helps protect against damage caused by the backup of sewers into a home. This is generally not standard in a home owners policy, but typically can be added on.

More Information:

Sign coverage

A type of business insurance coverage that helps protect owned and lighted signs.

More Information:

Snowmobile insurance

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.

More Information:

Spoilage coverage

An additional protection sometimes included in a business insurance policy 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.

More Information:

SR-22 insurance

A type of auto insurance a state may require for a driver who has been convicted of certain offenses such as driving without insurance or being convicted of a DUI. Also known as Certified risk or Certified policy

SR-22 form

A form that is filed with a state department of motor vehicles to show that 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-26 form

A form filed by an insurer to cancel an SR-22 when that form is no longer needed or the policy is cancelled or is not renewed. Requirements vary by state.

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.


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 ownership in a corporation.


The act of an insurance company seeking reimbursement for damages from the responsible party after paying a claim.

More Information:

Supplemental health insurance

A type of insurance designed to cover various out-of-pocket expenses beyond your regular health insurance coverage.

Surrender charge

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

Target-date fund

A type of mutual fund that is designed with a specific year in mind and takes care of asset allocation and rebalancing for you.


Earnings on an investment taxed at a later point in time, usually when the money is withdrawn. Typically associated with earnings from Traditional IRAs and annuities.

More Information:


Some investments are tax-exempt, which means you don't have to pay income tax on the earnings they produce.

Tax-filing date

The last date in which your tax preparation paperwork can be sent to the government for review—usually April 15 unless an extension is secured.


No taxes are due. With a Roth IRA, for example, no taxes are due on earnings or withdrawals if certain conditions are met.


An account, such as a 401(k), that qualifies for favorable tax treatment from the IRS. It typically is in the form of a deferred or reduced tax liability.

Term life insurance

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

More Information:

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.

More Information:

Time horizon

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

Traditional IRA

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

Total loss

A vehicle is generally declared a total loss when the cost to repair a vehicle is close to or exceeds its actual cash value. Or, some states may mandate for a lesser amount such as when the cost to be repaired is 75% of the vehicle's actual cash value.

More Information:

Totaled car

Term commonly used to describe a vehicle deemed a total loss.

More Information:


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.

Uninsured motorist coverage

A type of auto insurance coverage that helps protect an insured in the event they are involved in an accident with a vehicle driven by someone without liability insurance. It is required in some states.

More Information:


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.

Universal life insurance

Universal life is a type of permanent life insurance. Universal life combines a savings component (called cash value) with a lifelong death benefit; as long as you pay the premium, coverage lasts as long as you live. Universal life typically offers flexible premium and death benefit options.

More Information:

Unscheduled personal property coverage

Protection under a homeowners or renters insurance policy for possessions, such as clothing, appliances, artwork and other movable property, located in a home or apartment. If the item is not specifically listed on the homeowners or renters policy, it is referred to as unscheduled personal property. When a loss occurs it may be covered up to the total limit under this section of the policy. Sublimits may apply to certain categories of unscheduled personal property.

More Information:


Destruction or spoiling of property for criminal intent.

More Information:

Vandalism and malicious mischief

The willful and intentional destruction of another's property. This is typically a named peril on a homeowners insurance policy.

More Information:

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.

More Information:

Variable universal life insurance

This type of permanent life insurance policy offers death benefit coverage with the potential to accumulate cash value. Flexibility is available with premium payments, payment schedules and death benefits. Your premium payments are invested in your choice of a variety of options known as sub-accounts. This effectively increases the cash value accumulation potential as well as the risk.

More Information:

Vehicle history report

A document, often made available by car dealers, that shows if and when a specific used car was involved in an accident or suffered some other type of damage. An auto purchaser may also purchase a vehicle history report independently.

More Information:

Vehicle identification number (VIN)

A standardized 17-character number unique to each vehicle. The components of the 17-character code 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 on the vehicle’s dashboard.

More Information:

Water backup coverage

A type of insurance protection that covers the insured against damages caused by sudden and accidental overflow of water/waste water from sewers or drains in the home and/or overflow of water from a sump pump.

More Information:


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.

More Information:

Currently, there are no terms to display for this letter.

Currently, there are no terms to display for this letter.

Currently, there are no terms to display for this letter.

This content is for informational purposes only and may not be applicable to all situations.

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. © 2020 Allstate Insurance Company, Northbrook, IL.

Life insurance offered through Allstate Life Ins. Co. & Allstate Assurance Co., 3075 Sanders Rd, Northbrook IL 60062; Lincoln Benefit Life Co., 1221 N St. Ste 200, Lincoln NE 68508; American Heritage Life Ins. Co., 1776 American Heritage Life Dr., Jacksonville FL 32224. In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge NY.

Securities offered by Personal Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA, SIPC. Main Office: 2920 South 84th Street, Lincoln, NE 68506. (877) 525-5727. Check the background of this firm on FINRA's BrokerCheck website.

ECC Monitor: OK