Insurance terms, in plain English
Deductibles, endorsements, PIP: the words that show up on your policy, explained without the jargon.
A
- Actual cash value
- Pays the cost to replace damaged property minus depreciation, so older items pay out less.See also: Replacement cost, Depreciation
- Additional insured
- A person or business added to your policy, often a landlord or general contractor, so they are also protected for claims arising from your work.See also: Certificate of insurance (COI)
- Agreed value
- A boat or collector-vehicle policy setting where you and the insurer agree on the value up front, and that amount is paid for a total loss.See also: Actual cash value
B
- Binder
- Temporary proof of insurance issued before the full policy, often needed at a home closing.See also: Declarations page
- Bodily injury liability
- Pays for injuries you cause to other people, including their medical bills and your legal defense.See also: Liability coverage
- Business owner's policy (BOP)
- A package policy for small businesses that combines property, general liability, and business income coverage.See also: General liability
C
- Captive agent
- An agent who represents one insurance company and can only sell its policies.See also: Independent agent
- Certificate of insurance (COI)
- A one-page document proving a business carries insurance, often requested by landlords and clients.See also: Additional insured
- Collision coverage
- Pays to repair your car after it hits another vehicle or object, minus your deductible.See also: Comprehensive coverage
- Comprehensive coverage
- Pays for damage to your car from things other than a collision, such as theft, vandalism, hail, falling trees, or hitting an animal.See also: Collision coverage
D
- Declarations page
- The summary page of your policy listing who and what is covered, your limits, deductibles, and premium.See also: Binder, Limit
- Deductible
- The amount you pay out of pocket on a claim before your insurance pays the rest.See also: Premium
- Depreciation
- The decrease in an item's value over time from age and wear.See also: Actual cash value
- Dwelling coverage
- The part of a home policy that pays to repair or rebuild the house itself.See also: Replacement cost
E
- Endorsement
- A change or add-on to a standard policy, such as water backup coverage or a scheduled piece of jewelry.See also: Declarations page
- Exclusion
- Something a policy specifically does not cover, such as flood damage on a standard home policy.See also: Endorsement
G
- General liability
- Business insurance that covers injuries to others and damage to their property arising from your business.See also: Business owner's policy (BOP)
I
- Independent agent
- An agent who represents several insurance companies and can compare them for you.See also: Captive agent
L
- Liability coverage
- Pays for injuries or damage you are legally responsible for causing to others.See also: Umbrella policy
- Limit
- The most a policy will pay for a covered claim.See also: Deductible
- Loss assessment
- Condo coverage that helps pay your share if your association assesses owners after a large loss.
- Loss of use
- Pays extra living expenses if your home cannot be lived in after a covered loss.
N
- NFIP
- The National Flood Insurance Program, a federal program that provides flood insurance.See also: Exclusion
P
- Personal injury protection (PIP)
- Required in Massachusetts. Pays medical expenses and lost wages for you and your passengers after an accident, regardless of who is at fault.See also: Bodily injury liability
R
- Replacement cost
- Pays to replace damaged property with new items of similar kind and quality, without subtracting depreciation.See also: Actual cash value
U
- Umbrella policy
- Extra liability coverage that pays after your home and auto liability limits are used up.See also: Liability coverage
- Uninsured/underinsured motorist
- Covers your injuries when the at-fault driver has no insurance or not enough of it.See also: Bodily injury liability
W
- Workers' compensation
- Covers medical bills and lost wages for employees injured on the job. Required for almost all Massachusetts employers.See also: General liability
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