You know the song “The Name Game”? The one you probably sang at summer camp or in your kindergarten music class? The lyrics go a little something like this (go on, insert your own name!):
Shirley! Shirley, Shirley
Bo-ber-ley, bo-na-na fanna
Fo-fer-ley, fee-fi-mo-mer-ley, Shirley!
Well, isn’t that sometimes what insurance terminology sounds like? A whole lot of mumbo jumbo legalese strung together across one loooong document. It’s enough to make anyone’s head spin!
But as we always say at Marble: knowledge is power, and knowing the correct terminology puts you back in control of your insurance. (Plus, you’re less likely to sign up for a policy that doesn’t properly cover you.) That’s why we’ve put together a glossary of common insurance terms, written in plain ol’ English, so that you can understand your policies from top to bottom.
Confused by something and can’t find it here? We’d love to hear from you! And definitely check back in on this post, because we’ll be updating this as we get feedback from Marble members.
General Terms
- Deductible: A deductible is the amount of money you have to pay on an insurance claim before the insurance company will pay for you. For example, if you make a claim for a $3,000 vet bill and your deductible is $500, you’ll pay the $500 first and then the insurance company will reimburse you for the rest of the veterinary bill (all $2,500 of it).
- Endorsement: An insurance endorsement or insurance rider is a change to an insurance policy. It allows you to customize an out-of-the-box insurance policy. You can go deep on insurance riders in our blog post here.
- Insurance Claim: This is the request by a policyholder to receive compensation from the policy provider.
- Lapse: A lapse refers to the period in which you didn’t have insurance because your policy ended and there was no new coverage to replace it. Lapses can occur for several reasons; missing a payment or failing to renew a policy are two common causes.
- Premium: An insurance premium is the amount of cash money an individual (or business) has to pay for an insurance policy.
- Pro Rata Cancellation: This type of cancellation occurs when you, the policyholder, cancel your policy and are fully refunded for any premiums you paid in advance.
- Short-term Cancellation: If you, the policyholder, cancel your insurance policy before it expires, this is known as a short-term cancellation. Short-term cancellations do not automatically entitle the policyholder to any sort of refund on the remaining period.
- Underwriter: Underwriters are professionals who assess and analyze the risks involved in insuring a person or asset. After determining the risk, an underwriter sets a premium for a policy.
Auto Insurance
General
- Personal Injury Protection: If you’re driving and get into an accident — first off, we hope you’re okay! But if there happen to be any injuries or, god forbid, a death, personal injury protection (PIP) will cover the medical, hospital, and funeral expenses for you, passengers in the insured vehicle, and/or pedestrians struck by the insured vehicle.
- Personal Injury Protection (deductible): This is the amount you agree to pay out of pocket for damages that result from an accident for which you’re liable.
- Uninsured/Underinsured Motorist Bodily Injury: If you’re in an accident with an uninsured or underinsured driver, this coverage will help cover your medical care. It also helps pay medical expenses if you, as a pedestrian, are injured by a car.
- Uninsured/Underinsured Motorist Bodily Injury (deductible): This is the amount you agree to pay out of pocket for damages resulting from an accident with an uninsured or uninsured driver.
- Uninsured/Underinsured Property Damage: Uninsured motorist property damage (UMPD) helps protect you if you’re hit by someone who doesn’t have insurance or is underinsured. This coverage can help cover costs incurred to your car, home, or other property.
- Uninsured/Underinsured Property Damage (deductible): This is the amount you agree to pay out of pocket for property for damages resulting from an accident with an uninsured or underinsured driver.
- Comprehensive (value): Comprehensive coverage pays to repair or replace a covered vehicle that's stolen or damaged by fire, flood, wind, hail — you name it. Notably, these policies kick in for damage for everything except a collision or a car rolling over.
- Comprehensive (deductible): The amount you agree to pay out of pocket for a comprehensive claim.
- Collision Actual (value): Collision coverage helps to cover the cost of repairs to your vehicle — or even to replace the car altogether — if it's damaged or destroyed in an accident with another car.
- Collision Actual (deductible): The amount you agree to pay out of pocket for a comprehensive claim.
- Rental Reimbursement (up to per day): The amount of money you’ll be reimbursed per day to use a rental car if your car has been damaged in an accident.
- Roadside Assistance: Roadside assistance provides help if you have an issue while driving. We’re talking things like a flat tire, dead battery, towing, and more.
Liability to Others
- Bodily Injury Liability: If you’re legally liable for an accident, this type of coverage will pay for medical bills or even lost wages for anyone injured (excluding the insured driver). It also covers legal defense costs if you’re in the unfortunate position of being sued.
- Bodily Injury Liability (deductible): This is the amount you agree to pay out of pocket for damages that result from an accident for which you’re liable.
- Property Damage Liability: If you’re legally liable for an accident, property damage (aka PD) insurance pays for damages to others' property resulting from the accident. PD also pays for legal defense costs if you’re sued.
- Property Damage Liability (deductible): This is the amount you agree to pay out of pocket for damages that result from an accident for which you’re liable.
Homeowners and Renters Insurance
- Dwelling - Limit of Liability: Dwelling coverage helps to pay to rebuild or repair the physical structure of your home if it's damaged by a covered hazard. The limit of liability refers to the maximum amount your carrier will pay.
- Other Structures - Limit of Liability: “Other Structures” refers to any structure on your property, excluding your house. This can include a detached garage or guest house, for instance. The limit of liability refers to the maximum amount your provider will pay to rebuild or repair these structures.
- Personal Property - Limit of Liability: Personal Property is defined as all the stuff you own in your house, like furniture, clothing, and electronics. The limit of liability for personal property is the maximum amount your provider will pay to replace or repair your belongings after a covered loss.
- Loss of Use - Limit of Liability: If, for example, a pipe bursts in the apartment above yours and damages your entire apartment, you’ll have to move out temporarily and find other accommodations. That’s when Loss of Use coverage comes into play. Specifically, it kicks in when your home becomes uninhabitable owing to a covered loss. The limit of liability for Loss of Use is the maximum amount your carrier will pay to replace or repair your belongings after a covered loss.
- Personal Liability - Limit of Liability: Personal Liability will cover the costs of medical bills and legal fees incurred if you’re held legally responsible for an accident that takes place either in or outside of your home. The limit of liability for Personal Liability is the maximum amount your carrier will pay for the medical or legal fees.
- Medical Payment to Others - Limit of Liability: Medical Payment to Others covers any medical expenses if a guest is injured in your home. The limit of liability for Medical Payment to Others is the maximum amount your carrier will pay for the medical expenses for the guest, regardless of who is at fault.
- Deductible: A deductible is the amount of money you have to pay on an insurance claim before the insurance company will pay for you. For example, if you make a claim for a $10,000 repair to your home and your deductible is $500, you’ll have to pay the first $500 and then your provider will pay the rest of the repair costs.
- Deductible (Wind/Hail): A deductible for wind and hail is the amount of money you have to pay on an insurance claim due to wind or hail damage before the insurance company will pay for you.
Pet Insurance
- Coinsurance: Coinsurance is the percentage of the total bill (after the deductible) that you’re responsible for paying when making a claim. For example, if your pet insurance provider says they’ll pay 75% of the bill, you will still owe 25%.
- Reimbursement: Most pet insurance is reimbursement-based, which means that you’ll foot the whole bill upfront and your provider will pay some (or maybe all!) of the costs back to you afterwards. This means that when you take little Sushi to the vet, you’ll pay the bill onsite, but you can then submit a claim to be reimbursed.
- Per-Incident Deductible: With a per-incident deductible, your deductible is reset after each incident. Say your pet has a stomach issue and then an unrelated paw problem arises a few weeks later. You’ll have to pay the deductible twice, for each visit. Pet insurance with per-incident deductibles can get expensive if your pet has many health issues throughout the year.
Life Insurance
- Accidental Death and Dismemberment Benefit: This is a rider that provides for the insurer to pay a stated benefit in case of death or the loss of limbs or sight as a result of an accident. The terms and conditions of the rider will be stated in the insurance contract.
- Age last birthday: There are different elements that go into determining your life insurance rate, but a key factor is your age. One method evaluates people according to their age as of their last birthday. So in plain English: Age last birthday equals your actual age.
- Age nearest birthday: As previously mentioned, age is a key factor in determining your life insurance rate. One way they do that is by setting your rate based on your age as of your nearest birthday. So if you happen to be within six months of your next birthday, the issue age for your policy is your future age, aka how old you’ll turn on that upcoming birthday.
- Beneficiary: This is the person (or even sometimes an ‘entity’) who receives the money from a trust, will, or life insurance policy when the insured dies.
- Cash Value: Cash Value is included within a permanent life insurance policy and is the amount of money you can access for certain, specified uses. Be forewarned: if you use the money, your death benefit can decrease.
- Burial Insurance: This is a broadly used term that normally refers to a small policy of life insurance (somewhere between $5,000 and $25,000) that is used for burial and cremation expenses.
- Death Benefit: This is the amount in a life insurance policy that the provider pays out when the insured dies.
- First-to-Die Policy: This is a form of joint life insurance that pays a death benefit to the remaining insuree after the first insuree dies. Often couples, but also business partners, consider first-to-die policies.
- Group Life Insurance: Like the name suggests, this type of policy covers a group under a single contract. For example, employees of a company could be covered by a Group Life Insurance policy.
- Permanent Life Insurance: This is a type of life insurance policy meant to last an individual’s whole life, and not for a specified period of time — provided that the insured keeps it active by paying for the policy.
- Term Life Insurance: These policies are issued for a set period of time. Typical terms are 10, 15, 20, 25, and 30 years. They normally accrue no cash value but are less expensive than Whole or Permanent Life Insurance policies.
- Whole Life Insurance: This is a type of permanent life insurance and comes with a fixed premium and a fixed death benefit. Whole Life Insurance also has a cash value component.
Looking to organize your insurance policies and unlock tools to help you better understand your coverage? Well, you’re in luck! Set up your Marble wallet to easily compare insurers and make sure you’re getting the right policy for your needs — all while earning rewards just for having insurance.
