Insurance Terms Glossary
Get acquainted with the most commonly used insurance terms. You can find the definitions of the most relevant terms in our insurance glossary.
- Actual cash value coverage - type of insurance coverage that reimburses policyholders for the value of the lost or damaged property less depreciation. Online insurance rates for this type of coverage are typically cheaper than those for replacement value coverage.
- Actuary - an insurance professional that analyzes, evaluates, and manages statistical data. The primary responsibility of an actuary is to assess business and financial risks.
- Claim - a policyholder's request for reimbursement for a loss.
- Deductible - the amount of the loss that the policyholder pays out of pocket. The deductible may be a specific dollar amount, a percentage of the claim, or a certain period of time that must expire before benefits are paid out. Larger deductibles correspond with lower premiums.
- Liability insurance - coverage for what the insured is legally obligated to pay to reimburse another party for property damage or bodily injury caused by the policyholder.
- Moral hazard - with regard to insurance, the theory that transferring financial responsibility to a third party encourages less accountability and responsibility in policyholders. Also the notion that a policyholder may be dishonest in an insurance transaction.
- Preferred risk class - an underwriting term that refers to the group of prospective policyholders who represent the lowest risk of loss according to the insurer's underwriting standards. This group of potential insureds usually receives the lowest online insurance rates.
- Premiums - the cost of an insurance policy, usually charged on an annual or semiannual basis. Online insurance rates estimate the cost of premiums for any given policy.
- Replacement cost coverage - coverage that reimburses the policyholder for the value of the loss without accounting for depreciation. This type of coverage generally has higher online insurance rates.
- Risk - the likelihood of loss or the person or organization that is insured.
