Plain-language insurance
Insurance terms, defined plainly.
Insurance has its own vocabulary, and most of it isn't intuitive. Here are the terms we explain to clients most often, in plain English.
- Actual Cash Value (ACV)
- A method of paying claims where the insurance company pays the replacement cost minus depreciation. Contrast with Replacement Cost (RC), which pays without depreciation deduction.
- Additional Insured
- A person or entity not originally on the policy who is added by endorsement and gains the rights of an insured. Common in contracts where a landlord or general contractor requires being added.
- Adjuster
- The person assigned by the insurance carrier to investigate a claim, assess damage, and determine payment. Field adjusters visit sites; desk adjusters work claims remotely.
- Aggregate Limit
- The maximum amount an insurance policy will pay across all claims during a policy period, regardless of how many individual claims are filed.
- Assignment of Benefits (AOB)
- Paperwork that transfers your right to receive insurance payments to a third party — usually a contractor or restoration company. Can strip you of the right to control your own claim. We recommend never signing AOBs.
- Binder
- A temporary insurance contract issued while a permanent policy is being prepared. Confirms coverage is in force.
- Bodily Injury Liability
- Coverage that pays for medical expenses, lost wages, and pain and suffering of others when you cause an accident.
- Business Owners Policy (BOP)
- A packaged commercial policy bundling general liability, commercial property, and business income coverage. Designed for small to mid-size businesses.
- Cash Value
- The savings component of a permanent life insurance policy (whole, universal). Grows tax-deferred over time and can be borrowed against.
- Certificate of Insurance (COI)
- A one-page document summarizing your policy that proves to a third party (landlord, client, vendor) that you carry insurance. We issue them same-day.
- Claims-Made Policy
- An insurance policy that only responds to claims first reported during the policy period. Common for professional liability. Contrast with occurrence policies.
- Coinsurance
- A clause requiring you to insure your property to a specified percentage (usually 80%) of its replacement value. Underinsuring triggers a penalty at claim time.
- Collision Coverage
- Auto insurance that pays for damage to your vehicle from a crash with another vehicle or object, regardless of fault.
- Comprehensive Coverage
- Auto insurance that pays for damage to your vehicle from non-collision events — hail, theft, vandalism, fire, glass, animal strikes. Critical in Oklahoma.
- Declarations Page
- The first page(s) of your policy that summarize coverage, limits, deductibles, premium, and named insureds. Often called the 'dec page.'
- Deductible
- The amount you pay out-of-pocket before insurance pays on a claim. Higher deductibles generally mean lower premiums.
- Depreciation
- The reduction in value of property over time due to age, wear, and obsolescence. Affects how ACV claims are paid.
- Dwelling Coverage (Coverage A)
- In a homeowners policy, the coverage that pays to rebuild your home itself. Should equal current rebuild cost, not market value.
- Endorsement
- A modification or addition to an insurance policy that changes the original terms. Some add coverage; some restrict it.
- Errors & Omissions (E&O)
- Another name for professional liability insurance. Covers claims that your work caused financial harm to a client.
- Experience Modifier (Ex-Mod)
- A factor in workers' compensation that adjusts premium based on your claims history versus industry averages. 1.00 is average; lower is better.
- Extended Replacement Cost
- A homeowners endorsement that pays an additional 20-50% above your dwelling limit if rebuild costs exceed your coverage. Inexpensive but valuable.
- General Liability (CGL)
- Foundation commercial coverage protecting against third-party bodily injury, property damage, and personal/advertising injury claims.
- Guaranteed Replacement Cost
- A homeowners endorsement that pays whatever it costs to rebuild your home, with no cap. Available from some carriers.
- HO-3
- The most common homeowners policy form in the U.S. Covers your dwelling on an open-perils basis and personal property on a named-perils basis.
- HO-5
- A premium homeowners form that covers both dwelling AND personal property on an open-perils basis. Broader than HO-3, slightly more premium.
- Hired and Non-Owned Auto
- Commercial auto coverage for rented vehicles (hired) and employee-owned vehicles used for business (non-owned). Often missed but important.
- Independent Agent
- An insurance agent who represents multiple carriers rather than just one company. Can shop across the market to find the best fit. (That's us.)
- Liability Coverage
- Coverage that pays for harm you cause to others — bodily injury or property damage. Required by law for auto in Oklahoma.
- Loss of Use Coverage
- Pays additional living expenses (hotel, meals, etc.) when your home is uninhabitable due to a covered loss.
- MCS-90
- A federally required endorsement on commercial trucking policies for vehicles in interstate commerce, providing public liability protection.
- Medical Payments Coverage
- Auto: pays medical expenses for you and passengers regardless of fault. Home: pays small medical expenses for injured guests.
- Named Insured
- The person or entity specifically listed on the policy as the policyholder. Their spouse and resident relatives are typically also covered.
- Non-Renewal
- When an insurance company declines to continue coverage at the end of a policy period. Different from cancellation, which terminates mid-policy.
- Occurrence Policy
- An insurance policy that responds to claims arising from events that occurred during the policy period, regardless of when the claim is reported.
- Personal Injury Protection (PIP)
- Auto coverage that pays medical expenses and sometimes lost wages for you and passengers regardless of fault. Optional in Oklahoma.
- Premium
- The amount you pay for insurance coverage, typically billed monthly, semi-annually, or annually.
- Replacement Cost (RC)
- A method of paying claims where the insurance company pays what it costs to replace damaged property with new property of like kind and quality, without depreciation.
- Retroactive Date
- On a claims-made policy, the earliest date for work that the policy will cover. Maintaining the original retro date across carrier changes is critical.
- Rider
- An older term for what's now usually called an endorsement — an addition or modification to a base policy.
- Subrogation
- The process by which your insurer, after paying your claim, pursues recovery from the at-fault party. You may get your deductible back if subrogation succeeds.
- Tail Coverage (Extended Reporting Period)
- On a claims-made policy, coverage purchased when ending the policy that allows claims to be reported for past work after the policy ends.
- Term Life Insurance
- Life insurance that provides coverage for a specified period (10, 15, 20, or 30 years). Most affordable type, ideal for income replacement during working years.
- Umbrella Insurance
- Additional liability coverage sitting on top of underlying home and auto policies. Typically $1M-$5M, costs $200-$500/year, exceptional value.
- Uninsured/Underinsured Motorist (UM/UIM)
- Auto coverage that pays your medical bills and damages when the at-fault driver has no coverage or inadequate coverage. Critical in Oklahoma due to high uninsured rates.
- Whole Life Insurance
- Permanent life insurance with a guaranteed death benefit and cash value that grows tax-deferred. More expensive than term.
- Wind/Hail Deductible
- A separate, often percentage-based deductible (1-5% of dwelling) that applies only to wind or hail damage claims. Very important to understand in Oklahoma.
- Workers' Compensation
- Insurance covering medical care, wage replacement, and disability benefits for employees injured at work. Required for most Oklahoma employers.
Have a term you can't decipher?
Insurance jargon is full of trapdoors. Call us — we'll translate whatever's confusing you.
