The most important insurance terms to know

Insurance terms to know

From A-Z, we’ll help you understand the trickiest insurance terms in the business.

• Actual Cash Value: This is how much you would receive for an item at today's replacement value, minus depreciation.
• Additional Living Expenses: Covers any necessary increase in living expenses incurred by you and your house so that you can maintain your normal standard of living.¹
• Bodily Injury Liability: If you're responsible for an accident and someone gets hurt, this coverage pays for their medical costs and other out-of-pocket expenses. Plus, it covers any associated legal defense costs.
• Collision: Repairs or replaces your car when it's damaged in collisions with another vehicle or object. This includes damage caused by another car, or another object (like a guardrail or tree).
• Comprehensive: Repairs or replaces your car when it's damaged in an incident other than a collision. This includes damage caused by storms, floods, fires, vandalism, and/or theft.
• Deductible: This is the initial amount you pay out-of-pocket before your coverage kicks in. In most cases, you'll need to pay your deductible up front, even if the claim wasn't your fault.
• Depreciation: This is a reduction in value over time due to age, use, and condition of an item based on your market area.
• Dwelling: Another term to describe the part of your home insurance policy that covers the physical structure of the primary residence on your property.
• Liability Insurance: If someone else is injured or has their belongings damaged on your property, this covers any claims against you, as well as any reasonable and necessary medical expenses.
• Premium: The total price you pay for your policy.
• Scheduled Items: These are belongings (jewelry, art, etc.) that typically require additional coverage, since the standard home policy limits the amount you can claim per item.