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Insurance glossary

Insurance has its own language. Here are the terms you'll come across, explained in plain English — so you always know what your coverage means.

Actual Cash Value (ACV): The value of insured property at the time of a loss, calculated as replacement cost minus depreciation for age and wear. An ACV settlement pays what the item is worth today, not what it costs to buy new.
Additional Insured: A person or organization added to your policy who also receives certain protections — often required in contracts, for example when a landlord or general contractor must be named on your policy.
Agreed Value: A coverage basis where you and the insurer agree on an item's value up front, and that amount is paid on a total loss — with no depreciation deducted. Common for classic cars and boats.
Binder: A temporary document confirming that coverage is in place while the full policy is being issued. It provides proof of insurance in the interim.
Broker: A licensed professional who represents you, not a single insurer. A broker compares coverage and pricing across multiple insurance companies to find the policy that best fits your needs.
Bundling: Combining two or more policies — most commonly home and auto — with the same insurer to earn a multi-policy discount and simplify your coverage.
Claim: A formal request to your insurer for payment after a covered loss, such as damage, theft, or injury. The insurer reviews the claim and pays out according to your policy.
Collision Coverage: Auto coverage that pays to repair or replace your vehicle after a collision with another vehicle or object, regardless of fault.
Comprehensive Coverage: Auto coverage for damage to your vehicle from non-collision events such as theft, vandalism, fire, falling objects, or weather.
Coverage Limit: The maximum amount an insurer will pay for a covered loss. Choosing the right limits is key — too low, and you could be left paying the difference.
Deductible: The amount you pay out of pocket on a claim before your insurance pays the rest. A higher deductible usually means a lower premium, and vice versa.
Depreciation: The reduction in an item's value over time due to age and wear. It's the difference between replacement cost and actual cash value.
Endorsement (Rider): An add-on that changes your standard policy — adding, removing, or adjusting coverage. For example, an endorsement can add sewer-backup or scheduled-jewellery coverage.
Exclusion: A specific situation, peril, or item your policy does not cover. Reviewing exclusions is essential to understanding where you may have gaps.
Indemnity: The principle that insurance restores you to the financial position you were in before a loss — no better, no worse — rather than allowing you to profit from a claim.
Liability Insurance: Coverage that protects you if you're held legally responsible for injuring someone or damaging their property, including the cost of your legal defence.
Named Perils: A policy that covers only the specific risks listed in it. The opposite is 'all perils' (or open-perils) coverage, which covers everything except stated exclusions.
Peril: A specific cause of loss, such as fire, theft, windstorm, or water damage. Policies define which perils they cover.
Policyholder: The person or entity that owns an insurance policy and is responsible for paying its premiums.
Premium: The amount you pay for your insurance coverage, typically monthly or annually. Premiums are based on your risk profile, coverage, and chosen deductible.
Quote: An estimate of what your insurance will cost, based on the details you provide. As a broker, we gather quotes from multiple insurers so you can compare.
Replacement Cost: A settlement basis that pays the full cost to replace damaged property with new equivalent property, without deducting for depreciation.
Rider: Another term for an endorsement — an addition or change to a standard policy that tailors coverage to your needs.
Subrogation: The process by which your insurer, after paying your claim, pursues the at-fault party (or their insurer) to recover the cost.
Total Loss: When damaged property is destroyed or would cost more to repair than it's worth. The insurer settles for the property's value rather than repairing it.
Umbrella Insurance: Extra liability coverage that sits above the limits of your home and auto policies, protecting you against large claims that would otherwise exceed them.
Underwriting: The process insurers use to evaluate risk and decide whether to offer coverage, on what terms, and at what price.
Vacancy: A period when a property is unoccupied. Extended vacancy can affect coverage, since vacant properties carry higher risk — relevant for seasonal and rental properties.

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