Insurance Glossary
Decode insurance terminology to make smarter coverage decisions and avoid costly mistakes.
Premium
The amount you pay (monthly or annually) to maintain insurance coverage.
Example: A $150/month auto insurance premium = $1,800/year.
Deductible
The amount you pay out-of-pocket before your insurer covers the rest.
Example: With a $1,000 deductible, you pay the first $1,000 of a $5,000 claim; insurer pays $4,000.
Coverage Limit
The maximum amount an insurer will pay for a covered loss.
Example: A $300,000 liability limit means your insurer pays up to $300,000 in liability claims.
Exclusion
A specific condition, event, or circumstance not covered by an insurance policy.
Example: Most homeowner policies exclude flood damage — you need separate flood insurance.
Underwriting
The process insurers use to evaluate risk and determine coverage terms and premiums.
Example: Your driving record, age, and location are underwriting factors for auto insurance.