Insurance Terms in Plain English
A quick reference for the words you will see when comparing quotes, reading a policy or discussing a client’s request.
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Price and payment
Premium: the price charged for insurance. Check the payment schedule and any separate fees.
Deductible: the portion of a covered loss you are responsible for under the policy. Ask how it applies to the coverage you are comparing.
How much and what kind of protection
Limit: the maximum payable for a particular coverage, subject to the policy terms. A per-occurrence limit and an aggregate limit address different caps; ask which applies to the example you are discussing.
Exclusion: wording that removes specified losses, activities or circumstances from coverage.
Endorsement: a document that changes the policy. It can add, remove or modify coverage or other terms, so read it with the policy.
People and documents
Named insured: the person or business identified as an insured in the policy.
Additional insured: another party insured under specified policy terms. The scope can be limited; being named on a certificate is not enough on its own.
Declarations: the policy summary identifying items such as the insured, policy period, coverages, limits and premium.
Certificate of insurance: evidence summarizing insurance information. It does not replace the policy or change its terms.
Turn an unfamiliar term into a useful question
Choose a real activity your business performs and ask how the term applies to it. For example: “If equipment is damaged away from my premises, which limit, deductible and exclusions would apply?” These short definitions are a starting point; the wording in your own policy controls.
Keep exploring
Bring your questions to Mithril1. Coverage depends on the policy, its terms and the circumstances of a loss.
Further reading: NAIC guide to endorsements.
More definitions: California Department of Insurance glossary.