A
Actual Cash Value (ACV)
The value of property at the time of loss, calculated as replacement cost minus depreciation. If your 5-year-old TV is stolen, ACV pays what a 5-year-old TV is worth today, not what a new one costs.
Example: Your laptop was worth $1,200 new but is now 3 years old. With ACV, you might receive $600 after depreciation.
Additional Insured
A person or organization added to an insurance policy who is protected under the policy but is not the policyholder. Common in business insurance when clients or contractors require coverage.
Example: A general contractor requires subcontractors to add them as additional insured on their liability policy.
Adjuster
An insurance company representative who investigates claims and determines how much the insurance company should pay. Also called a claims adjuster.
Agent
A licensed professional who sells insurance policies and helps customers find appropriate coverage. Independent agents (like Texian) represent multiple companies, while captive agents work for one insurer.
Aggregate Limit
The maximum amount an insurance policy will pay for all claims during a policy period, usually one year. Different from per-occurrence limits.
Example: A policy with a $1 million per-occurrence limit and $2 million aggregate will pay up to $1M per claim but no more than $2M total per year.
B
Beneficiary
The person or entity designated to receive the death benefit from a life insurance policy when the insured person dies.
Binder
A temporary insurance contract that provides coverage until the formal policy is issued. Commonly used when you need proof of insurance immediately.
Bodily Injury (BI)
Physical harm to a person caused by an accident. Bodily injury liability coverage pays for medical expenses, lost wages, and pain and suffering when you injure someone else.
Bundle/Bundling
Purchasing multiple insurance policies (like auto and home) from the same company to receive a multi-policy discount. Can save 10-25%.
C
Carrier
The insurance company that underwrites and issues insurance policies. Also called an insurer.
Certificate of Insurance (COI)
A document proving you have insurance coverage. Often required by landlords, clients, or contractors before you can work or occupy space.
Claim
A formal request to your insurance company for payment after a covered loss. Filing a claim triggers the claims process.
Collision Coverage
Auto insurance that pays to repair or replace your vehicle if you hit another car or object, regardless of who is at fault.
Example: You back into a pole in a parking lot. Collision coverage pays for your car's damage, minus your deductible.
Comprehensive Coverage
Auto insurance that covers non-collision damage to your vehicle, including theft, vandalism, hail, flooding, hitting an animal, and fire.
Example: Hail damages your car parked outside. Comprehensive coverage pays for repairs.
Coverage Limit
The maximum amount an insurance policy will pay for a covered claim. Can be expressed per occurrence, per person, or as an aggregate.
D
Declarations Page
The first page(s) of your insurance policy that summarize your coverage, including policyholder name, coverage amounts, deductibles, premium, and policy period. Also called the 'dec page.'
Deductible
The amount you pay out of pocket before your insurance coverage kicks in. Higher deductibles usually mean lower premiums.
Example: With a $500 deductible, if you have $3,000 in damage, you pay $500 and insurance pays $2,500.
Depreciation
The decrease in value of property over time due to age, wear, and obsolescence. Used to calculate actual cash value.
Dwelling Coverage
The portion of homeowners insurance that covers the physical structure of your home, including walls, roof, and built-in appliances.
E
Endorsement
A written amendment that adds, deletes, or modifies coverage in an insurance policy. Also called a rider.
Example: Adding an endorsement to your homeowners policy to cover your expensive jewelry collection.
Exclusion
Specific situations, conditions, or circumstances that are NOT covered by an insurance policy. Always read your exclusions carefully.
Example: Most homeowners policies exclude flood damage, which requires a separate policy.
F
Filing a Claim
The process of notifying your insurance company of a loss and requesting payment. You typically call your agent or the carrier's claims line.
Flood Insurance
A separate policy that covers water damage from flooding. Standard home and auto policies do NOT cover flood damage. Available through NFIP or private carriers.
Full Coverage
An informal term usually meaning liability plus collision and comprehensive coverage on an auto policy. There's no official 'full coverage' policy.
G
Gap Insurance
Coverage that pays the difference between what you owe on your car loan and what your car is worth if it's totaled. Important for new cars that depreciate quickly.
General Liability
Business insurance that covers third-party bodily injury, property damage, and advertising injury claims. Essential for almost every business.
Grace Period
The time after your premium due date during which your policy remains in force even if you haven't paid. Typically 10-30 days, depending on the policy.
H
Hazard
A condition that increases the likelihood of loss. Physical hazards are tangible (like a swimming pool), moral hazards relate to behavior.
Homeowners Insurance
A policy that bundles coverage for your home's structure, personal belongings, liability, and additional living expenses into one package.
I
Independent Agent
An insurance agent who represents multiple insurance companies and can shop for the best coverage and rates for you. Texian Insurance is an independent agency.
Insured
The person(s) protected by an insurance policy. The named insured is the primary policyholder; additional insureds may also be covered.
L
Liability Coverage
Insurance that pays for bodily injury or property damage you cause to others. Protects your assets from lawsuits.
Liability Limits
The maximum your liability coverage will pay. Often expressed as split limits (100/300/100) or combined single limit.
Example: 100/300/100 means $100K per person for bodily injury, $300K per accident for bodily injury, and $100K for property damage.
Loss
The amount of damage or injury resulting from an insured event. What triggers an insurance claim.
Loss of Use
Coverage that pays for additional living expenses if you can't live in your home due to a covered loss. Includes hotel, meals, and temporary housing.
M
Medical Payments (MedPay)
Coverage that pays medical expenses for you, your passengers, or guests injured on your property, regardless of who is at fault.
Multi-Policy Discount
A discount for purchasing multiple policies (like auto and home) from the same insurance company. Also called bundling.
N
Named Insured
The person(s) specifically named on the insurance policy declarations page. Has the most rights under the policy.
Non-Owned Auto Coverage
Business insurance that covers liability when employees use their personal vehicles for work purposes.
P
Peril
A specific cause of loss, such as fire, theft, windstorm, or collision. Policies cover either named perils (specific causes listed) or open perils (all causes except exclusions).
Personal Injury Protection (PIP)
Coverage that pays medical expenses and lost wages for you and your passengers regardless of fault. Required to be offered in Texas but can be declined in writing.
Personal Property
Your belongings—furniture, electronics, clothing, etc.—as opposed to the structure of your home. Covered under homeowners and renters insurance.
Policy
The written contract between you and the insurance company that outlines your coverage, exclusions, limits, deductibles, and premium.
Policyholder
The person who owns an insurance policy. Also called the insured or named insured.
Premium
The amount you pay for insurance coverage, usually monthly, quarterly, semi-annually, or annually.
Example: Your auto insurance premium is $150/month, or $1,800/year if paid in full.
R
Renewal
The continuation of an insurance policy for another term. Most policies renew annually unless canceled.
Replacement Cost
Coverage that pays to replace damaged or stolen property with new items of similar kind and quality, without deducting for depreciation. Better than actual cash value.
Example: Your stolen laptop was 3 years old, but replacement cost coverage pays for a brand new equivalent laptop.
Rider
An addition to an insurance policy that modifies or adds coverage. Also called an endorsement.
S
SR-22
A certificate of financial responsibility that proves you have auto insurance. Required after certain violations like DUI or driving without insurance. It's not insurance itself—just proof.
Subrogation
When your insurance company pays your claim, they gain the right to pursue the responsible party to recover their costs.
Example: Your insurance pays for your car damage, then sues the at-fault driver to recover what they paid.
T
Term Life Insurance
Life insurance that covers you for a specific period (10, 20, or 30 years). If you die during the term, your beneficiaries receive the death benefit. Most affordable type of life insurance.
Total Loss
When damage to property (usually a vehicle) costs more to repair than the property is worth. The insurance company pays the actual cash value and takes possession of the property.
U
Umbrella Insurance
Extra liability coverage that kicks in when your auto, home, or other policies reach their limits. Provides an additional layer of protection for your assets.
Underwriting
The process insurance companies use to evaluate risk and determine whether to issue a policy and at what price.
Uninsured Motorist (UM)
Coverage that protects you when you're in an accident with a driver who has no insurance. Essential in Texas where about 14% of drivers are uninsured.
Underinsured Motorist (UIM)
Coverage that protects you when the at-fault driver doesn't have enough insurance to cover your damages. Often paired with UM coverage.
W
Whole Life Insurance
Permanent life insurance that covers you for your entire life and builds cash value over time. Premiums are higher than term but never increase.
Workers' Compensation
Insurance that covers medical expenses and lost wages when employees are injured on the job. Required for most Texas employers.
Still Have Questions?
Insurance shouldn't be complicated. Our agents are happy to explain any term or help you understand your policy. No jargon, no pressure—just plain-English answers.
Ready to Get the Right Coverage?
Now that you understand the terminology, let us help you find the perfect insurance policy. Free quotes, no obligation.
Get Your Free Quote