Glossary
Plain-English definitions for the terms that tend to trip people up in the documents ReadMyPolicyanalyzes. Each one includes real examples and why it matters when you're making a decision.
Actual Cash Value
Actual cash value (ACV) pays the depreciated value of damaged property at the time of loss — roughly replacement cost minus wear and tear.
Coinsurance
Coinsurance is the percentage of a covered cost you pay after meeting your deductible, with the insurer paying the rest.
Copay
A copay (or copayment) is a fixed dollar amount you pay for a specific covered health service, like $25 for a doctor visit.
Deductible
A deductible is the amount you pay out of pocket on a covered claim before your insurance starts paying.
Exclusion
An exclusion is a cause of loss or type of property that the policy explicitly does not cover.
Out-of-Pocket Maximum
The out-of-pocket maximum is the most you'll pay in a policy year for covered services before insurance covers 100%.
Policy Limit
The policy limit is the maximum amount an insurer will pay for a covered loss, either per occurrence or in aggregate over the policy period.
Premium
A premium is the amount you pay — monthly, quarterly, or annually — to keep your insurance policy in force.
Replacement Cost
Replacement cost coverage pays what it would cost today to replace damaged property with new materials of like kind and quality, without deducting for depreciation.
Rider
A rider (or endorsement) is an add-on to a base policy that expands, limits, or modifies coverage.