Common Insurance Terms

We’ve compiled an insurance glossary to help you make sense of some of the insurance terms on our website.

Keep in mind that our terms and definitions are intended for information purposes only, and the way they’re interpreted and applied may vary slightly from state to state. These terms and definitions do not replace or otherwise alter the definitions and information that appear in individual insurance policies.

Common Insurance Terms

We've compiled an insurance glossary to help you make sense of some of the insurance terms on our website.

Keep in mind that our terms and definitions are intended for information purposes only, and the way they're interpreted and applied may vary slightly from state to state. These terms and definitions do not replace or otherwise alter the definitions and information that appear in individual insurance policies.

Actual cash value (ACV)

The value of the property lost or damaged at the time of the loss. See depreciation.

Additional insured

A person or party, other than the policyholder, who is added to a policy so that they will also be covered by
that policy.

Additional living expense (property)

This coverage provides a specified amount per day for additional expenses in the event that you cannot live in your insured residence.

After-market parts

Parts made by a company other than the manufacturer of the auto. See original equipment manufacturer.

Appraisal

An estimate of the property value, or of the extent of property damage, provided by an authorized person. Appraisals are performed to determine the value of the property at the time of the loss.

Bodily injury liability coverage

Covers damage resulting in bodily injury or death sustained by others, including covered medical costs, that you become legally responsible for as a result of a covered auto accident.

Cancellation

Terminating an insurance contract before the specified end-date noted in the policy.

Claim

Request by a policyholder or third party from an insurance company for losses covered by an insurance policy.

Claimant

A person requesting an amount for covered losses from the insurer.

Collision coverage

Covers damage to your vehicle resulting from collision with another vehicle or object (subject to deductible).

Comprehensive coverage

Covers damage to your vehicle not caused by collision or upset (subject to deductible). Examples may include theft, vandalism, weather events and contact with animals.

Continuous insurance

This occurs when a policyholder has been insured by one or more insurance companies, without any lapse in coverage, for a specified period of time.

Credit based insurance score

Like most insurers, Nationwide uses a credit-based insurance score to predict insurance losses.

Studies show that considering credit creates a more accurate insurance rate. By predicting potential losses better, Nationwide can provide a more appropriate rate for each customer. About half of our existing customers receive a rate decrease based on their credit scores.

Declarations page

A summary document of an insurance policy that identifies the policyholder, the property or vehicles covered, the coverages and the premium amounts. The declarations page usually serves as the cover page of a
policy document.

Deductible

The amount a policyholder agrees to pay before the insurance company covers a loss. In addition to the standard deductible, there can be different deductibles for different types of losses such as wind, hail, hurricane
or earthquake.

Depreciation

A decrease in the value of property due to wear, age or other cause. See actual cash value.

Endorsement

Endorsements can alter, delete or add coverage, terms or provisions to an insurance policy.

Exclusion

A provision in an insurance policy that excludes and/or limits certain coverages.

Farm Bureau

A private, dues-paying organization comprised of a state's county Farm Bureau organizations. Members help advance the public interest in agriculture and participate in legislation, public information and
education programs.

Farm Bureau members may be eligible for Nationwide insurance discounts in California, Connecticut, Delaware, Maryland, New York, Ohio, Pennsylvania, Vermont and West Virginia.

FR-44/SR-22

If you are convicted of certain traffic violations or driving under the influence of alcohol or drugs, the state may require you to file an FR-44/SR-22 to verify that you maintain auto liability coverage.  Both forms are official documents showing proof of financial responsibility, but use different titles based on your state of residence. If an FR-44/SR-22 should expire or be canceled, an insurance company will issue an FR-46/SR-26 form, which certifies the cancellation of the policy.

Hazard

A condition that creates or increases the chance that a loss will occur. For example, a wood-burning stove may increase the chance of a loss from a fire.

Identity Theft Assistance

This product provides insurance coverage related to fraudulent use of one's identity.

Indemnification

The act of compensating for a loss.

Insured

The person or parties who are insured or protected by an insurance policy.

Insurer

The company that provides the insurance coverage and services on a specific policy.

Lapse

A lapse in coverage occurs when someone goes without insurance for a period of time.

Liability coverage (homeowners)

Covers bodily injury and property damage to others for which you are held liable (as provided by your policy and state law).

Lien

A creditor’s claim against an owner's assets to secure an unpaid debt.

Lien holder

The party who has a claim on property until the satisfaction of some debt or duty. For example, a bank is the lien holder of a car until the loan is paid.

Limits of insurance

The amount an insurance company will pay for a covered loss, as stated in the policy.

Loss

Direct and accidental damage to the insured automobile or property used as the basis for filing a claim. 

Loss assessment

This coverage provides reimbursement for extra fees assessed by a condominium or homeowners association. It is subject to a deductible and the limit stated in the policy.

Loss history

A history of a person's automobile or property losses.

Loss of use (auto)

This coverage helps pay for alternative transportation (such as bus, subway or another car) if your car cannot be driven due to a covered loss. In your policy, this also may be referred to as rental reimbursement, transportation expense or rental car expense.

Loss of use (property)

Coverage that pays additional expenses when a policyholder has to move out of the residence while repairs are made, as a result of damage caused by a covered loss.

Market value

The value of property in terms of what it can be sold for in the open market.

Medical payments (auto)

Covers reasonable medical expenses for you and others in the event of an accident, regardless of who is at fault. In your policy, this may be referred to as medical expenses or medical benefits.

Medical payments to others (homeowners)

This coverage may provide payment for medical expenses resulting from an accident on your property. "Med pay" is intended for the immediate medical treatment of guests on your premises, without determining fault. This coverage is subject to specific dollar limits per incident, and availability may vary.

Misrepresentation

Statements that are false or misleading.

Mitigation

Steps taken to prevent or reduce the amount or likelihood of loss.

Motor vehicle report (MVR)

The record of a person's driving history, including details of any accidents or violations, as reported to a state's department of motor vehicles.

Named insured

The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the policyholder.

Named non-owner coverage

Written for someone who does not own a private passenger or commercial automobile, but would otherwise meet the qualifications for an auto policy with Nationwide. Situations may include employer-furnished vehicles, borrowing cars from friends or relatives, or frequent use of rental cars.

Occasional driver

A driver who is not the usual or most frequent driver of the vehicle listed on an auto policy.

Original equipment manufacturer (OEM)

Original equipment manufacturer parts come from the manufacturer instead of aftermarket or salvage companies. An OEM endorsement ensures that aftermarket replacement parts won't be used to repair your vehicle. Policyholders must have comprehensive and/or collision coverage to add this option. See after-market parts.

Personal injury (property)

Provides coverage for certain damages awarded to others on behalf of the insured, such as covered claims for bodily injury caused by a slip and fall on your property.

Personal injury protection (auto)

Pays medical expenses to or for an insured in the event of an accident, regardless of who is at fault. May also pay for funeral costs, lost wages and costs for household services. Coverage varies from state to state.

Personal property

Property owned or used by an insured.

Personal umbrella

A personal umbrella insurance policy offers an extra layer of liability protection for your assets if there's a serious auto accident or accident on your property. Otherwise, you could be liable for more than your current auto or homeowners coverage limits.

Policy

A written contract of insurance.

Policyholder

The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the named insured.

Premium

The amount of money an insurance company charges in return for providing coverage.

Primary driver

The person who drives the vehicle most often. Also referred to as the principal driver.

Primary use (auto)

This is the vehicle's typical use. "Work" refers to a vehicle that is primarily used for commuting to and from work or school. "Pleasure" refers to a vehicle primarily used for personal errands or personal trips.

Property damage liability coverage (auto)

This type of insurance helps pay for damage to someone else’s property as the result of a covered accident for which you are responsible. It may help cover the expense of repairing or replacing a car, fence or other property damaged during the covered incident.

Renters insurance (tenants insurance)

A renters insurance policy covers the tenant and some of their personal possessions.

Replacement cost

The cost of replacing damaged or destroyed property.

Replacement Cost Plus/Guarantee

Replacement Cost Plus or Replacement Cost Guarantee is an optional coverage that can provide additional protection above the amount the home is insured for. It is designed to protect against unforeseen increases in the cost of repairs.

Resident premises

The physical location of the property for which insurance protection is provided. This is also known as the
insured location.

Roadside Assistance

This optional auto insurance coverage can help you if you need a tow, run out of gas or have a flat tire.

SR-22/FR-44

If you are convicted of certain traffic violations or driving under the influence of alcohol or drugs, the state may require you to file an SR-22/FR-44 to verify that you maintain auto liability coverage.  Both forms are official documents showing proof of financial responsibility, but use different titles based on your state of residence. If an SR-22/FR-44 should expire or be canceled, an insurance company will issue an SR-26/FR-46 form, which certifies the cancellation of the policy.

Umbrella policy

A personal umbrella insurance policy offers an extra layer of liability protection for your assets if there's a serious auto accident or accident on your property. Otherwise, you could be liable for more than your current auto or homeowners coverage limits.

Uninsured and/or underinsured bodily injury coverage

This type of coverage may protect against drivers without insurance, and/or drivers with insufficient policy limits to reimburse you for damages they caused.

This coverage typically pays the difference between the amount recovered from the other driver and the amount of the damages, up to the limit of the policy. Depending on the state where you are seeking coverage, uninsured and underinsured motorist coverage may be sold individually or combined into one coverage.

Uninsured or underinsured motorists property damage

Covers damage to your vehicle resulting from a covered accident that you are legally entitled to receive from a driver who is not insured or whose insurance limits are not enough to reimburse you for damages they caused. This type of coverage varies from state to state.

Vehicle identification number (VIN)

Your vehicle's unique 17-character VIN can be found on the dashboard and driver's side door jamb. This unique serial number is also included on your vehicle's registration form and insurance card.

Windstorm or hail coverage

Provides coverage for losses as a result of windstorm or hail. However, this coverage may be subject to special terms, conditions and deductibles. The windstorm or hail peril may be excluded entirely.

Insurance terms, definitions and explanations are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in individual insurance contracts, policies or declaration pages, which are controlling. Such terms and availability may vary by state and exclusions may apply. Discounts may not be applied to all policy coverages.

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