Insurance Terms, Explained

Insurance has its own language. Here are the terms you’re most likely to see on a Mississippi home, auto, business, or life policy, explained in plain English.

Actual cash value (ACV)

What it costs to replace something, minus depreciation for age and wear. ACV payouts are lower than replacement cost payouts. ACV vs. replacement cost.

Beneficiary

The person or organization that receives a life insurance payout. Review yours after any major life change.

Binder

A temporary agreement that puts coverage in place before the full policy is issued. Lenders often ask for one at closing.

Business owner’s policy (BOP)

A package policy for small businesses that combines general liability and commercial property, often with business income coverage.

Certificate of insurance (COI)

A one-page summary proving a business has insurance. Clients and landlords often require one before work begins.

Collision coverage

Pays to repair your car after a crash with another vehicle or object, regardless of fault.

Comprehensive coverage

Pays for damage to your car from things other than a crash: theft, hail, flood, fire, falling trees, and animals.

Declarations page

The summary page of your policy that lists what’s covered, your limits, your deductibles, and your premium. It’s the most useful page to bring when comparing quotes.

Deductible

The amount you pay out of pocket on a claim before insurance pays. A higher deductible usually means a lower premium.

Dwelling coverage (Coverage A)

The part of a homeowners policy that pays to repair or rebuild the house itself. It should be based on rebuild cost, not market value. Dwelling coverage, explained.

Endorsement

A change or add-on to a policy that adds, removes, or modifies coverage, like adding water backup coverage to a homeowners policy.

Exclusion

Something a policy specifically does not cover. Flood and normal wear and tear are common homeowners exclusions.

Flood insurance

A separate policy that covers damage from rising water. Available through the National Flood Insurance Program (NFIP) and private insurers. Flood insurance in Mississippi.

General liability

Business coverage for injuries to others and damage to their property caused by your business operations.

Liability coverage

Pays for injuries or damage you’re legally responsible for causing to other people, plus your legal defense.

Loss of use (Coverage D)

Pays extra living expenses, like a hotel or rental, if your home is unlivable after a covered loss.

Named storm deductible

A separate deductible that applies to damage from a named tropical storm or hurricane, often a percentage of your dwelling coverage. How storm deductibles work.

Ordinance or law coverage

Helps pay the extra cost of rebuilding to current building codes after a covered loss.

Personal property (Coverage C)

Covers your belongings, like furniture, clothing, and electronics, inside and often outside your home.

Premium

The price you pay for an insurance policy, usually monthly or annually.

Replacement cost

Pays what it costs to repair or replace damaged property with new materials of similar kind and quality, without subtracting depreciation.

Term life insurance

Life insurance that covers you for a set number of years. Term vs. whole life.

Umbrella policy

Extra liability coverage that kicks in after your home and auto liability limits are used up. Usually sold in $1 million increments.

Uninsured motorist coverage

Protects you when the at-fault driver has no insurance or not enough of it. Why it matters in Mississippi.

Whole life insurance

Permanent life insurance that lasts your whole life and builds cash value.

Wind pool

A state-backed insurer of last resort for wind and hail coverage on coastal property. In Mississippi, it’s the Mississippi Windstorm Underwriting Association.

Workers’ compensation

Covers medical bills and lost wages for employees injured on the job. Required for most Mississippi employers with five or more employees. Workers’ comp in Mississippi.