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Insurance glossary

The industry is full of jargon. But what does it all mean? The glossary is designed to help break down insurance jargon into everyday concepts. For exact definitions of terms in your policy, please see your personal policy for full details.


Actual cash value

"Actual cash value" means the amount it would cost to repair or replace covered property, at the time of loss, with material of like kind and quality, less allowance for physical deterioration and depreciation, including obsolescence. "Actual cash value" applies to valuation of covered property regardless of whether that property has sustained partial or total loss.

At Goodcover, for short we often call this the "craigslist" price for something. What are "depreciated" clothes worth? This is why all Goodcover policies pay losses on a "Replacement Cost Coverage" basis.

Additional interest

An Additional Interest is a person or company, usually your landlord, who you name on your policy and who is entitled to get notifications from the insurer about your policy’s status.

Basically, landlords want to know you have active coverage, enough coverage, you pay the bill, and your policy doesn’t cancel or lapse for any reason. Goodcover takes care of these notifications for you without exposing any more personal data than is legally required.

One thing to know is 9 times out of 10 when a Landlord says they want to be an "Additional Insured" on your policy, what they mean is they want to become an Additional Interest.


Bodily injury

Physical injury including sickness or disease to a person. In a homeowners/renters policy this is relevant to the liability portion of the policy.



A request made by the insured (you) for payment from the insurer due to loss incurred and covered under the policy agreement.



The amount of money the policyholder is responsible during a claim. For example, if your $2,000 computer is stolen, and you have a $500 deductible, you will receive $1,500 ($2,000 - $500).


The conversion of a mutual insurance company, which is one that is owned by the policyholders, to a capital stock company. Conversely, shareholders own a stock insurance company.


A refund of a portion of the premium paid by the insured (you) from the insurance company. For Goodcover this would happen if during the year we paid less for claims than expected, on average.


Earned premium

The portion of the insured's prepaid premium that corresponds to coverage provided in the past. Since you had coverage for that time, the premium is considered “earned” by the insurer.

For instance, if you paid for a yearly policy entirely upfront, six months into the policy 50% of the premium is considered "earned". In California, when you cancel a residential insurance policy, the insurer must legally return the "unearned" portion of the premium you’ve already paid them. See "Prorated refund".


An amendment or rider to a policy adjusting coverages and overriding the general contract. Insurance is a contract between the insured and insurer. You can think of them as instructions, for instance "Remove exclusion for accidental damage for laptops..."



Fire coverage protects the insured against the loss to personal property from damage caused by the peril of fire or lightning.


Grace period

The amount of time you have after your premium is due without interruption of coverage.



Also known as a Renters Insurance Policy, this is the standard policy that includes coverage that protects you primarily from lawsuits (Liability) and your stuff (Property).



The person (aka policyholder) listed on the insurance policy who is protected in case of a covered loss.

The policyholder is not the only person though that fits under Goodcovers policy’s definition of "insured" - spouses, roommates, and resident relatives, even if they’re not named on the policy, are automatically insureds. If they’re on the lease, they’re covered by your policy.

Insured location

The premises covered under a policy. In a renters insurance world this would be the place you rent that is listed on the policy as the insured location.

Policies (including ours) cover a bunch of other locations that aren’t named in the policy as “insured locations” - such as a place you are temporarily living, or a place you are moving into from your old residence.



When a policy expires without being renewed, it is considered "lapsed". If this ever happens, and you want to get insured again, you’ll have what insurers call a "lapse in coverage" - i.e. a period in which your stuff wasn’t insured - which makes a lot of them nervous. So, if you are looking to keep your coverage, best thing to do is make sure your payment details and accounts are up to date, so it doesn't accidentally become cancelled or lapsed.

Loss of use

Protection in the event your place becomes uninhabitable due to a covered loss. We'll pay for alternative accommodations and additional living expenses for you. Also known as ‘temp-housing'.


Moral hazard

Moral hazard is the term insurers use to describe changes you make in your behavior that increase the risk of loss, since you know you have insurance to cover you if there's a loss.

For instance, you know your insurance will cover you if your bike is stolen, so you intentionally decide not to bother locking it up.



Occurrence means an accident, which first happens or first commences during the policy period and which results in "bodily injury" or "property damage".


Peril, or "Perils insured against"

A cause of a loss - basically, the things you are insured against. HO-4 Renters Insurance like Goodcover's policy have a named set of Perils (found on page 11 of one of our sample policies).

Property damage

Property damage in the context of a Goodcover policy means physical injury to, destruction of tangible property, including the loss of use of that property.

Prorated refund

In some states, when you cancel a residential insurance policy, the insurer must legally give you a prorated refund. This means they must return the "unearned" portion of the premium you’ve already paid them. For instance, if you paid your yearly premium upfront, and cancelled six months into the policy, you will be due a refund of 50% of what you paid.


Replacement cost

"Replacement cost" means the amount necessary to repair or replace the damaged property with no deduction for depreciation.

At Goodcover, we often call this the "retail cost" for short, since for most people, it means the cost to buy something again new at retail prices.