A plain-English insurance vocabulary
Insurance policies are dense with jargon that decides exactly what you pay and what you can claim. This reference defines the core terms across general, health, property, liability and life cover, so you can read a policy schedule and know where each pound goes. Use the search box and category filter to jump straight to the term you need.
How it works
Most insurance terms fall into one of two buckets: how much you pay, and what gets covered. The cost-side terms stack in a defined order on a claim:
1. Premium → ongoing cost to hold the policy
2. Deductible → you pay this first on a claim
3. Co-pay / Coinsurance → your share of covered costs after the deductible
4. Out-of-pocket max → ceiling on your total spend; insurer then pays 100%The coverage-side terms — peril, exclusion, sum insured, liability limit — define the scope and ceiling of what the insurer will pay. Together they tell you the real shape of your protection beyond the headline price.
Terms that trip people up most often
Deductible vs excess. In the US this is called a deductible; in the UK it is usually called an excess. Both mean the same thing: the fixed amount you pay first before the insurer covers anything on a claim. A voluntary excess is an amount you choose to add on top of the compulsory minimum in exchange for a lower premium.
Coinsurance vs co-pay. These are easily confused because they sound similar and both describe a cost-sharing split with the insurer. A co-pay is a flat fixed fee per service (for example £25 per GP visit regardless of what the visit costs). Coinsurance is a percentage of each bill you owe after the deductible (for example you pay 20% of a £500 bill, the insurer pays 80%). On some policies you can owe both.
Actual cash value vs replacement cost. This distinction matters enormously on property claims. Actual cash value deducts depreciation — an eight-year-old laptop worth £200 today pays out £200. Replacement cost ignores depreciation and pays what it costs to buy a new equivalent today, perhaps £800. Replacement-cost cover costs more in premium but drastically reduces what you pay out-of-pocket after a loss.
Subrogation in practice. If you make a claim and your insurer later recovers money from a third party who caused the loss, it keeps that recovery up to what it paid you. This is not a concern unless you signed away your right to sue the responsible party before claiming — doing so can void subrogation and make your insurer’s payment conditional.
Reading a policy schedule efficiently
Start with three things: the sum insured or liability limit (the maximum payout), the deductible or excess (your first-loss share), and the exclusions list. The headline premium tells you what the policy costs; those three items tell you what the policy actually does. Most disputes arise from exclusions that were never read, or from misunderstanding whether a claim falls inside the sum insured or is subject to a sub-limit.
Tips and notes
- A lower premium often means a higher deductible — compare total likely cost, not just the monthly figure.
- Liability limits are frequently split into a per-occurrence cap and an annual aggregate; both can be exhausted in a bad year.
- Replacement-cost cover costs more than actual-cash-value but pays far better on older property, because it does not deduct depreciation.
- Exclusions are where most disputes start — read them before you read the price.