Reference
Plain-English definitions of the insurance terms you'll actually encounter — no jargon, no fluff. Bookmark this page and come back whenever you need a quick answer.
36 terms defined
The replacement cost of damaged or stolen property minus depreciation. If your 5-year-old TV is stolen, ACV pays what a 5-year-old TV is worth today — not what you paid for it. Compare with Replacement Cost Value.
Home InsuranceAn insurance professional who investigates claims, assesses damage, and determines how much the insurance company should pay. After you file a claim, an adjuster will typically inspect the damage in person or review photos and documentation.
Claims GuideA licensed professional who sells insurance policies on behalf of one or more insurance companies. A captive agent (like Blue Paper Co.) represents one carrier exclusively, while an independent agent represents multiple carriers.
Why Local AgencyA temporary proof of insurance coverage issued before the formal policy is prepared. Mortgage lenders typically require an insurance binder before closing on a home purchase.
First-Time HomebuyerCoverage that pays for injuries you cause to other people in an at-fault accident. In North Carolina, the minimum required bodily injury liability is 50/100 — meaning $50,000 per person and $100,000 per accident.
Auto InsurancePurchasing multiple insurance policies (such as auto and home) from the same carrier. Bundling your policies can save up to 25% on premiums and simplifies managing your coverage.
Bundle & SaveA formal request to your insurance company for payment after a covered loss or event. Filing a claim triggers the claims process — investigation, assessment, and payment if the loss is covered under your policy.
Claims GuideAuto insurance that pays to repair or replace your vehicle after a collision with another vehicle or object, regardless of who is at fault. Collision coverage is optional in NC but required if you have a car loan or lease.
Auto InsuranceAuto insurance that covers damage to your vehicle from non-collision events — theft, vandalism, hail, flooding, falling trees, and animal strikes. Like collision, it's optional in NC but typically required by lenders.
Auto InsuranceA legal doctrine used in North Carolina (one of only four states) where a person who is even 1% at fault in an accident may be completely barred from recovering damages from the other party. This makes carrying high liability limits and UM/UIM coverage critical for NC drivers.
NC Contributory NegligenceThe amount you pay out of pocket before your insurance coverage kicks in. For example, with a $1,000 deductible on a $5,000 claim, you pay $1,000 and insurance pays $4,000. Higher deductibles generally mean lower premiums.
The decrease in value of property over time due to age, wear, and tear. Depreciation is the key difference between Actual Cash Value and Replacement Cost Value policies.
Home InsuranceThe portion of a homeowners policy that covers the physical structure of your home — walls, roof, foundation, and built-in appliances. Your dwelling coverage limit should reflect the full cost to rebuild your home, not its market value.
Home InsuranceAn add-on to your insurance policy that modifies or extends coverage beyond the standard terms. Common endorsements include scheduled jewelry coverage, water backup coverage, and identity theft protection.
An account managed by your mortgage lender that collects a portion of your monthly payment to cover property taxes and homeowners insurance. Your insurance premium is paid from this account when it's due.
First-Time HomebuyerA specific event, condition, or type of property that is NOT covered by your insurance policy. Common exclusions include flood damage in homeowners policies, intentional damage, and normal wear and tear.
A separate policy (not included in standard homeowners insurance) that covers damage from flooding. Available through the National Flood Insurance Program (NFIP) or private carriers. In High Point, most properties are in low-risk zones, but 25% of flood claims come from these areas.
Home InsuranceCoverage that pays the difference between what you owe on your car loan and what the car is actually worth if it's totaled. If you owe $25,000 but the car's ACV is $20,000, gap insurance covers the $5,000 difference.
Auto InsuranceThe most common type of homeowners policy, covering your dwelling, personal property, liability, and additional living expenses. HO-3 policies cover your home on an 'open perils' basis (everything except what's specifically excluded) and personal property on a 'named perils' basis.
Home InsuranceInsurance that pays for injuries or damage you cause to others. In auto insurance, liability covers the other driver's medical bills and property damage. In homeowners insurance, it covers injuries to guests on your property. NC requires minimum auto liability of 50/100/50.
Auto InsuranceCoverage that pays for additional living expenses — hotel, meals, laundry — if your home is uninhabitable due to a covered loss. Also called Additional Living Expenses. Typically covers the difference between your normal living costs and temporary costs.
Home InsuranceAuto insurance that pays medical expenses for you and your passengers after an accident, regardless of who is at fault. Medpay is especially valuable in NC because of the contributory negligence rule — it pays even if you're partially at fault.
Auto InsuranceA type of coverage that only protects against risks specifically listed in the policy — such as fire, theft, windstorm, and hail. If a peril isn't named, it's not covered. Compare with Open Perils.
A type of coverage that protects against all risks except those specifically excluded in the policy. Open perils coverage is broader and generally more expensive than named perils coverage.
The portion of a homeowners or renters policy that covers your belongings — furniture, electronics, clothing, appliances. Standard policies typically cover personal property at 50-70% of your dwelling coverage limit.
Renters InsuranceThe written contract between you and your insurance company that details what is covered, what is excluded, your deductibles, your limits, and your premium. Always read your declarations page — it summarizes the key terms of your policy.
The amount you pay for your insurance coverage, typically billed monthly, quarterly, semi-annually, or annually. Your premium is determined by factors like your coverage limits, deductible, location, claims history, and credit score.
Auto insurance that pays for damage you cause to another person's property (their car, fence, mailbox, etc.) in an at-fault accident. NC's minimum property damage liability is $50,000.
Auto InsuranceInsurance for tenants that covers personal property, liability, and additional living expenses. It does NOT cover the building itself — that's the landlord's responsibility. In High Point, renters insurance typically costs $12-$20 per month.
Renters InsuranceCoverage that pays the full cost to replace damaged or destroyed property with new items of similar kind and quality, without deducting for depreciation. RCV policies cost more than ACV policies but provide significantly better protection.
Home InsuranceThe process by which your insurance company seeks reimbursement from the at-fault party (or their insurer) after paying your claim. If another driver hits your car and your insurer pays for repairs, they'll pursue the other driver's insurer to recover costs.
A policy that provides additional liability coverage beyond the limits of your auto and homeowners policies. A $1 million umbrella policy typically costs $150-$300 per year and protects your assets if you're sued for more than your underlying policies cover.
Umbrella InsuranceCoverage that pays for your injuries and damages when the at-fault driver doesn't have enough insurance to cover your losses. Critical in NC due to the contributory negligence rule.
Auto InsuranceThe process insurance companies use to evaluate risk and determine whether to offer coverage and at what price. Underwriters review factors like your driving record, credit score, property condition, and claims history.
Coverage that pays for your injuries and damages when the at-fault driver has no insurance at all. Nearly 1 in 7 NC drivers is uninsured, making UM coverage essential — especially given the contributory negligence rule.
Winston-Salem UM GuideA separate, often higher deductible that applies specifically to wind and hail damage claims on your homeowners policy. In NC, this is typically 1-2% of your dwelling coverage — on a $300,000 home, that's $3,000-$6,000 out of pocket.
Hail Damage GuideInsurance terms only get you so far. If you want to know what coverage you actually need, call your local agency.