The words they use, and what they cost you.
Insurance is priced in English and settled in jargon. Every term Koala uses anywhere on this site is defined here, including the part a dictionary leaves out: where the word actually costs people money.
- 29 terms
- 4 categories
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- What you payThe words on the bill, and the ones that decide what you owe when you claim6 terms
- What you're covered forThe words that decide whether a loss is paid at all, and how much of it8 terms
- When you claimThe words that appear once something has gone wrong11 terms
- Who's involvedEveryone with a role in your claim, and whose side they're on4 terms
What you pay
The words on the bill, and the ones that decide what you owe when you claim.
The amount you pay out of your own pocket on a covered claim before the insurer pays anything. A $1,000 deductible on a $6,000 loss means the insurer's cheque is $5,000.
Where it bites
Raising your deductible is the fastest way to cut your premium, which is exactly why it gets recommended so often: the saving is visible every month and the cost only shows up on the worst day of your year. Some homeowner policies also carry a separate, much larger percentage deductible for wind, hail, or hurricane, expressed as a share of your dwelling limit rather than a flat dollar figure.
- Coinsurance
The percentage of a covered cost you keep paying after your deductible is met. In health insurance, 20% coinsurance on a $10,000 procedure means you owe $2,000 of it and the plan owes $8,000.
Where it bites
People read the deductible as the finish line. It isn't; it's where coinsurance starts. Your true worst case is the out-of-pocket maximum, not the deductible.
A flat fee you pay for a specific health service ($30 for a visit, $15 for a prescription), regardless of what the service actually cost.
Where it bites
A copay looks like the whole price and often isn't. Depending on the plan, the visit's copay may not cover the labs, the imaging, or the specialist consult ordered during it, each of which can land later as its own bill with its own cost share.
- Out-of-pocket maximum
The ceiling on what you can be made to pay in a plan year for covered, in-network care. Once your deductible, copays, and coinsurance add up to this number, the plan pays 100% of covered costs for the rest of the year.
Where it bites
It is the single most important number on a health plan and almost nobody shops on it. It also does not cover everything: premiums don't count toward it, and neither do out-of-network charges or services the plan never covered in the first place.
- Limit
The most the insurer will pay, whether per claim, per category, or per policy period. A policy is really a stack of separate limits: dwelling, personal property, liability, loss of use, each with its own ceiling.
Where it bites
A loss that runs past the limit stops being the insurer's problem and becomes yours, in full. This is why the liability limit matters far more than most people assume: it is the number standing between an at-fault accident and your savings.
Also written as Cost share
Also written as OOP max
Also written as Coverage limit, Policy limit
What you're covered for
The words that decide whether a loss is paid at all, and how much of it.
The part of a policy that pays for harm you cause to other people: their injuries, their property, and the legal defence if they sue you. It is the half of auto insurance every state requires you to carry.
Where it bites
State minimums were set decades ago and have not kept pace with what a hospital stay or a new car costs. Carrying the legal minimum is legal; it is not the same as being covered.
- Comprehensive and collision
The two optional auto coverages that pay for damage to your own car. Collision covers a crash regardless of fault; comprehensive covers roughly everything else: theft, hail, fire, flood, glass, and animal strikes.
Where it bites
"Full coverage" is a phrase salespeople use and no policy actually contains. It usually means liability plus these two, which still doesn't include your deductible, and may not include a rental car while yours is in the shop.
- Actual cash value
What your property was worth the moment before it was destroyed: replacement cost minus depreciation for age and wear. A ten-year-old roof is paid as a ten-year-old roof.
Where it bites
This is the single largest gap between what people think they bought and what they get. An ACV settlement on a $30,000 roof can arrive as $12,000, and the policy is being honoured exactly as written. Whether your policy is ACV or replacement cost is often decided by one line in the declarations you have never read.
- Replacement cost
What it costs today to replace what you lost with something of like kind and quality, with no deduction for age or wear.
Where it bites
Most replacement-cost policies don't hand you the replacement-cost cheque up front. They pay actual cash value first and release the rest (the recoverable depreciation) only after you have actually done the repair and sent the receipts. Miss the deadline for that second claim and the difference stays with the insurer.
A loss the policy explicitly will not pay for, listed in its own section. Flood and earthquake are excluded from essentially every standard homeowner policy in the United States and must be bought separately.
Where it bites
Exclusions are where valid-feeling claims quietly fall apart, and the exclusion that gets you is rarely the dramatic one. It's usually a mundane phrase (wear and tear, neglect, gradual leak, earth movement) applied more broadly than the facts support. An exclusion applied too broadly is one of the most challengeable things in a denial letter.
- Endorsement
An add-on that changes the base policy by adding a coverage, raising a sub-limit, or scheduling a specific valuable item like a ring or a bike so it's insured for its real value.
Where it bites
Standard policies cap whole categories of property (jewellery, cash, electronics, tools) at surprisingly low sub-limits, no matter how much total personal-property coverage you carry. Without an endorsement, that cap is what you get, and you find out about it after the theft, not before.
- Loss of use
The coverage that pays your extra costs of living somewhere else while your home is uninhabitable: hotel, short-term rental, meals and laundry above what you'd normally spend.
Where it bites
It's real money that goes unclaimed constantly, because it doesn't feel like part of the claim and nobody sends you an invoice for it. Keep every receipt from the day you move out; the coverage is usually capped as a percentage of your dwelling limit, or by a hard deadline, or both.
- Declarations page
The one- or two-page summary at the front of your policy listing who is insured, what's covered, every limit, every deductible, and the endorsements attached. It is the policy in miniature.
Where it bites
Almost every question you have about your own coverage is answered on this page, and almost nobody has read theirs. If you look at one insurance document this year, look at this one. Read it before a claim, when you can still change what it says.
Also written as Physical damage coverage, Full coverage
Also written as ACV
Also written as RCV, Replacement cost value
Also written as Rider, Floater
Also written as Additional living expenses, ALE
Also written as Dec page
When you claim
The words that appear once something has gone wrong.
The sworn statement of what you lost and what you're claiming for it, usually on the insurer's own form, and usually due within a fixed window after they request it.
Where it bites
It is a deadline with teeth. Missing it, or filing it incomplete, can hand the insurer a procedural reason to deny an otherwise perfectly valid claim, one that has nothing to do with the merits of what happened to you.
The amount an adjuster subtracts from replacement cost to account for the age, wear, and remaining useful life of what was damaged.
Where it bites
Depreciation is a judgement call dressed as arithmetic. The schedule an adjuster applies (how many years they think a roof, a floor, or a laptop lasts) is an assumption, and assumptions can be argued with when the item was newer, better maintained, or longer-lived than the schedule assumes.
The chunk the insurer held back from a replacement-cost claim, which you can claim back once the repair is actually done and you send proof of what it cost.
Where it bites
It is money you are already owed that is only paid if you ask, correctly, in time. It routinely goes unclaimed, either because nobody explained that a second payment existed, or because the deadline to claim it ran out while the repair was still being scheduled.
- Total loss
When the cost to repair your vehicle exceeds a set share of its value, the insurer stops paying for repairs, takes the car, and pays you what it decides the car was worth.
Where it bites
The entire settlement collapses into one number, the vehicle's actual cash value, and that number is built from comparable listings the adjuster chose. Offers routinely omit the sales tax, title, and registration you'll pay on a replacement, which are recoverable in many states if you ask.
A request to reopen and increase a settlement after damage or cost is found that the original estimate missed: hidden rot under a floor, code upgrades the repair triggers, a price that moved.
Where it bites
Adjusters' estimates are written from what was visible on the day of the inspection, and repairs routinely uncover more. A settlement is not final just because it was paid; a supplement is the normal, expected mechanism for correcting it.
A provision in most property policies for breaking a deadlock over the amount of a loss. Each side hires an appraiser, the two appraisers pick a neutral umpire, and any two of the three can set the figure. No lawsuit required.
Where it bites
It is the most underused sentence in American property insurance. It settles disputes about how much, not about whether the loss is covered at all. And it is invoked in writing, by you, not offered to you.
After your insurer pays you, it inherits your right to go after whoever actually caused the loss and recover what it paid out.
Where it bites
If they succeed, your deductible is usually refunded to you out of the recovery, which is why it matters that you hear about it. It arrives quietly, months later, and only if you're paying attention.
An insurer's failure to deal with you fairly and honestly: a denial with no reasonable basis, an offer with nothing supporting it, an investigation that never happened, a claim slow-walked without cause.
Where it bites
Bad faith is a pattern, not a single letter, and it becomes visible only when the handling is laid out as a dated timeline. Every state sets its own standard and its own remedies, and none of it happens automatically; the record has to be built by you.
- Explanation of benefits
The statement a health plan sends after a claim showing what was billed, what the plan allowed, what it paid, and what it says you owe. It is not a bill.
Where it bites
It is the document that tells you a denial happened, and it is the one people throw away. The line explaining why something wasn't covered (a reason code) is the exact thing an appeal has to answer, and the clock on that appeal has usually already started.
The insurer's written refusal to pay a claim, in whole or in part, stating the reason and the policy language it relies on.
Where it bites
A denial letter is written to sound final. It is a first position, not a verdict, and it must tell you why, which means it also tells you exactly what an appeal has to answer. The reason cited is frequently narrower, or more arguable, than the tone of the letter suggests.
Also written as Totalled
Also written as EOB
Who's involved
Everyone with a role in your claim, and whose side they're on.
- Adjuster
The person who investigates your claim, decides what it's worth, and makes the offer. Unless you hired them yourself, they work for the insurer.
Where it bites
They are usually not being unfair, and they are never neutral. They apply the insurer's estimating software, the insurer's depreciation schedule, and the insurer's reading of the policy. Every one of those is a position, which means every one of them can be answered.
A licensed adjuster you hire to represent you instead of the insurer. They document the loss, argue the valuation, and negotiate the settlement on your behalf.
Where it bites
They are paid a percentage of your settlement, typically in the region of 10 to 15%, which comes out of the money meant to rebuild your life. On a large, complex loss that can be worth every cent. On a straightforward one, it is a permanent cut of your payout in exchange for work that is largely reading, benchmarking, and letter-writing.
- State department of insurance
The state regulator that licenses insurers, sets the claim-handling rules they must follow, and takes complaints from policyholders about how a claim was handled.
Where it bites
Filing a complaint is free, it takes minutes, and it puts your claim in front of someone the insurer has to answer to in writing. It won't adjudicate your loss, but a regulator asking questions changes how carefully a file gets read.
An agent sells policies on behalf of one or more insurers. A broker shops the market on your behalf. Both are typically paid a commission by the insurer whose policy you end up buying.
Where it bites
The advice can be genuinely good and the incentive still points somewhere other than your interest. Koala takes no commission and sells no policy, which is why it can tell you the number and then leave you alone with it.
Also written as Claims adjuster, Company adjuster
Also written as DOI, Insurance commissioner
A word is a start. Here's the rest.
The glossary tells you what the language means. These tell you what your own coverage costs, where every figure came from, and what to do when a claim goes wrong.
- Read it
Methodology
Where every number comes from
The datasets, the exact arithmetic, and the levers Koala can't see. Nothing hand-copied.
- Read it
Estimate
What your coverage should cost
Build a profile once and see the range published rate data implies for every line you carry.
- Read it
Guides
Playbooks for when it goes wrong
Documenting damage, reading a denial, checking a total-loss valuation, line by line.
Now use it on your own policy.
Knowing the words is the cheap half. Build your profile and Koala will show you what every line you carry should actually cost: free, and with the arithmetic printed.