Policy Translator
Insurance, in plain English
Insurance policies are written to be precise, not to be read. The definitions matter, the exclusions often matter more, and very little of it gets explained at the point of sale. This page translates the terms that come up most often into plain English. It is a starting point for a better conversation, not a substitute for reading your policy or for advice about your own situation.
One rule applies throughout: the policy language governs. If anything here differs from what your policy says, the policy controls.
Plain English
Policy basics
The handful of terms that appear on every policy you will ever hold.
- Premium
The amount you pay for the policy, usually monthly or annually. It is the price of the promise, not a measure of how much protection you have.
A lower premium can mean thinner coverage. Compare what is covered before comparing price.
- Deductible
The amount you pay out of pocket on a claim before the insurer pays. A higher deductible usually lowers the premium.
Choose a deductible you could comfortably pay tomorrow, not the one that makes the quote look best.
- Limit
The most the insurer will pay for a covered loss, whether per claim, per year, or per item, depending on the policy. Anything above the limit is yours to cover.
Limits set years ago often trail today's asset values and liability exposure.
- Exclusion
Something the policy specifically does not cover. Exclusions are listed in the policy and can remove coverage you assumed you had, such as flood, certain business activities, or intentional acts.
Most unpleasant claim surprises trace back to an exclusion no one pointed out.
- Endorsement
An amendment attached to a policy that adds, removes, or changes coverage. Also called a rider. Endorsements are how a standard policy is tailored to a specific situation.
The endorsements often say more about your real coverage than the base policy does.
- Declarations page
The summary page at the front of a policy. It lists who is insured, what is covered, the limits, the deductibles, the premium, and the policy period.
It is the fastest way to see what you actually bought. Every review starts here.
Plain English
Property and liability
How homes, vehicles, valuables, and the lawsuits that follow them are covered.
- Replacement cost vs. actual cash value
Replacement cost pays what it costs to replace the item new today. Actual cash value pays replacement cost minus depreciation, so an older roof or vehicle pays out far less.
On a home or a collection, the difference between the two can be substantial.
- Agreed value
A coverage basis where you and the insurer settle on an item's value up front, and that amount is paid in a total loss with no depreciation argument afterward. Common for collector cars, art, and jewelry.
Standard auto and homeowners policies rarely work this way for high-value items.
- Scheduled items
Specific high-value belongings, such as jewelry, watches, or art, listed individually on a policy with their own limit, often supported by an appraisal. Unscheduled items fall under a general limit instead.
Standard homeowners policies apply low sub-limits to jewelry, watches, and similar items.
- Umbrella and excess liability
Extra liability coverage that sits on top of your auto, home, and other policies and pays once their limits are used up. It protects your assets and future income from a large lawsuit.
For high-net-worth households, guidance typically starts at $5 to $10 million or more.
- Personal liability
Coverage for injuries or property damage you or your household are legally responsible for, including the cost of legal defense. Found in homeowners and renters policies and extended by an umbrella.
Your net worth, not your policy limit, is what a judgment can reach.
Plain English
Income and life
Protecting the ability to earn, and the people who depend on it.
- Individual disability insurance
A policy you own personally that replaces a portion of your income if illness or injury keeps you from working. It follows you between employers and is not tied to a team or company plan.
Group disability through an employer is often capped and ends when the job does.
- Own-occupation
A definition of disability that pays if you cannot perform the duties of your specific occupation, even if you could do other work. Weaker definitions pay only if you cannot work at all.
For a surgeon or an athlete, the definition is the policy.
- Permanent total disability
Coverage that pays a lump sum if an injury or illness permanently ends your ability to work in your profession. For athletes, this is the policy that protects a career that ends early.
The amount should track the career earnings at risk, not a round number.
- Loss of value and contract protection
Coverage designed to pay if an injury or illness reduces the value of your next contract rather than ending your career. Availability depends on the market and the athlete's situation.
Most useful heading into a contract year, when the expected value can be measured.
- Term vs. permanent life insurance
Term life covers you for a set number of years at a lower cost. Permanent life, such as whole or universal life, is designed to last a lifetime and builds cash value, at a higher premium.
Match the type to the obligation. A mortgage and young children have an end date. An estate does not.
- Key-person coverage
Life or disability insurance a business owns on a person whose loss would seriously hurt the company, such as a founder or top producer. The business is the beneficiary and uses the proceeds to recover.
Lenders and investors often require it.
Plain English
Business
The coverages a company relies on, and the ones it often assumes it has.
- General liability vs. professional liability
General liability covers bodily injury, property damage, and related claims from your operations, such as a customer injured on site. Professional liability, also called errors and omissions, covers claims that your advice or service caused a financial loss.
Many businesses carry one and assume it covers the other. It does not.
- Workers compensation
Coverage for employees injured on the job: medical costs, lost wages, and related benefits. Required by law for most employers, with rules that vary by state.
Misclassified workers or payroll is a frequent and expensive audit finding.
- Business interruption
Replaces lost income and covers continuing expenses when a covered event, such as a fire, shuts down operations. Usually attached to a commercial property policy and limited to a set recovery period.
The building is insured. The months of lost revenue often are not.
- Cyber insurance
Covers the costs of a data breach, ransomware, or other cyber event: forensics, customer notification, legal defense, business interruption, and in some policies extortion payments.
Any business that stores customer data or takes payments carries this exposure.
- Management liability
A family of coverages protecting a company and its leaders from claims about how the business is run, including directors and officers, employment practices, and fiduciary liability.
Without it, employment-related claims can reach the owners personally.
Plain English
Group health and benefits
The vocabulary of an employee benefits program.
- Plan design
The structure of an employee benefits program: which plans are offered, the deductibles and copays, the networks, and who is eligible. Design drives both the cost and how employees feel about the benefit.
A plan nobody uses well is an expense, not a benefit.
- Employer contribution strategy
How much of the premium the employer pays versus the employee, and how that split works across plan tiers and family coverage. It is a lever for budget, recruiting, and retention.
Changing the split can move participation and cost more than changing the carrier.
- Market review
Taking the group's census and claims picture to multiple carriers at renewal to compare price, network, and plan options, instead of accepting the incumbent's renewal.
Renewals increase quietly when nobody shops them.
Common gaps
What a review most often finds
These come up again and again, across households and businesses of every size. None of them is exotic. All of them are fixable.
- Home and property limits that have not kept up with rebuilding costs or renovations.
- Jewelry, watches, and art covered only under low general limits instead of being scheduled.
- No umbrella policy, or an umbrella that does not sit correctly above every underlying policy.
- Employer disability coverage assumed to be enough, when it is capped and ends with the job.
- Life insurance sized years ago, before the mortgage, the business, or the children.
- Business policies that never added the newest entity, location, or line of work.
- Professional liability missing because general liability was assumed to cover it.
- Personal and business coverage bought from different agents who have never compared notes.
Bring me the policies. I will translate them.
A Portfolio Review reads every policy you hold, explains it in plain English, and tells you where the gaps are and what it would take to close them.