Home Insurance Glossary
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Actual cash value: the worth of a damaged or stolen item
at the time of the loss.
Additional living expense coverage : pays for some additional
living costs (i.e. motel, restaurant) if you must live elsewhere while
repairs are being made to your damaged home.
Adjuster : a person trained professionally to assess damage
and settle your claim. The adjuster may be a company employee or under
contract to the company.
All risk : losses are covered for any reason except for those
specifically excluded in the policy
Appraisal : an evaluation of your property claim
Binder : a temporary or preliminary coverage until a policy
can be written or delivered.
Cancellation : you or the insurance company stop coverage
before your policys normal expiration date.
Claim : a request for reimbursement for a loss covered under
Conditions : the part of the insurance policy that explains
the obligations of the insured and the insurance company under the property,
for property and liability. It explains your duties in the event of a loss
and how the company will settle.
Declarations page : commonly the first page of your policy
containing the name of the insured, the address, the dollar amount of coverage
provided, a description of the property, and the cost.
Deductible : the amount of the loss you paid out-of-pocket
per claim or accident.
Depreciation: the decrease in your homes value since
the time it was built because of age or wear and tear.
Endorsement : an attachment to your insurance policy that
adds to, removes or changes the original terms. You can negotiate various
types of endorsements to tailor a policy to your special needs.
Exclusions : certain causes and conditions that your insurance
policy does not cover.
Floater : additional coverage added to your policy to cover
items such as antiques, jewelry, furs, guns, and so forth.
Guaranteed replacement cost coverage : pays for the full
cost to replace or rebuild your home, even if it costs more than your policy
Inflation guard coverage : an automatic annual raise in your
coverage limits based on the insurance companys estimate of rising
building material and labor prices.
Liability coverage : insurance that covers for injuries to
another or damage to another persons property for which you are
Limit : the maximum amount of benefits your insurance policy
pays in the event of a loss
Loss: the dollar value of property damage or physical injuries.
Midterm cancellation: a cancellation that occurs during the
policy term and prior to the expiration or renewal date of the policy.
Named perils: individually itemized, covered, perils stated
in your policy.
Non-renewal: the refusal by a company to renew your policy
when it expires.
Offer : the amount your insurance adjuster proposes to pay
you for your loss
Peril : an event that causes a loss to your home and property
such as fire, windstorm, and theft. Policies have two sets of perils: covered
Personal property floater: an endorsement that provides additional
coverage for furs, jewelry, stamps, coins, antiques, computer, guns, and
other items that exceed the normal low limits in your home policy.
Premium: the amount of money paid for your insurance policy.
Replacement cost coverage : how much it will cost you to
replace a stolen or damaged item with a comparable, new item at todays
Replacement cost guarantee : pays the full cost to repair
or replace your dwelling or personal property, even if it exceeds the original
Risk : has two meanings: (a) the chance of loss such as from
a peril; and (b) the person that is insured by a policy.
Settlement : the dollar amount you agree to accept from the
insurance company as payment for your loss.
Subrogation : a third party (e.g., the insurance company)
assumes anothers legal right to collect a debt or damages.
Umbrella liability : insurance protection against losses
in excess of the amount covered by other liability policies.
Underwriting : the process by which an insurance company
selects and classifies risks according to their degree of insurability.