| Actual Cash Value |
| The cost of repairing or replacing damaged property with property of the same kind and quality, less depreciation (i.e., in the same physical condition as the original property prior to damage). |
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| Additional Coverages |
| Extra coverage that can be purchased to provide protection above and beyond that provided in the homeowners policy (e.g., a higher amount of coverage against the theft of jewelry). When such additional coverage is purchased, it becomes an Endorsement or Rider to the original policy.
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| Additional Living Expense |
| The part of homeowners insurance that provides reimbursement for motel rooms, meals and other expenses when loss of property by a covered peril forces you to maintain temporary residence elsewhere. Also called loss of use coverage. |
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| Adjuster |
| An insurance company representative who seeks to determine the extent of the insurer's liability for loss when a claim is submitted.
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| Agency |
| An insurance sales office that is directed by a general agent, manager. independent agent or company manager.
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| Agent |
| A person licensed by a state insurance department who solicits, negotiates or effects insurance contracts on behalf of one or more insurers.
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| Blanket Endorsement |
| Instead of scheduling a list of individual items, a single Blanket Endorsement will cover a wide range of personal belongings. It "blankets" its coverage over what your carrier offers to cover: jewelry, golf clubs, art, etc.
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| Business Pursuits |
| Business Pursuits extends liability coverage to people who operate at-home sales or other small "franchised" ventures (i.e. Tupperware, Avon, etc.). However, it does not cover you if you own the business.
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| Captive Agent |
| An agent who sells insurance for one company.
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| Catastrophe |
| To insurers, a catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million. Insurance actuaries calculate the probability of catastrophic loss on a state-by-state basis, using a formula based on the total number of catastrophes in each state over a 40-year period. This catastrophe factor, calculated annually, is included in the price of insurance.
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| Claim |
| A demand made by an insured, or an insured's beneficiary, for payment of benefits provided by an insurance policy. |
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| Condominium Owners Insurance |
| Though similar in personal property and liability coverage to homeowners insurance, structurally the condo owner’s policy is from the "walls in" and does not cover the building itself.
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| Coverage |
| The scope of protection provided under an insurance contract.
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| Depreciation |
| A decrease in the value of property over a period of time resulting from use, obsolescence or wear and tear.
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| Dwelling Policy |
| Though similar in personal property and structural coverage to a homeowners policy, a dwelling policy excludes liability coverage.
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| Earthquake |
| Earthquake may be added as an endorsement. It protects against damage incurred from an earthquake, tremors and aftershocks. It is usually in the form of a deductible, roughly 10% of your home's insurance (your house is insured for $100,000: you pay $10,000). However, an Earthquake Endorsement does not cover a flood due to an earthquake.
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| Emergency Measures |
| Those repairs or other actions taken to protect the insured and the insured's property from further loss when damaged or destroyed by a covered peril.
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| Endorsement |
| An attachment to an insurance policy that amends and alters the coverage provided in the policy. Also called a Rider.
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| Exclusion |
| Specific situations, conditions or circumstances that are listed in the insurance policy as not being covered.
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| Floater |
| Property insurance for items that are moved from location to location, covering losses wherever they occur. It is typically bought to cover jewelry, furs and other items whose full value may not be covered in standard homeowners policies.
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| Guaranteed Contents |
| Depreciation of value is common with personal belongings. Things like TV's, radios and furniture naturally lose value as time goes on: the $200 14" TV you bought two years ago is no longer worth $200. In the event you claim the TV as a loss, under a standard policy, your carrier would reimburse you minus 2 years worth depreciation (referred to as actual cash value). With Guaranteed Contents, you're guaranteed replacement regardless of depreciation. You would be reimbursed with the amount you paid two years ago or have it replaced with a comparable item.
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| Guaranteed Dwelling |
| The market value of your home is determined by many factors including the land it sits upon, the quality of nearby schools, local social demographics and the desirability of the neighborhood. Standard insurance does not cover this market value, it only covers your home's replacement value (how much it would cost to rebuild). With Guaranteed Dwelling, your carrier will cover the cost of rebuilding your home even in excess of of your policy. For example, your home is "worth" $180,000 on the market, but would only cost $150,000 to rebuild. With Guaranteed Dwelling, your carrier would pay the extra $30,000 if necessary.
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| Home Business |
| If you operate a small business at home (and own it), Home Business extends your liability coverage. However, it must be a small business, like violin lessons or baking. The entire ground floor of a two-story house (with you living on the second floor) normally doesn't qualify.
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| Home Daycare |
| Home Daycare is necessary if you operate such a business in your house. Your standard policy will not cover any liability claims should they arise (i.e. little Billy trips over some Tinker Toys while in your home daycare).
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| Homeowners Insurance |
| A "package" policy providing coverage against property and liability perils facing homeowners.
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| Income Property |
| Your standard policy's liability coverage doesn't include structures you rent for personal income. Coachhouses, poolhouses and converted basements need a separate endorsement of Income Property to help protect you. Although your tenant may have his/her own Renter's Insurance, premises liability may still fall on you.
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| Independent Agent |
| An agent who represents more than one insurer.
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| Inflation Guard |
| Building costs increase with inflation like everything else. Unfortunately, your homeowners insurance will remain the same if not carefully monitored. Inflation Guard automatically adjusts your home coverage as determined by the industry's inflation statistics.
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| Insurance |
| A formal device for reducing the chance of loss by transferring the risks of several individual entities to insurance companies.
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| Insurance Commissioner |
| The head of a state's insurance regulatory agency. Also known as the Director or the Superintendent in some states.
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| Insurance Fraud |
| Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid.
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| Insured |
| The party covered by an insurance arrangement, to whom an insurer agrees to indemnify for losses, provide benefits or render services.
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| Liability |
| Individual responsibility for causing, through negligence, injury to another person or damage to another person’s property. Also called Personal Liability.
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| Liability Insurance |
| Insurance that pays and renders services on behalf of a policyholder who is unintentionally, but legally responsible for bodily injury or property damage that is caused to another person and covered in the policy.
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| Market Value |
| The price for which something would sell under current market conditions.
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| Ordinance or Law Exclusion |
| Homeowners policies may exclude situations where repair or replacement of damaged property must be done in conformance with building codes requiring upgraded materials. A standard homeowners policy may cover only the cost of replacing or repairing with the original grade of materials. The difference in cost between the old materials and the new materials required by ordinance or law is excluded or limited, unless the homeowner has purchased additional coverage.
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| Other Structures |
| Structures like fences, tool sheds and benches are usually covered by a 10% limit from your standard policy (i.e. your home is insured for $150,000 so structures are covered by $15,000). However, this may not always be adequate for larger or more elaborate structures (gazebos, stables, etc.). Other Structures increases the limit to help cover costs in case of loss.
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| Package Policy |
| A single insurance policy that combines several coverages available separately. For example, homeowners insurance is a package policy, combining property, liability and theft coverages.
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| Peril |
| A property insurance term referring to the possible cause of loss such as a fire or a windstorm.
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| Personal Injury |
| This is a form of extended liability coverage. Whereas your standard policy covers "normal," more physical injuries (i.e. your friend breaks his arm at your party), Personal Injury helps protect you from lawsuits of Libel, Slander and Defamation of Character. If you have an umbrella policy, you may not need it.
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| Personal Property |
| All tangible property not classified as real property.
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| Policy |
| A written contract for insurance between the insurance company and the policyholder, stating which perils and damages are covered and which are not.
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| Premium |
| The amount of money an insurance company charges, based on a given rate, to provide the coverage described in the policy, or, simply stated, the price of insurance protection for a specified risk for a specified period of time. Typical homeowners insurance premiums are charged annually.
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| Property Coverages |
| Insurance that covers damage to or loss of the policyholder's property.
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| Rates |
| The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves as the basis for the premium.
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| Real Property |
| Land and most things attached to the land such as buildings and vegetation.
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| Regulation |
| Insurance is a state-regulated business. State insurance laws are administered by insurance departments, whose job includes approval of rates and policy forms, investigation of company practices, review of annual financial statements, periodic examination of books and liquidation of insolvent insurers.
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| Renters Insurance |
| A form of homeowners insurance offering coverage for personal property and liability, but excluding real property.
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| Replacement Value |
| The cost of replacing property without deducting for depreciation.
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| Risk |
| This word has two meanings for insurers: (1) the chance of loss, such as from a peril; and (2) the person or entity that is insured by a policy.
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| Scheduled Endorsement |
| Most insurance carriers have established certain reimbursement limits to what you can claim on personal items. As a result, precious belongings like jewelry, antiques and silverware may not be adequately covered. EachScheduled Endorsement covers a specified item listed along with its value. A degree of extended coverage is also possible apart from normal perils (i.e. diamond from an engagement ring is lost due to a loose setting). Much like Guaranteed Contents, depreciation of value is not a factor. Scheduling can increase premiums significantly.
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| Sewer and Drains |
| Damage to your finished or storage basement is not covered by standard insurance in the event of faulty sewer lines or drains. It's not covered by flood Insurance either! Sewers and Drains will help cover losses from such an event (limits and contents o coverage vary: contact your agent).
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| Special Computer Insurance |
| Although computers may be covered under normal conditions of property protection, it may not be enough. Many businesses operate from home and the loss of a computer may seriously damage the home's income. Computer Insurance helps cover replacement costs, but usually doesn't cover the electronic data within or spontaneous "non-peril" malfunction.
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| Underwriter |
| A company representative who reviews applications for insurance coverage to ensure that they are acceptable and appropriately priced.
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| Watercraft |
| Watercraft provides liability coverage for certain types of watercraft. Conditions are usually specified within the endorsement (inclusions and limits). Not all carriers offer watercraft as an endorsement. Ask your agent.
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