Homeowners Insurance “Terms”

 

There are many terms associated with homeowners that you may not know or understand - here is a list of terms that are commonly associated with home owners insurance policies so that you can understand what you are getting with your insurance policy.

Act of God:

This is an accident or event that is unpreventable and is the result of natural causes such as lightning or floods.

Actual Cash Value (ACV):

This is the replacement cost of your damaged or lost property at the time of the loss minus the depreciation.

Additional Living Expense (ALE):

Increases in your living expenses caused by the accident for which you are making an insurance claim in order to maintain a normal standard of living.

Application:

The written statement given to the potential policy holder that provides the information that will determine the home owner insurance policy to be written.

Appraisal:

A claims representative or appraiser's estimate of the damage to your property or the value of your property and/or possessions.

Basic Limits:

The lowest possible coverage amount by law or by company.

Cancellation:

Ending the insurance policy.

Catastrophe:

A severe disaster that causes a major or total loss unexpectedly and suddenly.

Claim:

Demanding payment for a loss incurred under your insurance contract.

Conditions:

The provisions listed in the insurance policy that includes the rights, duties and responsibilities of the insured and the insurer.

Damages:

The payment that a party is legally required to pay to someone as compensation for an injury or loss.

Deductible:

The amount of an insurance claim that the insured person agrees to pay. This amount is deducted from the claim payout.

Depreciation:

The decrease in value of any property over a period of time.

Effective Date:

The date that your homeowner's insurance policy begins.

Endorsement:

An amendment to your standard homeowner's insurance policy that covers unique items.

Exclusion:

The perils, people, property or locations that are not covered with your homeowners insurance.

Fire Insurance:

Part of your homeowners insurance policy that insures against losses due to fire, lightning and other causes defined in the contract.

Flood Insurance:

Coverage for your possessions and property that are caused by rising and flooding of bodies of water. Flood insurance is separate from homeowners insurance.

Hazard:

A condition that increases the likelihood or extent of a loss.

Insured:

The person who is protected by the homeowner's insurance policy.

Liability Insurance:

Insurance for injuries to other people.

Loss:

The reduction in value of your property that is caused by a peril covered by your homeowners insurance.

Loss of use:

Payments/compensation for your losses because you have lost the use of your possessions or property.

Mobile Home Insurance:

Special home owners policy designed for mobile home owners.

Partial Loss:

Loss that does not completely destroy the insured property that is covered by the policy.

Peril:

The cause of the accident, claim or loss.

Premium:

The amount to be paid for the insurance policy.

Total Loss:

A complete loss of goods or property that is insured.

 
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