Homeowners Insurance Glossary

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Accident

An accident is something that can happen to the home. The accident types that are covered will vary between homeowners insurance policies

Actual Cash Value

An actual cash value homeowners insurance policy is one that pays you the actual cash value of items that are covered by the policy. The other major type of homeowners insurance policy is replacement value.

Additional Living Expenses

Additional living expenses are typically provided as a lump sum payment directly after your home is damaged. Additional living expenses are meant to provide payment for necessary living items such as clothing and food.

Adjuster

A homeowners insurance adjuster is the representative who will contact you after you submit a damage claim. When the claim involves major damage, the adjuster typically visits the property to assess the damage and determine how much the insurance company will pay.

Agent

A homeowners insurance agent is the individual who provides policy quotes when you are searching for coverage. There are both local and national agents available depending on your preferences.

Appraisal

You can get a home appraisal to determine the exact value of your home and then receive homeowners insurance based on that amount. An appraisal is beneficial in some situations such as when you own an older home in a newer development.

Basic Form Homeowner Policy

A basic form homeowner policy typically covers eleven perils. A few of those perils are lightening or fire, vandalism, windstorm or hail, damage caused by vehicles or aircraft, broken glass, smoke, volcanoes, and personal liability.

Blanket Policy

A blanket policy is the most common type of homeowners insurance. This type of policy includes most types of damage however, it's important to read the terms of your specific blanket policy to determine what is included.

Broad Form Homeowner Policy

A broad form homeowner policy is more robust than the basic form policy. Broad form insurance typically includes seventeen perils.

Broker

A homeowners insurance broker is a representative who typically gathers policy quotes from several insurance companies for you to compare. An independent broker can be a valuable resource in trying to find the lowest rates.

Burglary

Burglary is typically covered by homeowners insurance but it will depend on your specific policy. It is wise to take an annual inventory of items in your home to simplify the reporting process in case a burglary occurs.

Cancellation

Cancellation of homeowners insurance is possible at any time. Homeowners typically proceed with cancellation after selling their property. However, if the reason for current policy cancellation is to switch to another provider, it is important to activate the new policy before cancelling the old one to avoid a lapse in coverage.

Claim

A claim is filed whenever damage occurs to the home and you need money to fix the home or replace items within it. You are in charge of filing the claim and the sooner it is filed after damage, the sooner you will receive reimbursement.

Claimant

A claimant is the person or persons submitting a claim. As the claimant, you are responsible for submitting claims before the provider will begin the payment process.

Complaint

If you would like to file a complaint against your insurance company, this is usually handled by the insurance department of your state government. Each state carries a different complaint filing process so it is necessary to inquire regarding your state's specific process.

Condominium Policy

A condominium policy is available for those individuals who own a condominium rather than an individual home. Damage is just as likely to occur to a condominium as an individual home so it is necessary to have a sufficient condominium policy.

Contract

A homeowners insurance contract includes all of the terms of the policy such as the types of damage that are covered. It is important to review the contract terms to ensure you understand what is and what is not included in your policy.

Coverage

Coverage refers to the types of home damage that will be reimbursed by the insurance company. Each type of homeowners insurance policy includes different coverage limits.

Covered Person

The covered person is whoever is named in the homeowners policy. Other household members such as a spouse and children are typically also covered.

Debris Removal

Debris removal refers to the coverage that is provided by a homeowners insurance policy for the removal of such debris as fallen trees after a disaster. The debris removal limit is typically separate from the limit of the overall policy.

Declarations

The declarations section of a homeowners insurance policy includes basic information on the property. This information can include the address and description of the property.

Decline

A homeowners insurance company can decline to provide you coverage or to provide renewal for a policy that is set to expire. The company can decline you coverage for a variety of reasons including your claims history and insurability.

Deductible

The deductible is the amount you are required to pay for damages before the homeowners insurance provider will pay their share. Each policy has a different deductible limit and your deductible amount should be specified in the insurance contract.

Depreciation

Depreciation is the decline in value of your property due to normal conditions. Depreciation is typically not reimbursable with homeowners insurance.

Disability Insurance

Disability insurance helps covers your bills if you are injured and can't work. It is beneficial to purchase disability insurance because this coverage can help you pay necessary expenses such as mortgage payments.

Discount

It is possible to receive a discount on your homeowners insurance policy. Discounts are offered to homeowners for a variety of reasons including living near a fire station so it is important to shop around to get the best deal.

Dwelling Fire Policy

A dwelling fire policy is available to protect all dwellings on your property such as a garage and sheds against certain perils. These perils can include, among other things, fire and collapse.

Dwelling Policy

A dwelling policy is often a less expensive policy option that only protects a dwelling, not the surrounding property or the items within the dwelling. The terms of dwelling policies vary between companies so it is best to inquire with your specific insurance provider.

Earned Premium

The earned premium is the portion of an insurance policy that was used to buy coverage. For example, if you pay in advance for a six month policy, and you are two months into the premium, then the value for those two months is the earned portion.

Effective Date

This is the date that the homeowners insurance policy becomes effective.

Endorsement

This is a segment added to the standard policy that either expands or limits the basic coverage. An endorsement is also sometimes called a ‘rider'.

Escrow

Escrow is funds placed in the protection of a third party until certain conditions are satisfied.

Exclusion

An exclusion is a provision in a homeowners insurance policy that denies coverage for certain perils, locations, property, or people.

Expiration Date

The expiration date is the date that the homeowners insurance policy expires.

Face Amount

The face amount is the sum that the homeowners insurance provider will pay upon the qualifying event.

File and Use

File and use refers to the requirement that insurance companies must file their rates with their state's insurance department. However, the companies don't have to receive approval from the state department before implementing the new rates. If the state department determines that a certain company's rates are excessive and those rates have already been implemented, then the company will be required to reimburse their customers.

First Party

The first party is the person who is insured under the homeowners policy.

Flood Insurance

Flood insurance provides coverage for damage caused by flooding that is not covered in a basic homeowners policy. Those homeowners with property in a flood plain are typically required to purchase flood insurance.

Gap Insurance Coverage

Gap insurance coverage provides coverage for the difference of the actual cash value of property and the amount that you still owe on that property.

Grace Period

This is the amount of time that the policy will remain in effective after the premium payment is due but not paid.

Hazard Insurance

Hazard insurance is also caused homeowners insurance and covers your home if it is damaged by predefined perils.

HOI

This is the abbreviation for homeowners insurance.

Homeowner

A homeowner is the owner of property that is insured by the homeowners insurance policy.

Homeowners Insurance

Homeowners insurance, otherwise known as hazard or fire insurance, protects your property against pre-specified perils. A variety of homeowners insurance policies are available at varying premiums.

Independent Adjuster

The person who determines losses on behalf on an insurance company but who isn't an employee of that company.

Inflation Protection

Inflation protection automatically adjusts the value of your homeowners insurance policy limits to account for changes in the cost to rebuild or fix the property.

Insurable Interest

The interest a person has in the property or person that is insured.

Insurance Score

An insurance score is frequently based on a person's credit history and is commonly used in the underwriting process.

Insured

Being insured means you have insurance protection against specified perils that could damage your property.

Insurer

The insurer is the homeowners insurance company who provides your insurance policy and will pay for damages that occur to the property.

Justified Complaint

A justified complaint is a complaint that shows a violation of the policy terms and that a normal person would view as below the standard of business practices.

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Lapse

Lapse refers to the time that you aren't insured. It is important to avoid a lapse in coverage.

Liability Coverage

Liability coverage will provide protection if you are sued and found responsible for damage to another person or property.

Limit

The limit is the maximum amount of coverage that is purchased by the insured for a specific type of coverage.

Loss

A measurable dollar amount of damage caused to a person or property and that is paid by the insurer.

Loss Assessment

A loss assessment can be issued by a homeowner's association for its members to collectively pay for damages that aren't covered by the insurance policy of the association. For example, if a community building is damaged excessively, the association may require the members to pay for the additional dollar amount.

Loss of Use

The additional amount that is paid to the insured for cost of living expenses while the primary residence is being repaired.

Market Value

The market value is the current value of your property, including the value of the land.

Material Misrepresentation

A substantial misreporting of information on an insurance application form. If the insurance company has access to the correct information then coverage could be denied.

Misquote

A misquote can occur when the insurance agent quotes you one price but then the policy premium shows a different price. A misquote can result from many factors and must be sorted out with the provider.

Modified Coverage

Modified coverage is for older homes that have an excessively higher replacement value than the actual market value.

Mortgage Loan

A mortgage loan is available for those homeowners who can't pay for their property outright. When a mortgage loan is secured, the lender will typically require that the property owner purchase homeowners insurance.

Named Insured

This is the person or entity that is listed on the declaration page of the policy.

Non Renewal

This is when the insurer chooses not to renew the homeowners insurance policy at the end of its premium period.

Other Structures Coverage

The portion of a homeowners insurance policy that covers structures other than the primary residence.

Peril

Any hazard that could cause damage to the property.

Perpetual Insurance

An insurance policy that has no set expiration date.

Personal Property

Personal property are items such as furniture that aren't land or aren't connected to the land.

Policy

A policy is the contract between you and the homeowners insurance company. You purchase a policy to receive protection for your property.

Policy Limit

The maximum amount of protection that is purchased by the insured for a certain amount of coverage.

Policy Owner

The policy owner is the person whose name is listed on the contract. If you purchase the policy, then you are the policy owner and are responsible for paying the premium.

Premier Homeowner Policy

A premier homeowner policy is typically for high value homes that need an excessive amount of coverage.

Premium

The premium is the amount you pay for a homeowners insurance policy. The premium amount will vary depend on the type of policy you purchase.

Property Coverage

The protection that is provided by a homeowners insurance company against damage.

Property Damage

Physical damage that is caused to a property.

Property Insurance

Coverage that is available for property owners against damages.

Public Insurance Adjuster

A person employed by an insurance company to negotiate an insurance claim on behalf of that company. The adjuster works for a portion of the claim settlement.

Quote

When shopping for homeowners insurance, you will receive a quote from each prospective insurance companies. Each quote that is received should be compared to determine the best offer.

Reasonable Repairs

These are reimbursements issued by the insurer to the insured for the cost of protecting property against further damage.

Refund

A amount of money returned to the insured for overpayment of a premium.

Reinstatement

The process of reinstating an insurance policy after it lapsed due to the insured not paying the premium.

Removal of Property

Provisions included in homeowners insurance policies to remove certain items such as fallen trees after property damage occurs.

Renewal

At the end of each term, your homeowners insurance policy will be up for renewal. If you want to continue the coverage, you will begin paying the next premium cycle.

Renters Insurance

Protection available to cover the losses that can occurring from rental of a home.

Replacement Cost

Replacement cost is a type of coverage that pays for the replacement costs of items rather than the actual value of those items.

Residual Market

Insurers who provide coverage for those who can't obtain coverage from the primary homeowners insurance market.

Rider

A provision to the main homeowners insurance policy that extends or limits coverage.

Single Interest Insurance

Coverage for only one party that has insurable interest in the property. For instance, a lender can take out single interest insurance on the property if you have a mortgage with them but don't have a homeowners insurance policy.

Special Form Homeowner Policy

The most comprehensive homeowners insurance type of single-family homes. Special form insurance covers the insured against a list of named perils.

Standard Exclusions

What is not covered in a homeowners insurance policy.

Surcharge

A extra homeowners insurance policy charge added by the insurer.

Terms

Homeowners insurance terms are included in the insurance contract. Terms typically include such items as what is and what is not covered by the policy.

Third Party Administrator

Otherwise known as TPA, this is an organization that performs clerical and managerial duties for an insurance plan that is not an original party of the plan.

Third Party Claim

A third party claim is made by a third party for damage that is claimed to have been caused by the policy holder.

Underwriter

The individual who reviews an application for insurance to determine if the application will be accepted and at what premium the policy will be offered.

Unearned Premium

This is the amount of pre-paid premium that has not yet been used.

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There are no terms for this letter.

Waiver

A waiver is when an individual is offered insurance coverage but declines it.

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There are no terms for this letter.

Y

There are no terms for this letter.

Z

There are no terms for this letter.

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