ACTUAL CASH VALUE (ACV):  The amount needed to repair or replace the damaged portion of your home (or your contents) after depreciation.  ACV is computed by subtracting depreciation from the replacement cost.

ADDITIONAL LIVING EXPENSES:  Pays expenses over and above your normal living costs (motel rooms, restaurant meals, laundry service) while your home is being repaired or rebuilt after damage from an insured loss.

APPRAISAL:  A written valuation of property by the estimate of a qualified person.

BUILDER’S RISK:  Coverage for a home under construction.  This coverage must be changed to permanent insurance upon completion of the dwelling.

CATASTROPHE:  A severe disaster that causes a major or total loss unexpectedly and suddenly; usually a low-probability, high-cost event such as hurricanes, floods, and earthquakes.

CLAIM:  A policyholder’s request for reimbursement from an insurance company for a loss to property.  In order to be paid, the loss must be covered by the policy.

COINSURANCE CLAUSE:  An agreement in which you will carry insurance on your property in an amount equal to a certain percentage of its value.

DEDUCTIBLE:  The amount a policyholder must pay out-of-pocket for each claim before the company will begin paying.  Deductibles may be a specific dollar amount (i.e.: $1000) or a percentage of the home’s value.

DEPRECIATION:  The estimated decrease in property value over time due to wear and tear, aging, and other related factors.  Depreciation is usually calculated by establishing a useful life of the item and determining what percentage of that life remains.

DWELLLING POLICY:  A form of home insurance used to cover dwellings that are not owner occupied or do not otherwise qualify for homeowner’s insurance.  Personal liability and personal property coverage is not standard on a dwelling policy, but can be added for an additional premium.

ENDORSEMENT:  A change, provision, or document added to a home insurance policy that changes the original coverage or terms.

EXCLUSION:  The perils, people, property, or locations that are NOT covered by your policy.  A common example of an exclusion found in a standard home insurance policy is flood damage.

 FLOATER:  see “Scheduled Personal Property”.

FLOOD INSURANCE:  Coverage for your dwelling and contents for loss caused by rising water.  Flood insurance is separate from home insurance and is federally regulated, so that the same policy costs the same amount no matter where it is purchased.

GUARANTEED REPLACEMENT COST COVERAGE:  An endorsement that lets you replace your home without subtracting for depreciation, even if it costs more than the policy limit.  Most companies have a maximum limit of 125%.

HAZARD:  A condition that increases the probability or extent of a loss.

HOME INVENTORY:  A detailed list of personal possessions and any information (including pictures or videos) that could help identify lost or destroyed items.

HOMEOWNER’S POLICY:  A package of insurance including coverage for buildings, personal property, and comprehensive personal liability for losses due to a variety of perils.  To qualify for this policy, the home must be owner occupied.

INDEPENDENT AGENT (AGENCY):  An insurance agent or agency not directly employed by an insurance company.  By definition, independent agents represent multiple insurance companies and can help you find the best fit for your personal home insurance needs.

INSURANCE SCORE:  Also called “Financial Score” – is a numerical system based on select credit report characteristics.  There is no direct relationship to financial credit scores used in lending decisions, as insurance scores are not intended to measure creditworthiness, but rather to predict risk. Insurance companies use insurance scores for underwriting decisions, and to partially determine charges for premiums.  Insurance scores are applied in personal lines products, such as homeowners and auto.

INSURED:  The policyholder or person(s) protected in case of a loss.

LIABILITY INSURANCE:  Covers losses that an insured person is legally liable for, such as injury or negligence in regard to their home or property.  Coverage would be for both legal payouts and legal costs for which the insured would be responsible.  Intentional acts or damage are typically not covered.

LOSS OF USE:  see “Additional Living Expense”.

MEDICAL PAYMENTS:  Coverage for medical expenses up to a specified limit for persons accidentally injured at your home, regardless of fault.  This coverage does not apply to you or anyone living with you.

MOBILEHOME INSURANCE:  Home policies designed especially for mobilehome owners.

NAMED PERILS:  This provides coverage only for losses to your property resulting from the “perils” that are specifically listed in the policy.

PERIL:  The cause of a loss; such as fire, wind, hail, and theft.

PERSONAL PROPERTY:  Property, other than land, which is movable such as furniture, jewelry, and appliances; your contents.

POLICYHOLDER:  The person who pays a premium to an insurance company in exchange for the protection outlined in an insurance policy.

PREMIUM:  The amount of money paid for an insurance policy.

REPLACEMENT COST:  The amount to replace contents, rebuild your home, or repair damages with materials of like kind and quality, without deducting for depreciation.

SCHEDULED PERSONAL PROPERTY:  Also called “Personal Articles Floater” – is a separate policy or an addition to a homeowners policy to provide extra coverage for listed items.  The standard homeowners policy has dollar limits on certain types of property such as jewelry, guns, furs, or coin collections.  This coverage allows a policyholder to purchase higher coverage limits for specific items and protects against causes of loss not covered on a homeowners policy.

SPECIAL FORM:  Often referred to as “all risk” – although a misleading term.  A coverage form that insures your home against all risk of physical loss, except those specifically listed in your policy as exclusions.