Glossary of Terms for Homeowners Insurance

By Compuquotes Team on March 27th, 2008

Homeowners Insurance

There are many terms associated with home owners insurance 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.

Applicant - the person who is applying for homeowners insurance.

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 home insurance.

Hazard - a condition that increases the likelihood or extent of a loss.

Homeowner's insurance policy - the package that includes your coverage for theft, comprehensive personal liability and losses due to a number of perils.

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

Liability insurance - insurance for injuries to other people.

Loss - the reduction in the 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.

Non-renewal - a homeowners insurance policy that is not continued by the insurer after it has expired.

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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