Glossary of Home Insurance Coverage Terms
You'll have an easier time negotiating the best home insurance coverage if you're familiar with common industry terms such as:
Actual Cash Value: Present property cash value. This is equal to the replacement cost minus depreciation
Base Premium: The charge for Coverage A (Dwelling amount on Homeowner forms) or Coverage C (Personal Property amount on Renter forms) without any additional coverages
Binder: A notification from your agent that insurance is in force, protecting you for a period of time until your complete home insurance coverage policy is issued
Casualty Insurance: Protects your legal responsibility for damage to another person's property or injury to another person
Coverage A: Covers your house and anything attached to your house, such as cabinets, carpets, and plumbing
Coverage B: Covers other structures on your premises that are clearly separated from the dwelling (e.g., detached garages, storage sheds, in-ground pools)
Coverage C: Covers your contents or personal property anywhere in the world
Coverage D: Covers the additional expenses you incur to live somewhere else due to damage caused by a covered loss
Exclusions: A section of your home insurance coverage contract that specifies the types of losses not covered by your policy. EXCLUSIONS ARE NOT COVERED BY YOUR HOME INSURANCE
Grace Period: The period of time beyond the due date of your policy premium during which your home insurance coverage will continue to be in force
Inland Marine: Movable property (e.g., furs, jewelry, stamp collections) insured by policies called floaters
Liability Coverage: Home insurance coverage for bodily injury and property damage
Limit of Liability: The maximum amount of damages that you have to pay in the event of a loss
Property Insurance: Home Insurance coverage for your personal or real property
Replacement Cost on Contents: An endorsement that insures for replacement cost rather than actual cash value
Rider (Endorsement): A written form or statement that alters or restricts your insurance contract
Statutory Limits: The minimum limit of liability that the law requires you to carry
Waiver: A signed agreement in your home insurance coverage not to endorse a right or privilege.
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