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Additional
Living Expense
Fire
damage or other covered loss could increase your living costs—you
may be paying for a hotel, restaurant meals or laundromat, for example.
In a standard homeowner policy, Loss of Use (Coverage D) will reimburse
you for any additional living expenses incurred by you in an attempt
to maintain a normal standard of living if your home is made uninhabitable
by a covered peril. See Loss
of Use.
Bodily
Injury (BI)
An important type of liability coverage, BI will pay legal
damages awarded for injury or death for which you are held legally
responsible.
Appurtenant
Structure
In a property insurance policy, "appurtenant structures" are
buildings on the same premises as the main, insured building. Appurtenant
structures like garages or barns on your property and are usually
covered by homeowner insurance policy.
Arbitration
Clause
In your property insurance contract, the arbitration
clause provides a means for settlement when you and your insurer
cannot agree on an acceptable claim payment. Appraisers representing
each party select a neutral arbitrator; a judgment by any two of
these three constitutes a binding settlement.
Broad
Theft Coverage
An endorsement to a dwelling policy which provides theft coverage
for contents to a named insured, owner occupant.
Business
Personal Property
In a homeowner policy, "business personal property" refers
to items or "contents" owned by your business or company—like
the lap top you might bring home over the weekend. Coverage is
usually limited to $2,500.
Coverage
A
Called "Dwelling", this is the part of your home insurance
policy that covers the home itself—frame, flooring and fixed
objects. The amount of Coverage A is the cost to replace the structure
of your home in the event of total loss. Other coverages are usually
based on a percentage of Coverage A.
Coverage
B
This part of your policy covers "Other Structures"—barns,
sheds, garages.
Coverage
C
"Personal Property" covers your belongings automatically for
50% of Coverage A.
Coverage
D
"Loss of Use" takes into account expenses you'll have if your
home is uninhabitable because of a covered loss. It pays for temporary
lodging and living expenses.
Coverage
E
"Personal Liability" covers you for your legal responsibility
for injury caused to others whether on or away from your own property.
Coverage
F
"Medical Payments" pays medical costs if someone is injured
on your property. A homeowner policy automatically covers $1,000.
You can increase this coverage in $1,000 increments, up to $5,000.
In order to collect more than this, the injured party must file
for compensation under Coverage E.
Debris
Removal Clause
While most property policies cover only direct damages caused
by an insured peril, the "debris removal clause" covers the cost
of removing debris produced by the peril's occurrence. For example,
a hurricane sweeps through the state; a fallen tree will be removed
only if it lands on your house. Debris Removal reimburses you for
the cost of cleaning all the broken limbs and rubble.
Direct
Loss
This is a damage or loss resulting as a direct consequence
of an insured peril. For example, a computer lost in a fire is
a direct loss; the data destroyed inside the computer is considered
an indirect loss.
Direct
Writer
When an insurance company offers its policies directly to consumers
through its own employees, it's called a "direct writer." Electric
Insurance Company is a direct writer.
Dwelling
Forms
These are polices which cover a residence dwelling or building
and the personal property inside. You can buy dwelling forms which
vary by the degree of coverage they offer.
Earthquake
Endorsement
Most homeowner policies exclude coverage for earthquake damage.
People who are concerned about the risk of earthquakes can add
an Earthquake Endorsement to cover damages.
Easement
An "easement" entitles its holder to specific interests, such
as a right of way, in land owned by someone else.
FAIR
An acronym for "Fair Access to Insurance Requirements," FAIR
offers insurance to people in high-risk areas who might otherwise
be denied coverage. Reinsured by the United States government,
FAIR is a pooling plan with policies for fire and allied perils.
Fire
In property insurance, "fire" refers to the unintentional or "hostile" occurrences
of flame and combustion. Damage caused by fire in your fireplace,
for instance, is not covered under your homeowner policy. But if
your rug were ignited by a spark from that same fireplace, you
would be covered.
Fire
Resistive Construction
Building construction using fire-resistive materials in its
roof, floors and exterior walls. See also Modified
Fire-Resistive Construction.
Fire
Wall
A
wall designed to contain or seal off fires in a building.
Fireproof
Unfortunately, no one can make a building completely undamageable
by fire. Today, insurers use the term "fire-resistive" to describe
buildings which are practically resistant to most fire damage.
Flood
A temporary submersion, partial or complete, of ordinarily
dry land by water or mud. Floods are typically caused by an overflow
of waters, whether inland, tidal or from any accumulated runoff
from any source. Flood is excluded under a typical homeowner insurance
policy.
Flood
Insurance
Policies sold to cover property owners from losses caused by
floods or flooding, usually offered in conjunction with a government
flood insurance plan.
Frame
Construction
The most common form of housing construction, frame buildings
are made primarily of wood frames and joists.
Guaranteed
Replacement Cost
Guaranteed Replacement Cost coverage on homeowners insurance
means that your home will be repaired to its value at the time
of loss, reguardless of the amount of coverage carried. For example,
you estimate your home to have a full replacement value of $162,000.
On your homeowner policy, you carry $162,000 coverage for the structure.
If you have guaranteed replacement cost endorsement on your policy
and the home is lost in a fire and the house costs $168,000 to
rebuild, the policy will pay $168,000.
Homeowner
Policy
Combined property and liability insurance that covers homeowners
and renters for damage to or theft of their property and liability,
in case they are responsible for injury to another person.
Increased
Cost of Construction Insurance
Commonly added as an endorsement to homeowner policies, "increased
cost of construction insurance" covers the additional costs of
building repair or reconstruction when you rebuild with more expensive
services, materials and techniques required by local ordinances.
Increased
Hazard
Property insurance terms are tailored to the nature and use
of the property as it exists when the policy is written. Should
you introduce dangerous materials or activities into the property,
like making fireworks, you will have added an increased hazard
whose liabilities would not be covered by your policy.
Indirect
Loss
Also known as consequential loss or damage, indirect loss results
from, but is not caused directly by, a peril. If your business
property burned down, for instance, the property itself is a direct
loss, while the lost business revenues would be considered an indirect
loss.
Inflation
Guard Coverage
"Inflation Guard Coverage" provides automatic periodic
increases on the building's property insurance, to reflect the
effects of inflation on building replacement expenses.
Inherent
Vice
A property flaw or fault which causes its own destruction.
Damages from inherent vices are usually not covered through insurance.
Liberalization
Clause
If policies or endorsement forms are broadened through legislation
or rating authority rulings—and do not require premium increases—the "liberalization
clause" automatically includes the broadened coverage in similar,
existing policies.
Loss
of Use Coverage
If your home becomes uninhabitable because of an insured
peril, Loss of Use (Coverage D) provides compensation for additional
living expenses incurred in an attempt to maintain a normal standard
of living. Loss of Use is automatically included as 20% of the
Replacement Cost amount you carry in Coverage
A .
If your home were covered for $200,000, for example, Loss of Use
coverage would provide up to $40,000 for additional living expenses.
See Additional
Living Expenses .
Loss
Payable Clause
To protect lenders or lien holders, this clause extends coverage
to parties with an insurable interest in your property, most often
the institution holding your mortgage.
Masonary
Noncombustible Construction
Refers to buildings constructed from noncombustible materials
such as masonry walls of brick, cinder block, stone, tile, or other
similar materials, and floors and roofs made of metal or other
noncombustible materials.
Mobile
Home Policy
A homeowner policy for a permanently situated mobile home.
Modified
Fire-Resistive Construction
Building construction featuring exterior walls, floors and
roofs made of fire-resistive materials such as masonry or metal.
Mortgage
Clause
In policies covering mortgaged property, the "mortgage
clause" protects the interests of the mortgagee for loss reimbursement
and other rights of recovery, regardless of any acts or neglect
by the insured.
Mortgagee
A lender or creditor, typically a bank, who holds the mortgage,
and lends money secured by the value of the mortgaged property.
Mortgagor
Usually the homeowner who, as debtor, receives money in return
for a property mortgage granted as a security for the loan.
Named
Perils
Named Perils Insurance covers specific perils listed in a policy,
as opposed to an "all-risk insurance" covering all losses except
the ones excluded by name in the policy.
National
Flood Insurance Program (NFIP)
A program backed by the United States government to provide
flood insurance for fixed property. The NFIP writes policies directly
and offers reimbursement to private carriers offering flood insurance.
Occupancy
Property insurance rates reflect the way the property is used.
In general, "owner occupied" homeowner policies are less expensive
than "non-owner occupied" policies.
Off
Premises
Coverage you can obtain for personal property or "contents" which
are away from the principle, insured property. In most cases, the
amount of this coverage is limited to a percentage of the property's
total coverage.
Other
Structures
Generally detached structures, such as a garage or tool shed,
sharing property with the insured dwelling. Under a homeowner policy, "other
structures" are automatically covered for 10% of the limit chosen
for Coverage
A.
Personal
Property
Any of your property, such as furniture, clothing and consumer
electronics, other than real estate property. Your homeowner policy
covers the personal property of you and your family members.
Physical
Damage
Actual damage to your property.
Red-Lining
Unfair discrimination against a risk based solely on its location.
For example, the denial of property insurance to the owner of a
building located in a depressed area.
Rental
Value
Insurance Protection against loss of rental value or actual
rent should the owner's insured property suffer damages prohibiting
property use or tenant occupation.
Renters
Insurance
See HO4 .
Replacement
Cost
Coverage for the cost of replacing damaged property at the
time of loss with that of similar kind and quality. If you carry
replacement cost coverage and have a loss, the insurer pays for
the cost of a new replacement, minus any policy deductible.
Residence
Premises
Where you, the insured, live. In homeowner insurance, this
includes the dwelling, grounds and other structures, or that part
of any other building in which you live.
Riot
Violent activity by more than one person. The number of persons
it takes to constitute a riot varies by state. Your policy may
cover riots through extended coverage or direct reference.
Scheduled
Personal Property
Personal belongings that are worth more than the limits of
liability set in your policy can be insured by adding this endorsement.
Sinkhole
Collapse
A special form of earth movement, covered by some homeowner
insurance, referring to the sudden collapse or sinking of land
into empty, underground spaces eroded by water. Most other forms
of earth movement remain excluded from ordinary policies.
Smoke
Damage
As opposed to fire damage caused by combustion, heat or burning,
this is damage attributable to the smoke itself.
Stated
Amount
In your policy, you may choose to cover certain items for a
specific amount. In the event of loss, the insurer pays the stated
amount regardless of the property's actual value. If, for example,
you insured a painting for a stated amount of $15,000, in the event
of theft you would recover the $15,000 (minus your deductible),
even if the painting had accrued value after the policy had been
signed.
Tenants
Policy
Another term for Renters Insurance. See HO4.
Unoccupied
Property without people occupying or living within it. As opposed
to vacant property, unoccupied property may hold furnishings. Unoccupancy
beyond a specified period of time is prohibited by the standard
homeowner policy. See Vacant.
Vacant
A building with nothing in it. While an "unoccupied" building
is defined by not having people in it, a "vacant" building is also
devoid of furnishings and other items. Vacancy beyond a specified
period of time is prohibited by the standard homeowner policy.
See: Unoccupied .
Vandalism
and Malicious Mischief (V&MM or VMM)
Your homeowner policy should automatically cover you for willful
destruction or damage performed by others to your property. |
