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A glossary of insurance-related terms you may read in your policy or hear in discussions with our team.



Actual Cash Value — The fair or reasonable cash price for which the property could be sold in the market in the ordinary course of business. Not a forced sale.

Additional Coverages — Extra coverage that can be purchased to provide protection above and beyond that provided in the homeowners policy (e.g., a higher amount of coverage against the theft of jewelry). When such additional coverage is purchased, it becomes an Endorsement or Rider to the original policy.

Additional Living Expense — The part of homeowners insurance that provides reimbursement for motel rooms, meals, and other expenses when the loss of property by a covered peril forces you to maintain temporary residence elsewhere. Also called loss of use coverage.

Adjuster — An insurance representative who investigates personal or property damage and makes estimates for effecting settlements.

Agent — A person licensed by a state insurance division who sells insurance on a commission basis.

Binder — A temporary insurance contract that provides coverage until the policy is issued and expires when the permanent policy is written. Often used during a lending process.

Cancellation — Termination of an insurance contract before the end of the policy period, by the insured or insurer, usually in accordance with provisions in the contract.

Catastrophe — To insurers, a catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million.

Claim — Your formal demand to be reimbursed for losses covered by your insurance policy.

Coinsurance — Insurance in which the insured is obligated to maintain coverage on a risk at a stipulated percentage of its total value, or in the event of loss, suffer a penalty in proportion to the deficiency.

Condominium Owners Insurance — Though similar in personal property and liability coverage to homeowners insurance, structurally the condo owner’s policy is from the “walls in” and does not cover the building itself.

Coverage — An inclusion within the scope of an insurance policy; the amount available to meet liabilities.



Declarations Page — The portion of the insurance contract that contains information such as name and address of the insured, description of the property, coverage, and premium amounts.

Deductible — A certain dollar amount, specified in some property insurance policies, beyond which insurance protection begins. The insured assumes the loss up to the limit of the deductible amount and then the company pays any loss over that amount.

Depreciation — A decrease in the value of any type of tangible property over a period of time resulting from use, wear and tear, or obsolescence.

Dwelling Policy — Though similar in personal property and structural coverage to a homeowners policy, a dwelling policy excludes liability coverage.

Endorsement — A provision added to an insurance contract altering its scope or application. Sometimes called a rider.

Emergency Measures — Those repairs or other actions taken to protect the insured and the insured’s property from further loss when damaged or destroyed by a covered peril.

Exclusion — Specific situations, conditions, or circumstances that are listed in the insurance policy as not being covered.

Floater — Property insurance for items that are moved from location to location, covering losses wherever they occur. It is typically bought to cover jewelry, furs, and other items whose full value may not be covered in standard homeowners policies.

Holdback — Usually the amount of depreciation deducted from a claim payment, which may or may not be recoverable based on the policy provisions.



Independent Agent — An agent who represents more than one insurer.

Insurance Fraud — Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise be denied.

Insured — A person or institution covered by an insurance policy.

Liability — A coverage for property damage or bodily injury arising from personal actions, the operation of a business, or the actions of employees.

Limit — The maximum amount a policy will pay for a covered loss.

Loss — The amount of an insured’s financial detriment by death or damage that the insurer becomes liable for.

Loss of Use — See Additional Living Expenses.



Market Value — The price for which something would sell under current market conditions.

Medical Expense — Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and prosthetic devices.

Mortgagee — The party loaning money toward the purchase of personal property, usually a home or building.

Named Perils — Named perils are the specific dangers a policy insures you against, such as fire, windstorm, and hail. These perils are named or listed in the policy.

Negligence — Failure to exercise the care that a prudent person usually exercises to protect others from harm.

Non-Renewal — A decision made by the insurance company not to extend coverage for another policy period after the current policy period expires.

Occurrence — An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Ordinance or Law Exclusion — Homeowners policies may exclude situations where repair or replacement of damaged property must be done in conformance with building codes requiring upgraded materials. A standard homeowners policy may cover only the cost of replacing or repairing with the original grade of materials. The difference in cost between the old materials and the new materials required by ordinance or law is excluded or limited unless the homeowner has purchased additional coverage.


Package Policy — A single insurance policy that combines several coverages available separately. For example, homeowners insurance is a package policy, combining property, liability, and theft coverages.

Peril — A specific risk covered by an insurance policy, such as fire, flood, hail, theft, or windstorm.

Personal Property — All tangible property not classified as real property (see Real Property).

Policy — A contract that sets forth the rights and obligations of both a policyholder and an insurance company.

Premium — The consideration paid for a contract of insurance.

Real Property — Land and most things attached to the land such as buildings, structures, fencing, and vegetation.

Reinsurance — Insurance by another insurer of all or a part of a risk previously assumed by an insurance company.

Renewal — A new policy or a standard certificate from an insurance company, stating that the conditions of your old policy will stay in effect.

Renters Insurance — A form of homeowners insurance offering coverage for personal property and liability, but excluding real property.

Replacement Cost (Replacement Value) — The cost of replacing property without deducting for depreciation.

Reserve — An amount representing actual or potential liabilities by an insurer to cover debts to policyholders, or an amount allocated for a special purpose.

Risk — The chance of loss, damage or injury, and the degree of probability of such loss.




Schedule — A list of items covered by an insurance policy with their descriptions and values.

Stated Value Insurance — Insurance written to cover an item of property for a specific amount of insurance.

Tort — A wrongful act other than a breach of contract for which relief may be obtained in the form of damages or an injunction.

Uninsured — An individual who does not have insurance protection and personally assumes any losses.

Workers’ Compensation — Coverage required by State law against compensation to workers who are injured on the job, regardless of whether or not the employer has been negligent.

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