Glossary Draft

Act of God
In terms of insurance coverage, an act of God is an unpreventable natural occurrence that causes damage to your insured property. Examples include natural disasters and heavy storms.

Related links
Esurance blog: how to disaster-proof your insurance
What is hazard insurance?
Home insurance and natural disasters: are they covered?
Actual cash value
An actual cash value policy (also known as an ACV policy) refers to a homeowners insurance settlement that provides coverage on the basis of the value at the time damaged or stolen. This may apply to a structure, component of the structure, or personal belongings. Since these materials aren’t brand new, depreciation will be factored in when your insurer pays out your claim.

See also: depreciation, replacement cost

An actuary is an insurance professional who analyzes various types of data and statistics to determine insurance risks and premiums.

See also: insurance score, insurance claim report

Related link
How is my homeowners insurance premium decided?
Additional interest insured
Additional interest insured refers to another person or organization listed on and may be protected under a policyholder’s homeowners insurance policy. If you’re financing your home, you may need to list your mortgage company as an additional interest insured, as they may have an insurable interest in the property, or as extended protection by the policy.

See also: endorsement, insured, insurable interest, mortgager, mortgagee

Additional living expense coverage
If a covered incident damages your home, rendering it uninhabitable for a temporary period of time, additional living expense (ALE) coverage within your homeowners insurance policy may help pay for housing and any increased food costs to maintain equivalent living standards while your home is being repaired or rebuilt. For example, ALE could help cover a hotel or temporary housing while your home is being repaired from fire or storm damage.

See also: loss of use

Related link
Additional living expense coverage and homeowners insurance
An adjuster (also known as a claims adjuster, field adjuster, or insurance adjuster) is an insurance professional who determines the monetary compensation an insurance company will pay a claimant. When someone files an insurance claim, an adjuster examines the damaged property and determines how much the insurance company should pay to repair the property and/or reimburse the claimant for his or her losses.

See also: claim, indemnity

Related link
Esurance homeowners insurance claims information
An agent (also known as an insurance agent) sells insurance coverage and helps manage customers’ policies. Insurance agents are the authorized representatives of an insurance company or of multiple companies.

See also: broker, specialist

Apartment insurance
See renters insurance.

Attractive nuisance
An attractive nuisance is an element you add to your property that increases its value or fun factor, while also increasing your personal liability because kids or guests are more likely to be injured by it. Examples include swimming pools, trampolines, treehouses, playground equipment, and fountains or ponds.

See also: family liability protection, guest medical protection

Related link
What is an attractive nuisance?
Automated Clearing House payments
Automated Clearing House payments (also known as ACH payments, automatic payments, or electronic payments) are electronic withdrawals from a policyholder’s bank account or credit card used to pay insurance premiums or other types of bills.

Related link
What payment methods does Esurance offer?
Betterment is the act of property improvement. This term is often used in referencing changes made to a home — such as repairing a damaged roof — that increase its value and insurability.

Related links
7 home maintenance tasks to save you money
How to make your home eco-friendly
How remodeling your home affects your homeowners insurance
As a temporary authorization of insurance, a binder shows that coverage is in place (bound) for a specific amount of time, usually between 30 to 60 days. It will be replaced by a declarations page when the policy is issued.

When a policyholder requests a car or home loan, the loan company typically requires proof of insurance — which can be provided in the form of a signed binder.

See also: proof of insurance

Broad form
Broad form (also known as broadest insurance or broadform insurance) is an insurance policy that covers you and/or your property against every possible peril allowed by the insurer.

See also: peril, named peril, open peril, exclusions

A broker (also known as an insurance broker, independent insurance agent, or independent agent) is an independent insurance professional who helps clients obtain coverage that suits their needs by comparing offerings from multiple insurance companies. Rather than endorsing any particular company, a broker represents the consumer. A broker is knowledgeable in the practices and types of insurance offered by the companies he or she works with.

See also: agent, specialist

Building codes coverage
Typically an optional coverage on your homeowners insurance policy, building codes coverage pays the difference in cost if your home is damaged by a covered incident and requires more expensive repair or rebuilding costs in order to be aligned with city ordinances or newer building codes. Older homes are often required to be repaired or rebuilt with upgraded roofing materials, electrical equipment and wiring, and plumbing systems, for example.

Related link
Building codes coverage for homeowners insurance

Bundling (also known as combining policies) is the act of obtaining multiple types of insurance from the same company. Examples include combining homeowners and car insurance, or life, health, and home insurance. Because of multiple-policy discounts, bundling can result in substantial savings for the policyholder.

See also: home insurance

Related link
Bundle Esurance home and auto to save
Business use
See commercial use.

Car insurance
Car insurance (also known as auto insurance, automobile insurance, vehicle insurance, or motor insurance) is a contract between a vehicle owner and an insurer. A car insurance policy provides financial protection from the costs associated with a car accident, including property damage and personal liability.

Related links
Car insurance quotes
Car insurance discounts
How your rate is determined
Casualty insurance
See property and casualty insurance.

A homeowners insurance claim is a policyholder’s request to be reimbursed for a loss that’s covered by homeowners insurance.

See also: adjuster, indemnity

Related link
File a homeowners insurance claim
Commercial use
Commercial use classification (also known as business use) means that you use part of your home for business purposes, such as sales, a day care, esthetician work, client services, etc.

Condominium insurance
Condominium insurance (also known as condo insurance) covers your personal property and the inside of your condo. Condo insurance also provides liability protection for bodily injury or property damage to others. Your condominium association will cover the building itself and the surrounding property.

See also: home insurance, renters insurance

Related link
Condo insurance quotes
Continuously insured
The length of time you’ve been continuously insured is the number of years you’ve been covered by one or more insurance companies without a lapse in your homeowners insurance coverage.

Credit score
A credit score is a numerical value that represents how likely it is an individual will repay a loan or other debt on time.

The higher your credit score, the better chance you have of being approved for loans, credit cards, vehicle financing, etc. Factors such as bill payment history, credit history, debt-to-credit ratio, and many other financial details can positively or negatively affect your credit score.

See also: insurance score

Related link
Homeowners insurance: credit score vs. insurance score
Declarations page
The declarations page (also known as a dec page) of your home insurance policy summarizes the information essential to your homeowners insurance coverage: your name and address, your lender’s contact information, and the home insurance premium, as well as the policy’s coverages, limits, and deductibles, and term length.

See also: policy jacket, binder

Related link
What is a homeowners insurance declarations page?
A deductible is the amount you agree to pay out of pocket before a certain coverage kicks in after you file a homeowners insurance claim. Generally, higher deductibles translate to lower premiums because you’re assuming more of the financial risk in the event of a claim.

Related link
The highs and lows of choosing home insurance deductibles
Defensible space
Defensible space has to do with reducing fire risk near your home. Essentially, you keep the area around your property free from combustible materials, including vegetation, to maintain defensible space.

Related links
Everything you need to know about smoke alarms
Renters insurance may protect your assets in the event of a fire
Depreciation is the decline in an object’s value due to age, wear and tear, or obsolescence.

See also: actual cash value, replacement cost

Direct homeowners insurance
Direct homeowners insurance (sometimes known as online insurance) lets consumers buy home insurance coverage directly through a company’s website or over the phone rather than through an independent agent or broker.

See also: agent, broker, Esurance

DIY home inspection
In general, a DIY home inspection is pretty self-explanatory. But at Esurance, you can save a cool $50 on your homeowners policy by completing a home inspection using our easy-to-use app within 20 days of your policy’s start date.

Related link
The DIY home inspection app from Esurance
Dwelling insurance
See home insurance.

Earth movement
Earth movement, in this context, is the movement of land (i.e. earthquakes, landslides, mudslides, sinkholes) due to natural and/or geological events.

See also: mine subsidence, sinkhole, earthquake insurance

Related links
Does homeowners insurance cover landslides and mudslides?
Does homeowners insurance cover sinkholes?
Earthquake insurance
Earthquake insurance is a type of coverage that can be added to a policyholder’s homeowners, condo, or renters insurance for an additional premium. As the name implies, it covers damages caused by earthquakes and other earth movement, such as landslides.

Earthquake insurance typically doesn’t include coverage for mine subsidence or sinkholes.

Most standard homeowners policies do not insure against earthquake damage unless this additional coverage is added to the policy.

See also: home insurance, renters insurance, condominium insurance, mine subsidence, earth movement, sinkhole

Related links
How to disaster-proof your insurance
Homeowners insurance quotes
Effective date
The effective date is the date your homeowners insurance coverage begins. You are not covered by a home insurance policy until the effective date, which you can select when you buy your policy.

See also: binder, policy jacket, proof of insurance

An endorsement, formerly known as a “rider,” refers to any change made to your original insurance contract. Endorsements can adjust your contract from its base form to include or remove coverage (typically for high-value items like jewelry and furs, for example), or change provisions mid-term from your current contract.

See also: exclusions, limits, deductible

Related link
FAQs on making changes to your policy
The U.S. Environmental Protection Agency (EPA) implemented the ENERGY STAR label program in 1992 to identify and promote energy-efficient products, homes, and buildings. ENERGY STAR products include appliances, home office equipment, lighting, heating and cooling equipment, and consumer electronics — and typically lends to decreasing homeowners’ energy use, resulting in lower utility bills and greenhouse gas emissions.

Related link
Benefits of an ENERGY STAR home
An escrow account is a type of savings account designed to hold money you’re using to pay for homeowners-related expenses, such as property taxes and homeowners insurance. Instead of paying for these expenses in large lump sums, an escrow account — typically managed by your lender — parcels out the payments in smaller, periodic installments.

Related link
Paying homeowners insurance through escrow
That’s us. Esurance is a San Francisco-based insurance company that offers direct-to-consumer personal car and homeowners insurance. Our innovative approach to insurance allows customers to take advantage of affordable rates, great discounts, and a wealth of handy online tools.

We also help customers find affordable insurance in the states we don’t operate in, and can help you find reliable car, home, renters, life, health, motorcycle, ATV, Segway golf cart, scooter, boat/PWC, travel trailer, RV, snowmobile, classic car, commercial auto, condo, flood, umbrella, pet, cell phone, and business insurance products.

See also: car insurance, homeowners insurance, direct homeowners insurance, renters insurance, condominium insurance

Related links
Insurance products
Car insurance
Motorcycle insurance
Homeowners insurance
Renters insurance
Exclusions are situations that are not covered by a given insurance policy. Any specific exclusion will be stated in your homeowners insurance policy.

See also: policy jacket, named peril, open peril, peril

Extended premises coverage
An optional coverage on your homeowners insurance policy, extended premises coverage extends liability coverage to visitors on your property. It’s often mandatory for 2-, 3-, and 4-unit homes, but it may also be useful for people with non-adjacent, vacant property.

Fair rental income protection
Fair rental income protection is an optional coverage on your homeowners insurance policy that reimburses lost revenue at market value if a space you rent out is uninhabitable after a covered loss.

See also: loss of use

Related link
Fair rental income protection for home insurance
Family liability protection
A coverage that typically comes standard on most homeowners insurance policies, family liability protection (also known as homeowners liability coverage, liability insurance, etc.) covers homeowners’ legal liability if their negligence leads to another person’s injury or property damage. It can also cover legal defense if the homeowner is sued over said injury or property damage.

Related link
Family liability protection and homeowners insurance
Family member
For homeowners insurance purposes, a family member is someone who lives in the same home as the policyholder and is related by blood, marriage, or other recognized ties (like adoption, foster care, or wardship). Students living away from home may still be considered family members for insurance purposes.

Related link
Does homeowners insurance cover your college student?
Fire department charges coverage
Fire department charges coverage can help cover the fee the fire department may charge when responding to a call at your home.

Related links
Does homeowners insurance cover fire?
Wildfires and homeowners insurance
Force-placed insurance
Since your mortgage company typically requires continuous homeowners insurance coverage as a condition of your loan, they may purchase insurance on your behalf if you let your homeowners insurance lapse — this is called force-placed insurance. Your lender will typically pay for the policy through your escrow account, which can raise your mortgage payments, since force-placed insurance policies are typically more expensive (and can cover less incidents) than typical home insurance.

See also: mortgager, lender

Related links
My homeowners insurance lapsed: now what?
Guest medical protection
If someone is injured on your property, guest medical protection on your homeowners insurance policy can help pay for their medical expenses. This coverage typically comes standard on your average home policy, and can help cover things like ambulance rides, X-rays, hospital stays, and surgical procedures. As the name implies, guest medical protection only extends to guests — not anyone who lives in the home.

Related link
Guest medical protection for homeowners insurance
Hazard insurance
See home insurance.

Related link
What is hazard insurance?
Home day care coverage
An optional coverage on your homeowners insurance policy, home day care coverage can help cover your personal liability and others’ medical bills if you run an in-home day care, and an accident happens that results in your being legally responsible for paying the injuries.

See also: family liability protection, guest medical protection, commercial use

Home insurance
Home insurance (also known as hazard insurance, homeowners insurance, dwelling insurance, or house insurance) is a form of property and casualty insurance that covers the insured’s primary residence. A home insurance policy generally offers coverage for liability, personal belongings, and damage to the primary structure as well as other structures — such as detached garages and storage buildings on the home’s property.

A home insurance policyholder must own or be making mortgage payments on his or her home.

Those who rent their dwellings may protect their belongings by buying renters insurance.

See also: manufactured home insurance, renters insurance, condominium insurance, direct homeowners insurance, Esurance

Related links
Homeowners insurance quotes
Renters insurance quotes
Condo insurance quotes
Home insurance calculator
A home insurance calculator helps you estimate how much coverage you may want to consider for your homeowners insurance policy before getting a quote.

See also: quote, limits

Related link
The Esurance home insurance calculator
Home inventory
A home inventory is essentially a documentation of your home and the belongings inside. It’s important to create a thorough home inventory — including any receipts or other pertinent documents — in case you experience a theft or other loss. If you make renovations to your home, upgrade your appliances, or purchase additional items of value, it’s key to update your home inventory so that you maintain a thorough documentation of your home and its contents at all times. This can significantly expedite the claims process and ensure you get the most out your home policy.

See also: claim

Related links
How to create a home inventory
Hidden valuables in your home: what is my stuff worth?
Home warranty
A home warranty is generally a type of protection for household systems and appliances — like electrical wiring, garage door openers, plumbing, pools, dishwashers, smoke detectors, and AC units and heaters. A warranty is typically purchased by the seller of the house to help reassure potential buyers that these systems are covered should something happen once the keys are turned over. It’s important to note that home warranties expire, and don’t replace homeowners insurance, which covers a lot more in addition to your home’s systems and appliances.

It’s also important to mention that while home warranties cover failed systems and appliances, homeowners insurance can cover damage that is sudden and accidental.

See also: home insurance

Related link
Home warranty vs. homeowners insurance
Identity theft expense coverage
Identity theft expense coverage (also known as identity theft insurance) is a standard, optional coverage on many homeowners insurance policies, and can come to your aid if you’re ever a victim of identity theft. This coverage often offers services dedicated to repairing the damage done to your name and credit.

See also: credit score

Related links
Identity theft insurance for homeowners
7 tips to avoid identity theft
Your online security: how Esurance protects your info and identity
Increased building structure coverage
An optional coverage on your home policy, increased building structure coverage offers additional protection for your on-premises structures in the extreme cases when your original coverage limits aren’t sufficient.

Related link
Homeowners insurance dwelling coverage: explained
An indemnity is the sum that your insurer will pay to you or others after an accident that results in damage to property or people. The idea is that it’ll restore you to your pre-loss situation.

See also: claim

Independent insurance agent
See broker.

Insurable interest
An insurable interest exists when an insured individual or institution derives financial benefit from the continued, unimpaired, undamaged existence of insured property. For example, a mortgager has an insured interest in a mortgagee’s home.

See also: mortgager, mortgagee, lender, insured

Insurance adjuster
See adjuster.

Insurance claim report
Insurance claim reports provide details about home insurance claims you’ve filed with insurance companies. These reports are provided by independent consumer reporting agencies that collect homeowners insurance claim information from a variety of insurance companies. One of the most common agencies issuing such reports is C.L.U.E., the Comprehensive Loss Underwriting Exchange.

Related link
Comprehensive Loss Underwriting Exchange reports: explained
Insurance fraud
Insurance fraud (also known as an insurance scam) is any act that knowingly defrauds an insurance company to obtain payment. Fraud can take on many forms, ranging from overinflated repair bills, to staged fires and other incidents, to exaggerated claims of stolen property or damages.

Insurance fraud is a leading cause of today’s rising insurance costs, and all states enforce strict laws against this form of crime. Convicted offenders can face major penalties, hefty fines, and imprisonment.

See also: claim, car insurance, home insurance, insurance claim report

Insurance score
Insurance scores are based on analytical models that objectively measure the relative likelihood of future insurance losses based on aspects of your credit history. These scores and analyses of their significance are provided by independent consumer reporting agencies.

See also: credit score

Related link
Homeowners insurance: credit score vs. insurance score
An insured is an individual and/or institution covered by a homeowners insurance policy.

See also: insurable interest, mortgager, mortgagee, lender

Investment property
An investment property is any piece of real estate used to generate revenue for the owner. Examples of common investment properties include apartment complexes, rental houses, and vacation rentals.

See also: home insurance, renters insurance, landlord insurance

A judgment is a final decision rendered by a court of law.

Landlord insurance
If you own a property that you rent out full-time, there’s a good chance you’ll need landlord insurance, which can help financially protect your personal liability, especially in the event of a tenant’s (or their guests’) injuries — which homeowners insurance likely won’t cover. Landlord insurance also covers the structure itself, as well as the building’s contents. If you’re deemed responsible for others’ medical expenses, or are ever taken to court over injuries or property damage, landlord insurance is typically the best option for helping to protect your finances.

See also: home insurance, condominium insurance, investment property

Related link
Landlord insurance vs. home insurance
A lender is any individual or organization that provides monetary loans. When someone obtains a loan, he or she must pay the lender back in full, with interest, within an agreed-upon period.

See also: mortgager, insurable interest

Life event
The term “life event” refers to an occurrence in life that significantly changes a person’s status or living situation. Common examples of life events include marriage, divorce, serious medical diagnosis, disabling injury, pregnancy/childbirth, buying a house, and death of a spouse or close relative.

See also: endorsement

A limit is the maximum amount an insurance company will pay, per coverage, for each covered loss.

See also: home insurance, policy jacket, binder

Loss of use
A typical homeowners policy provides coverage for the loss of use of your home after a covered incident, which means payments for temporary housing, additional food expenses, and even transportation costs after your home is rendered temporarily unlivable. Loss of use coverage is also known as additional living expense coverage.

See also: additional living expense coverage

Related link
Additional living expense coverage and homeowners insurance
Loss payee
A loss payee is a person or institution with a legal, insurable interest in a property. In the case of purchasing a home, the loss payee would typically be the mortgage company.

See also: insurable interest, mortgager

Manufactured home
A manufactured home is a factory-built home that meets the Manufactured Home Construction and Safety Standards set by the U.S. Department of Housing and Urban Development in 1976.

Unlike the mobile homes of the past, manufactured homes today come with many upgrades and can closely resemble a typical site-built home.

See also: manufactured home insurance, home insurance

Manufactured home insurance
Manufactured home insurance provides coverage for manufactured homes against sudden and accidental losses, including those caused by fires, theft, floods, hurricanes, tornadoes, earthquakes, vandalism, landslides, and more.

See also: mobile home, mobile home insurance, manufactured home

Related link
Manufactured home insurance quotes
Mine subsidence
Mine subsidence is the earth movement that results from the failure or collapse of underground mines, and often resembles sinkholes or troughs. Most homeowners insurance policies don’t cover damage from mine subsidence, but some states have mandated that insurers make coverage available for residents who live in high-risk areas. Separate, standalone policies are also available.

See also: earth movement, sinkhole, earthquake insurance

Related link
Does homeowners insurance cover sinkholes?
Mobile home
A mobile home is a factory-built home manufactured before the establishment of the Housing and Urban Development (HUD) code in 1976. Mobile homes are built on a chassis for easier transporting and usually require utilities hook-ups and anchoring.

See also: mobile home insurance, manufactured home, manufactured home insurance

Mobile home insurance
Mobile home insurance protects your mobile home and any attached structure(s) in the event of any direct, sudden, or accidental loss. Mobile home insurance also covers your personal belongings and provides personal liability protection.

See also: manufactured home insurance, manufactured home, mobile home

Related link
Mobile home insurance
Also known as a lender or mortgage company, a mortgagee is an individual or institution — in this case, usually a bank — that provides mortgage loans.

See also: lender, mortgager

The borrower of a mortgage loan — in this case, the homeowner.

See also: mortgagee, insurable interest

Named peril
A named peril is a damage/loss risk specifically listed on your homeowners insurance policy. Named peril insurance specifies the threats the property is protected against, as opposed to open peril insurance, which guards against a general list of risks that are not excluded from the policy.

See also: peril, open peril, exclusions, home insurance

Related links
Home insurance quote
Condo insurance quote
Named insured
See primary policyholder.

Online insurance
See direct homeowners insurance.

Open peril
Open peril (also known as all-risk) is property insurance that protects your things from any and all types of damage, except those specifically named on your policy.

See also: named peril, peril, exclusions, home insurance

Related link
Take inventory of your possessions for more effective insurance
Other structures coverage
Typically included as a standard coverage on home policies, other structures coverage insures the structures on your property not attached to the dwelling itself — like carports, fences, and storage sheds.

Related link
Other structures coverage for homeowners insurance
Out-of-pocket expenses
Out-of-pocket expenses are what you pay in addition to what your home insurer pays when you file a claim. These are typically the result of the deductibles and coverage limits you choose.

See also: deductible, claim

A peril is anything that can cause damage or loss to your property. This can be a wide range of things, from wind to theft to smoke.

See also: named peril, open peril, exclusions, policy jacket, home insurance

Related links
Renters insurance quote
Homeowners insurance quote
Personal liability
Personal liability (also known as personal obligation or personal responsibility) refers to a situation in which an individual is legally responsible for damages caused to another party or their property.

When someone is deemed personally liable, he or she is financially obligated to compensate the other party for damages in accordance with national and state liability laws.

Policyholders may carry personal liability coverage on their home insurance, car insurance, and virtually any other type of property and casualty insurance policy they own. Individuals may also purchase personal umbrella insurance in order to insure against liability situations not covered by their other insurance policies, and in excess of the base policy limits.

See also: family liability protection, umbrella insurance

Related link
Family liability protection for homeowners
Personal property insurance
Personal property insurance is one of the foundational coverages of any homeowners insurance policy, and can financially protect you in the event that your belongings are stolen or damaged by a covered loss. This coverage typically protects your personal property at or away from home (for example, if your laptop is stolen from your vehicle).

Related link
Personal property insurance for homeowners
Your policy is the contract that states what your homeowners insurance coverage includes (coverages, limits, and deductibles), as well as your official annual premium.

It’s a document or group of documents that typically includes a declarations page, a list of exclusions, and other terms and conditions of your coverage.

See also: car insurance, declarations page, homeowners insurance, policy jacket, binder

Policy expiration date
The policy expiration date is the date your insurance coverage ends if your policy isn’t renewed.

The expiration date can be found on the declarations page of your homeowners insurance policy or on a recent homeowners insurance renewal notice.

See also: declarations page, binder, policy jacket, renewal letter

Policy jacket
A policy jacket is a brochure that contains all homeowners insurance policy language not contained in the declarations page and endorsements, including the exclusions, insuring agreements, definitions and conditions, and the premium.

See also: declarations page, endorsement, binder, exclusions

Policy term
A policy term is the length of time a homeowners insurance policy is valid. Home insurance policies from Esurance typically have a policy term of 12 months, depending on your state of residence.

See also: binder, policy jacket, declarations page, renewal letter

See rate.

Primary policyholder
The primary policyholder is the person who is billed for the homeowners insurance policy and who serves as the main point of contact with the insurance company.

See also: insured

Primary residence
The place you live more than 50 percent of the time.

Private mortgage insurance
Private mortgage insurance, or PMI, is designed to financially protect the lender if the homeowner stops making payments on the home loan. It’s typically required if you have a conventional loan and make a down payment of less than 20 percent of the home’s purchase price. It can also be required when you’re refinancing with a conventional loan and your equity is less than 20 percent of the house’s value.

The lender will usually set up PMI through a private insurer and add the premium to the mortgage payments.

See also: homeowners insurance, force-placed insurance

Related link
Homeowners insurance vs. PMI: what’s the difference?
Proof of insurance
Proof of insurance (also known as POI) is any legal, signed document provided by your insurance company that shows the effective date of your active insurance policy.

See also: declarations page, binder, policy jacket, renewal letter

Related links
How do I print my insurance card?
Electronic proof of insurance
Proof of loss
A sworn proof of loss is a statement made by the homeowner to the insurance company in support of a claim. Generally it entails basic information about the loss and its monetary amount. A proof of loss form may include the date and cause of the loss, some documents that support the amount of the loss being claimed, and people who have a vested interest in the claim.

See also: home inventory, claim, insurable interest

Related link
Do I need proof of loss when filing a claim?
Property and casualty insurance
Property and casualty insurance (also known as P&C insurance) financially protects homes, condos, businesses, cars, and other assets against damages and loss. Property insurance generally protects the property itself while casualty insurance (often known as liability insurance) covers policyholders against legal liabilities caused by injury or property damage to others.

Generally speaking, property and casualty insurance differ from life and health insurance policies because they protect against liabilities not covered by other insurance policies.

See also: home insurance, renters insurance, condominium insurance, landlord insurance

Property insurance
See property and casualty insurance.

A quote is an insurance premium estimate provided by an insurance agent, licensed insurance sales representative, or online engine. To receive the most accurate quote, provide honest, accurate information regarding your home, the area in which you live, etc.

See also: insurance claim report, rate, direct homeowners insurance, agent, broker, specialist, actuary

Related link
Getting a homeowners insurance quote online
A rate (also known as an insurance premium or premium) is the amount you pay for your insurance policy. Your rate can depend on many factors, including the size and type of your home, the state you live in, your claims history, and, in certain states, your credit-based insurance score.

See also: insurance score, insurance claim report, actuary, agent, broker, specialist, quote, binder, policy jacket, declarations page, renewal letter

Related link
How homeowners insurance premiums are decided
Renewal letter
A renewal letter (also known as a policy renewal or renewal slip) is a form that an insurer sends, by mail or electronically, to a policyholder just before the current policy term expires and the next one begins.

A renewal letter also states the premium for the upcoming term.

See also: binder, declarations page, policy jacket, policy term, rate

Renters insurance
Renters insurance (also known as renter’s insurance or renters’ insurance) typically covers you and your belongings against theft, vandalism, liability, and damages caused by hurricanes and fires. If you rent a house, condo, or apartment, renters insurance protects your personal effects, whether they’re stored at home, taken with you on vacation, or packed in your car.

See also: home insurance, condominium insurance, landlord insurance

Related links
Renters insurance quotes
Everything you need to know about renters insurance
Replacement cost
Replacement cost is the amount of money necessary to replace damaged, destroyed, or stolen property with a new item.

For example, if you carry replacement cost coverage on your home or renters insurance policy and a TV you bought several years ago is destroyed by a covered occurrence, your policy will pay you enough to purchase a brand new TV that’s comparable.

If you have actual cash value coverage, on the other hand, your policy will pay an amount equal to the depreciated worth of your older model television, regardless of how much it might cost to replace it.

See also: actual cash value, depreciation, claim, indemnity

Related links
Home insurance coverage
Condo insurance
Renters insurance
Second home
A second home (also known as a vacation home or secondary residence) is any home you own that isn’t your primary residence. Second homes are often used as vacation homes, guest houses, or rental properties.

See also: investment property

Related links
Homeowners and car insurance
Finding the right home insurance coverage
Condo insurance
Homeowners insurance
Secondary coverage
Secondary coverage (also known as secondary insurance) helps pay for expenses and damages not already covered by your primary coverage.

See also: umbrella insurance, primary residence

A sinkhole is a cavity in the ground caused by underground water erosion. A typical homeowners insurance policy doesn’t cover damage from sinkholes, but some insurers offer a policy endorsement, while separate sinkhole insurance policies are also available.

See also: earth movement, earthquake insurance, mine subsidence

Related link
Does homeowners insurance cover sinkholes?
Does homeowners insurance cover landslides and mudslides?
Smartphone app
A smartphone app is a mobile software application that you can download and run through an app-capable mobile phone like an iPhone® or an Android™ device.

There are myriad smartphone apps, all designed to perform specified functions. A few common smartphone apps include those dedicated to GPS navigation, games, music, and organization. Esurance offers a free app for iPhone and Android that allows customers to manage policies and file a claim, for example.

See also: DIY home inspection

Related link
Esurance mobile app
The DIY home inspection app from Esurance
A specialist, when used as a term in the insurance field, refers to an insurance professional who possesses a distinct and advanced knowledge of a particular type of insurance or company practice. A shopper with in-depth questions regarding homeowners insurance options may seek the advice of a home insurance specialist.

See also: broker, agent

Total loss
A total loss, in the context of insurance, is a judgment by the insurer that the value or repair costs of damaged property exceeds the value of the policy.

See also: increased building structure coverage, loss of use, additional living expense coverage, fair rental income protection, claim, proof of loss

An arrangement in which someone’s property or money is legally held or managed by someone else or by an organization (such as a bank) for usually a set period.

Umbrella insurance
Umbrella insurance (also known as personal umbrella insurance or a personal umbrella policy) provides personal liability coverage for situations not covered or inadequately covered by a policyholder’s other insurance policies. Umbrella insurance can also cover court fees and legal costs in the event of a lawsuit.

See also: personal liability, secondary coverage

Related link
What is liability coverage?
An underwriter assesses submitted insurance applications and determines whether to provide coverage and, if so, under what terms.

See also: agent, broker, actuary

Water backup coverage
A standard coverage on the majority of home policies, water backup coverage (aka sewer backup coverage) can help repair damage from water that comes from the ground up, such as a broken sump pump or overflowing drain. It’s important to note that this coverage is different from flood insurance, which isn’t included in a standard home policy.

Act of God
A natural occurrence, such as earthquake or hurricane.

Actual cash value (ACV)
The replacement cost of property, minus the diminished value from its age, use or wear.

CBack to Top
Contract of indemnity
Property insurance that restores the insured to their original financial condition after a loss happens.

DBack to Top
Declarations page
A page in your policy – usually the front page – with basic information such as your name and address, description of the property location insured, effective dates of the policy, amount of coverage and the premiums.

EBack to Top
Losses not covered because they are specifically excluded by the policy.

IBack to Top
Increased cost of construction
Added costs of rebuilding a damaged or destroyed building where local laws require the use of more expensive materials, services or methods than the original. This may also be referred to as building ordinance or law coverage.

MBack to Top
Malicious mischief
Deliberate damage or destruction of another person’s property. For insurance purposes, it is typically covered under vandalism.

NBack to Top
Named (or specified) peril
Events named in a policy such as vandalism, windstorm, fire or sprinkler leakage. A named-peril policy only covers those specific events, rather than all potential losses. These policies are usually cheaper because they cover fewer risks.

PBack to Top
Physical hazard
The features of a property that are vulnerable to damage. Building construction, electrical wiring and the heating/cooling system are examples of physical hazards.

Anything that has value. There are two types: real property and personal property.

Real property

Land and the permanent things on it, such as buildings, outdoor fixtures, machinery and equipment.

Personal property

All other property not classified as real property, and which is easily moved. This includes furniture, clothing and household goods.

RBack to Top
Replacement cost (RC)
The actual cost of replacing damaged or destroyed property with new property, in contrast to ACV. Refers to the amount it takes to replace damaged or destroyed property with new property, without consideration for depreciation.

SBack to Top
Property damaged beyond repair, which is taken over by an insurance company (after the claim is paid) in order to reduce its loss by “salvaging” the remaining value of the property.

TBack to Top
Territorial rating
A method of classifying risks by geographic location to set a fair price for coverage. Often used in conjunction with other rating factors.

VBack to Top
Valued policy
A specific amount paid to the insured in the event of a complete loss. Also known as an “agreed amount.”

Actual Cash Value

The cost of repairing or replacing damaged property with property of the same kind and quality, less depreciation (i.e., in the same physical condition as the original property prior to damage).

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 loss of property by a covered peril forces you to maintain temporary residence elsewhere. Also called loss of use coverage.


An insurance company representative who seeks to determine the extent of the insurer’s liability for loss when a claim is submitted.


An insurance sales office that is directed by a general agent, manager. independent agent or company manager.


A person licensed by a state insurance department who solicits, negotiates or effects insurance contracts on behalf of one or more insurers.

Captive Agent

An agent who sells insurance for one company.


To insurers, a catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million. Insurance actuaries calculate the probability of catastrophic loss on a state-by-state basis, using a formula based on the total number of catastrophes in each state over a 40-year period. This catastrophe factor, calculated annually, is included in the price of insurance.


A demand made by an insured, or an insured’s beneficiary, for payment of benefits provided by an insurance policy.

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.


The scope of protection provided under an insurance contract.


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

Dwelling Policy

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

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.


An attachment to an insurance policy that amends and alters the coverage provided in the policy. Also called a Rider.


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


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.

Homeowners Insurance

A “package” policy providing coverage against property and liability perils facing homeowners.

Independent Agent

An agent who represents more than one insurer.


A formal device for reducing the chance of loss by transferring the risks of several individual entities to insurance companies.

Insurance Commissioner

The head of a state’s insurance regulatory agency. Also known as the Director or the Superintendent in some states.

Insurance Fraud

Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid.


The party covered by an insurance arrangement, to whom an insurer agrees to indemnify for losses, provide benefits or render services.


Individual responsibility for causing, through negligence, injury to another person or damage to another person’s property. Also called Personal Liability.

Liability Insurance

Insurance that pays and renders services on behalf of a policyholder who is unintentionally, but legally responsible for bodily injury or property damage that is caused to another person and covered in the policy.

Loss of Use

See Additional Living Expense.

Market Value

The price for which something would sell under current market 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.


A property insurance term referring to the possible cause of loss such as a fire or a windstorm.

Personal Liability

See Liability.

Personal Property

All tangible property not classified as real property.


A written contract for insurance between the insurance company and the policyholder, stating which perils and damages are covered and which are not.


The amount of money an insurance company charges, based on a given rate, to provide the coverage described in the policy, or, simply stated, the price of insurance protection for a specified risk for a specified period of time. Typical homeowners insurance premiums are charged annually.

Property Coverages

Insurance that covers damage to or loss of the policyholder’s property.


The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves as the basis for the premium.

Real Property

Land and most things attached to the land such as buildings and vegetation.


Insurance is a state-regulated business. State insurance laws are administered by insurance departments, whose job includes approval of rates and policy forms, investigation of company practices, review of annual financial statements, periodic examination of books and liquidation of insolvent insurers.

Renters Insurance

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

Replacement Value

The cost of replacing property without deducting for depreciation.


See Endorsement.


This word has two meanings for insurers: (1) the chance of loss, such as from a peril; and (2) the person or entity that is insured by a policy.


A company representative who reviews applications for insurance coverage to ensure that they are acceptable and appropriately priced.

Glossary of Common Homeowners Insurance Terms
NOTICE: This document is for informational purposes only and is not intended to alter or replace the insurance policy. Additionally, this informational sheet is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company. If you have questions about your insurance, you should consult your insurance agent, the insurance company, or the language of the insurance policy.

( En Español)

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Actual cash value (ACV) – The value of your property, based on the current cost to replace it minus depreciation. Also see “replacement cost.”

Additional living expenses (ALE) – Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable. Policies cap the amount of ALE payable to 20 percent of the policy’s dwelling coverage.

Adjuster – An individual employed by an insurer to evaluate losses and settle policyholder claims. Also see “public insurance adjuster.”

Agent – A person who sells insurance policies.

Application – A form you fill out with information about you that an insurance company will use to decide whether to issue you a policy and how much to charge.

Appraisal – An evaluation of a home insurance property claim by an authorized person to determine property value or damaged property value. Many policies provide an “appraisal” process to resolve claim disputes. In this process, you and the insurance company hire separate damage appraisers. The two appraisers choose a third appraiser to act as an “umpire.” The appraisers then review your claim, and the umpire rules on any disagreements. The umpire’s decision is binding on you and the insurance company, but only for the loss amount. If there is a dispute over what is covered, you can still pursue a settlement of the coverage issue after the appraisal takes place. You are required to pay for your appraiser and half of the umpire’s costs.

Binder – A temporary insurance contract that provides proof of coverage until you receive a permanent policy.

Cancellation – Termination of an insurance policy by the company or insured before the renewal date.

Claim – A policyholder’s request for reimbursement from an insurance company under a home insurance policy for a loss to property.

Claimant – A person who makes an insurance claim.

Company profile – A summary of information about an insurance company, including its license status, financial data, complaint history, and a history of regulatory action.

Complaint – A written communication primarily expressing a grievance against an insurance company or agent.

Complaint history – Information collected or maintained by the Texas Department of Insurance relating to the number of complaints received against a particular insurer, agent or premium finance company and the disposition of the complaints.

Contract – In most cases, an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.

Declarations page – The page in a policy that shows the name and address of the insurer, the period of time a policy is in force, the amount of the premium, and the amount of coverage.

Deductible – The amount the insured must pay in a loss before any payment is due from the company.

Depreciation – Decrease in the value of property over time due to use or wear and tear.

Earned premium – The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has “earned.” For instance, if you have a six-month policy that you paid for in advance, two months into the policy, there would be two months of earned premium. The remaining four months of premium is “unearned premium.”

Effective date – The date on which an insurance policy becomes effective.

Endorsement – A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. Also called a “rider.”

Escrow – Money placed in the hands of a third party until specified conditions are met.

Exclusion – A provision in an insurance policy that denies coverage for certain perils, people, property, or locations.

Expiration date – The date on which an insurance policy expires.

File and Use – Residential property rates utilize a system called “file and use.” Under this system, insurance companies file their rates with the Texas Department of Insurance (TDI), but they do not need prior approval to implement new rates. If TDI determines that a company’s rates are excessive, the company can be ordered to pay refunds to the policyholders it overcharged. Companies can appeal adverse rate decisions.

First-party claim – A claim filed by an insured against his or her own insurance policy.

Grace period – The time – usually 31 days – during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the 31 days or the insured dies. This is not a “free-insurance” period.

Group of companies – Several insurance companies under common ownership and often common management.

Independent adjuster – A person who charges a fee to an insurance company to adjust the company’s claim.

Inflation protection – Automatically adjusts your home insurance policy limits to account for increases in the costs to repair or rebuild a property.

Insurable interest – Any financial interest a person has in the property or person insured. In life insurance, a person´s or party´s interest – financial or emotional – in the continuing life of the insured.

Insured – The policyholder – the person(s) protected in case of a loss or claim.

Insurer – The insurance company.

Justified complaint – A complaint that exposes an apparent violation of a policy provision, contract provision, rule, or statute; or which indicates a practice or service that a prudent layperson would regard as below customary business or medical standards.

Lapse – The termination of an insurance policy because a renewal premium is not paid by the end of the grace period.

Liability coverage – Covers losses that an insured is legally liable. For homeowners insurance, liability coverage protects you against financial loss if you are sued and found legally responsible for someone else’s injury or property damage.

Loss – The amount an insurance company pays on a claim.

Loss of use – A provision in homeowners and renters insurance policies that reimburses policyholders for the additional costs (housing, food, and other essentials) of having to live elsewhere while the home is being restored following a disaster.

Loss history – Refers to the number of insurance claims previously filed by a policyholder. A company will consider loss history when underwriting a new policy or considering a renewal of an existing policy. Companies view loss history as an indication of the likelihood that an insured will file a claim in the future.

Market value – The current value of your home, including the price of land.

Material misrepresentation – A significant misstatement in an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.

Non-renewal – A decision by an insurance company not to renew a policy.

Peril – A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy. An all-risk policy covers all causes of loss except those specifically excluded.

Personal property – All tangible property (other than land) that is either temporary or movable in some way, such as furniture, jewelry, electronics, etc.

Policy – The contract issued by the insurance company to the insured.

Policy owner – The person or party who owns an individual insurance policy. This person may be the insured, the beneficiary, or another person. The policy owner usually is the one who pays the premium and is the only person who may make changes to a policy.

Policy period – The period a policy is in force, from the beginning or effective date to the expiration date.

Premium – The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Property damage – Physical damage to property.

Public insurance adjuster – An individual employed by a policyholder to negotiate a claim with the insurance company in exchange for a percentage of the claim settlement. Public insurance adjusters must be licensed by TDI.

Refund – An amount of money returned to the policyholder for overpayment of premium or if the policyholder is due unearned premium.

Reinstatement – The process by which a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.

Renewal – Continuation of a policy after its expiration date.

Renters insurance – A form of insurance that covers a policyholder’s belongings against perils. It also provides personal liability coverage and additional living expenses. Possessions can be covered for their replacement cost or the actual cash value, which includes depreciation.

Replacement cost – Pays the dollar amount needed to replace the structure or damaged personal property without deducting for depreciation but limited by the policy’s maximum dollar amount.

Residual market – Insurers, such as assigned risk plans and the Texas FAIR Plan, that exist to provide coverage for those who cannot get it in the standard market.

Return premium – The premium returned to an insured for canceling or amending a policy.

Rider – A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy. Also called an “endorsement.”

Single interest insurance – Insurance coverage for only one of the parties having an insurable interest in that property. For instance, if you still owe money on your mortgage and do not have homeowners insurance, your lender may take out a single interest insurance policy to protect its own interest in your property. Single interest insurance protects only the policy owner, not the homeowner.

Staff adjuster – Employee of the insurance company’s claims department.

Surcharge – An extra charge added to your premium by an insurance company.

Surplus lines – Coverage from out-of-state companies not licensed in Texas but legally eligible to sell insurance on a “surplus lines” basis. Surplus lines companies generally charge more than licensed companies and often offer less coverage.

Third-party administrator (TPA) – An organization that performs managerial and clerical functions related to an employee benefit insurance plan by an individual or committee that is not an original party to the benefit plan.

Third-party claim – A claim filed against another person’s insurance policy.

Underwriter – The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.

Underwriting – The process an insurance company uses to decide whether to accept or reject an application for a policy.

Unearned premium – The amount of a pre-paid premium that has not yet been used to buy coverage. For instance, if you paid in advance for a six-month premium, but then cancel the policy after two months, the company must refund the remaining four months of “unearned” premium to you.

Actual cash value

Value of property before it was destroyed or damaged, minus depreciation. For example, if a 5-year-old television was destroyed, the insurance would pay an amount equal to the depreciated value of the old television. Replacement cost coverage would pay the cost of buying a new TV to replace the old one.

Additional living expenses

An insurance policy provision that pays for extra living expenses a policyholder faces while a home is undergoing reconstruction following a fire, storm or other covered peril. Covered expenses may include costs for moving, rent, hotel accommodations, restaurant meals and laundry expenses.

Adjusted basis

The cost of a property, with adjustments for improvements and depreciation.

All risks policy

A policy that protects against damage or loss of property from any peril, except those that are specifically excluded.


A professional estimate for how much property is worth, or an estimate of damage for insurance purposes. An appraisal is usually necessary before a home or a valuable possession, such as piece of jewelry or fine art, can be insured. The estimate guides the owner and insurance company to insure the property for the appropriate amount.

Back to Top
Casualty insurance

Insurance focusing on liability coverage for injury to other people or their property. It also includes a broad category of other types of insurance, such as aviation insurance and machinery insurance

C.L.U.E. database

The Comprehensive Loss Underwriting Exchange is a claims history database insurers use to help qualify and set premiums for insurance applicants. Maintained by LexisNexis Risk Solutions, the C.L.U.E database for property covers seven years. A C.L.U.E. Property report includes the policyholder’s name, date of birth, policy number and claim information, including date and type of loss and amounts paid by an insurer. LexisNexis also maintains a C.L.U.E. database for car insurers.

Condo insurance

A personal home insurance policy for condominium owners. Also called an H-06 policy, the policy provides protection for personal property from perils as well as liability protection. Typically, a condo owner purchases an H-06 policy for possessions and personal liability, and the condominium association carries insurance for the building exterior and common areas.

Contents coverage

Insurance coverage for household contents and other belongings worn or carried by the homeowner and covered family members. The coverage provides protection for belongings anywhere in the world, although standard home insurance policies have limits for how much coverage is given to off-premises belongings.

Coverage A

The portion of a home insurance policy that covers damage or destruction of a home’s structure, including its walls, roof, flooring, doors, windows and more. The amount of insurance should be enough to cover the cost of rebuilding the home in the event it is destroyed.

Coverage B

The portion of a home insurance policy that covers detached structures, such as a detached garage, fence, guesthouse or shed. Detached structures that are leased are not covered under this portion of the home insurance policy and require separate insurance.

Coverage C

The portion of a home insurance policy that covers personal belongings. The coverage applies to possessions anywhere in the world. Standard policies typically set coverage at 40 percent of the amount for which the house is insured. Typically, there are coverage limits on valuables – such as jewelry, firearms, antiques and fine art, and off-premises belongings – so additional insurance may be necessary for complete coverage.

Coverage D

The portion of a home insurance policy that covers additional living expenses if the home is uninhabitable while undergoing repairs after a disaster. Additional living expenses cover such costs as hotel rooms, rent, restaurant meals and moving.

Coverage E

The portion of a home insurance policy that provides financial protection against lawsuits associated with injuries or property damage. Coverage E comes into play if a homeowner was sued after the family dog bit a passerby, or a visitor sued after slipping and falling on an icy front step. Standard home insurance policies include exclusions and caps for liability protection.

Coverage F

The portion of a home insurance policy that pays for the medical bills of guests injured on the property. Often called MedPay, the insurance covers medical costs when no lawsuit is involved. It does not cover injuries stemming from abuse, transmission of disease or illegal sale of drugs.

Back to Top

A section of the home insurance policy that summarizes coverage details. Included are the names of the insured, the policy effective dates, amount of coverage, deductibles and endorsements.


An amount specified in the insurance policy for how much the policyholder must pay before insurance kicks in for a claim. For example, if a policyholder incurs a $1,000 covered loss and the deductible is $500, the insurance company would pay $500 for the claim.


A decrease in a covered item’s value due to age and deteriorating condition. Depreciation is the gap between the cost of new replacement property and the value of the old item before it was destroyed.

Back to Top
Earthquake insurance

Insurance that protects against losses caused by earthquakes. Standard home, condo and renters insurance policies do not cover damage caused by earthquakes. Earthquake insurance coverage can be purchased as a separate policy or as an endorsement.

Effective age

An appraiser’s estimate of a structure’s age based on its current condition, rather than its actual age. The effective age takes into account how well a property has been maintained and can be older or younger than the chronological age.


A document added to an insurance policy to add or restrict coverage. An endorsement can be added to a home insurance policy to increase coverage for landscaping, other structures, valuables, personal liability or a variety of other needs. An endorsement can also be used to exclude coverage – such as a pollution exclusion endorsement, which excludes damage from pollutant, unless their discharge was caused by a named peril in the policy.


A restriction in an insurance policy that eliminates coverage for certain perils, people, property or locations. Typical exclusions in a standard home insurance policy include floods and earthquakes.

Back to Top
FAIR plans

State-run insurance plans that provide property insurance to people in high-risk areas who might not otherwise have access to coverage.

Examination under oath


Insurance that provides additional coverage for personal belongings. Standard home, renters and condo insurance policies set dollar limits on coverage for valuables, such as jewelry, antiques, fine art and firearms. A policyholder with a large fine art collection would need to buy a floater to cover the full value of the artwork.


An overflow of water from a lake, stream, river or other body of water. Flood damage is not covered under standard renters, condo or home insurance. Coverage can be obtained by buying a separate flood insurance policy. Overflow of water from a broken pipe in a home does not constitute a flood.

Flood insurance

A special policy that provides protection against damage caused by floods. Flood insurance is backed and administered by the federal government through its National Flood Insurance Program and sold by home insurance companies.

Back to Top
Grace period

The period of time an insurance policy remains in effect after the premium due date has passed without a payment being made. The grace period for home, condo and renters insurance is relatively short, such as two weeks.

Group policy

Home insurance that’s purchased through a group, such as a professional association or employer. Group home insurance rates can be lower than individual home insurance rates.

Back to Top
Home insurance

Insurance for private homes. The policy covers the house, garage and other structures on the property and personal belongings against fire, theft, wind and a variety of other perils. Home insurance also provides personal liability protection for the homeowner and additional living expenses if the home is uninhabitable while undergoing repairs after a disaster.

Home inventory

A record of personal possessions for home, condo or renters insurance purposes. The inventory can include written information as well as video recordings and photographs of belongings. Insurers recommend homeowners and renters maintain a complete inventory of their household contents to ensure they purchase enough coverage and to help the claims process go smoothly.

Back to Top
Independent adjuster

An independent contractor who investigates and settles claims for insurance companies. An independent adjuster works on contract for insurers but is not employed by insurance companies.

Individual policy

A home insurance policy sold directly to an individual. The purchaser of an individual policy does not have to belong to a specific group to qualify for the insurance.

Insurance binder

A document that provides temporary proof of insurance coverage. The insurance binder is issued to cover the property until a formal policy is issued. When purchasing a home, the binder gives proof to the mortgage lender that the home is insured. Permanent home insurance must be purchased before the binder’s expiration date.

Insurance risk score

A score based on credit reports that insurers use to help them determine the risk for selling a policy to an individual home insurance applicant. A poor insurance risk score can trigger higher premiums.

Back to Top

The discontinuation of an insurance policy because the premium was not paid before the end of the grace period. A homeowner who allows a policy to lapse generally will face higher premiums to reinstate the policy.

Liability coverage

Insurance coverage that pays for damage or injuries a policyholder accidentally causes to others. These are costs for which the policyholder has a legal responsibility.

Loss of use

Inability to use a home while it’s being repaired or rebuilt after a disaster. Loss of use coverage in a home insurance policy provides a policyholder with additional living expenses to find and rent a home while the insured home is undergoing repair.

Back to Top
Market value

The estimated price for which a property can be expected to sell in the open market. A home insurance policy should provide enough coverage to rebuild the home in the event it is destroyed, and such costs can exceed a home’s market value.

Master policy

Insurance that covers the common areas of a condominium complex, such as building exteriors, pools, hallways and grounds. The master policy, funded by residents’ monthly dues, is a collective policy that does not cover personal belongings. Condo owners should know what their condominium association’s master policy covers so they can choose appropriate individual condo insurance.

Back to Top

A notice by an insurance company that it will not renew a policy when the term expires. Filing too many insurance claims can result in nonrenewal.

Back to Top
Personal property

Personal belongings not attached to the structure of the home, such as furniture, clothing, artwork and appliances. Most home insurance policies cover personal property up to 40 percent of the amount for which the home is insured. There are also specific limits for valuables, such as jewelry and firearms.

Public insurance adjuster

An adjuster who works on behalf of policyholders to help them evaluate damage and rebuilding costs after a disaster, and to guide them through the insurance claims process. Public adjusters charge a fee, typically 3 percent to 10 percent of the claim, to help clients get what they deserve from insurers.

Back to Top
Rated policy

An insurance policy with a higher-than-standard premium for property rated at a higher risk.

Renters insurance

Insurance for renters to protect their personal belongings, which are not covered under a landlord or apartment complex’s insurance policy. Renters insurance covers losses to personal belongings from a wide variety of perils, including theft, fire, smoke, windstorm and vandalism. Renters insurance also provides liability coverage.

Replacement cost coverage

Insurance that pays to replace damaged or destroyed belongings with new items. Replacement cost coverage is more expensive than actual cost coverage, which pays only the current value of the item (after factoring in depreciation) at the time it was destroyed.

Back to Top
Scheduled items

Valuables covered by additional insurance protection in a rider on a home, condo or renters insurance policy. Standard insurance policies provide a limited coverage amount for costlier items, such as jewelry, artwork, antiques and firearms. Scheduling such items increases the policyholder’s level of insurance coverage.

Back to Top
Umbrella liability

A liability insurance policy that provides additional protection beyond what is provided in car, home, renters or condo insurance policies. Insurers often require buyers to purchase up to the maximum liability limits on their home and car insurance policies before purchasing an umbrella liability policy.


The insurance company that assumes risk and issues the policy. It also refers to an insurance company professional who determines how to classify an insurance applicant’s risk level and whether the risk is worth assuming.

Dwelling insurance is coverage that protects you against physical damage to your home. Dwelling coverage is a standard component of a homeowners insurance policy that reimburses you for damage or physical losses to your home. These damages can occur from things like a fire, a hurricane or hail storms. Floods and earthquakes are not typically covered by regular homeowners insurance. If you live in a flood zone or earthquake area you will need an additional special policy.

Other Structures
This type of coverage refers to the other structures on your property that aren’t your home, such as garages, sheds and other buildings that are separate from your home. A basic homeowners insurance policy will provide coverage valued at 10 percent of the dwelling insurance as coverage for other structures. So, if you have $150,000 of coverage to your house, you would be insured for up to $15,000 on other structures. Talk to an agent about buying higher amounts of coverage if you have many structures on your property.

Personal Property and Contents
Personal property is also part of a basic homeowners insurance policy. It protects your personal belongings in case they are stolen or destroyed by an event that is covered in your policy. Typically, an insurance policy will limit the coverage for personal property to 50 to 70 percent of the amount your home is insured for. Items that will be covered under this section of your coverage include clothing and furniture.

Loss of Use
Loss of use coverage allows you to live your life as you were before the damage to your home. Loss of use gives you enough money to live comfortably while you are unable to live in your home. This type of coverage could be used toward hotel bills or restaurant costs while your home is under repair.

Personal Liability Protection
If someone gets hurt on your property, you could be sued for the damages. Should you lose a court case, the personal liability protection of your insurance would cover the damages. Any animals that you own are also included in this part of the insurance. For example, if your dog attacked a visitor, you would be covered if a lawsuit was brought against you.

Medical Payments
Medical payments coverage assists in medical expenses that you might be liable for if an injury occurred on your property and there wasn’t a lawsuit. This portion of the homeowners insurance would help if, for example, a friend falls on your steps and does not want to bring a lawsuit against you or if your dog bites your neighbor and he doesn’t want to sue.