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Additional Living
Expense
Fire or other damage caused by a 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.
All Risk
An "All Risk" policy insures against any and all losses which can happen
to your home, except those that are specifically excluded. However, the
policy will state that flood and earthquake are not covered and require
separate endorsement.
Appurtenant Structure
In a property insurance policy, "appurtenant structures" are detached buildings
on the same premises as the main, insured building. Appurtenant structures
like garages or barns on your property are usually covered by homeowner
insurance policy.
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.
Broad Theft Coverage
An endorsement to a Dwelling Policy which provides theft coverage for contents
of 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.
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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 should represent the cost to replace the structure of your home in the
event of total loss. Other coverages are usually based on percentage of
Coverage A.
Coverage B
This part of your policy covers "Other Structures"-barns, sheds, garages.
Coverage B is usually 10% of Coverage A (Dwelling Coverage) but can be
increased.
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 D is usually 20% of Coverage A (Dwelling
Coverage). See also Additional Living Expense
Coverage E
"Personal Liability" covers you for your legal responsibility for injury
caused to others whether on or away from your own property. The minimum
limit is $100,000.
Coverage F
"Medical Payments" pays medical costs if someone is injured on your property.
The minimum limit is $500. 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 our house.
Debris Removal reimburses you for the cost of cleaning up all the broken
limbs and rubble.
Direct Loss
This is damage or a 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." Mennonite Aid Plan 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.
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Earthquake Policy
Most homeowner policies exclude coverage for earthquake damage. People who
are concerned about the risk of earthquakes can purchase an Earthquake policy
to cover damages.
Fair Rental Value
Pays for the rent the building could have earned, less any expenses that
do not continue, while the premises is not fit live in - whether it was
actually rented at that time or not. This coverage is typically Coverage
D of a Dwelling Fire policy.
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.
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 rom 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 and reinsured by the federal government.
Homeowner Policy
Property and/or 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.
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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.
Inherent Vice
A property flaw or fault which causes its own destruction. Damages from
inherent vices are usually not covered through insurance.
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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.
Loss Payable Clause
To protect lenders or lienholders, this clause extends coverage to parties
with an insurable interest in your property, most often the institution
holding your mortgage.
Mobile Home Policy
A homeowner policy for a permanently situated mobile home.
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.
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Named Perils Insurance
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.
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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.
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 Policy
Also called Tenants Policy, is a "Named Perils" policy that does almost
everything a Homeowners policy except insure buildings..
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, without deduction for depreciation.
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Scheduled Personal Property
Personal belongings that are worth more than the limits of liability set
in your policy, such as jewelry, furs, silverware, etc., can be insured
by a separate "floater" policy.
Tenants Policy
Another term for Renters Insurance. See HO4 policy.
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.
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.
Vandalism and Malicious Mischief
Your homeowner policy automatically covers you for willful destruction
or damage performed by others to your property.
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