Glossary of Home Insurance Coverage Terms

When buying homeowners insurance you will have a much easier time if you are familiar with the common terms that are used by industry professionals.

Actual Cash Value: This is also known as the present cash value of the property. It is equal to the replacement cost of a home minus depreciation.

Base Premium: This is the charge for Coverage A which is the dwelling amount, or Coverage C with is the personal property amount; this does not include additional coverages.

Binder: This is a form that you will receive to let you know that your insurance is in place, and that you are protected until it expires.

Casualty Insurance: Legally protects you for injury to another person or damage to another’s property.

Coverage A: This covers your home as well as anything attached to it such as plumbing, carpets, and cabinetry.

Coverage B: Covers structures that are separate from your home. This includes storage sheds, detached garages, in-ground swimming pools, etc.

Coverage C: Covers personal property regardless of location.

Coverage D: This covers the expenses that you may incur to live elsewhere due to covered damage caused to your home.

Exclusions: Exclusions are things that are not covered by your homeowner’s insurance policy. This specifies the type of losses that your policy will not cover.

Grace Period: This is the amount of time beyond the due date of your premium that your home will continue to be covered.

Inland Marine: This is movable property that is insured by floaters. This can include items such as stamp collections, furs, jewelry, etc.

Liability Coverage: Coverage for property damage and bodily injury.

Limit of Liability: The absolute maximum amount of money that you have to pay due to a loss.

Property Insurance: Coverage for real or personal property.

Replacement Cost on Contents: This insures items for the replacement cost as opposed to the cash value.

Rider (Endorsement): A written statement that restricts or makes changes to your insurance policy.

Statutory Limits: The absolute minimum limit of liability that must be carried as outlined by the law.

Waiver: An agreement that is signed by the policy owner not to endorse a privilege or right.