Glossary of Homeowners Insurance Terms


Click on one of these common homeowners insurance related terms for a "plain English" explanation:

Actual Cash Value (ACV)
Unless otherwise defined in the policy, Actual Cash Value is defined in California as fair market value. The fair market value of an item is the amount at which a knowledgeable buyer (under no unusual pressure) would be willing to buy, and a knowledgeable seller (under no unusual pressure) would be willing to sell. Back to Top
Additional Cash Value
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. Back to Top
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. Back to Top
An insurance company representative who seeks to determine the extent of the insurer's liability for loss when a claim is submitted. Back to Top
A person authorized, by and on behalf of an insurer, to sell and service insurance policies. Back to Top
A temporary or preliminary agreement which provides coverage until a policy can be issued/delivered. Back to Top
A person who for payment of a fee (paid by you) procures insurance on your behalf. Back to Top
The termination of an insurance policy before its normal expiration date. Back to Top
A demand made by an insured, or an insured's beneficiary, for payment of benefits provided by an insurance policy. Back to Top
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. Back to Top
That portion of the premium paid to the agent as compensation for his or her services. Back to Top
Commissioner of Insurance
The title of the head of most state insurance departments. In some states, the Director or Superintendent of Insurance is used instead. Back to Top
The scope of protection provided under an insurance contract. Back to Top
Declarations (Dec) Page
The front page of your policy is called the Declarations page. It contains useful information such as:
  • the exact name of your insurance company
  • the policy number
  • your coverages and premiums
  • your deductibles, if applicable
  • the limits of insurance
  • any applicable lienholder information..
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The amount of the loss which the insured is responsible to pay before benefits from the insurance policy are payable. You may choose a higher deductible to lower your premium. Back to Top
A decrease in the value of property over a period of time resulting from use, obsolescence or wear and tear. Back to Top
Dwelling Policy
Though similar in personal property and structural coverage to a homeowners policy, a dwelling policy excludes liability coverage. Back to Top
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. Back to Top
An attachment to an insurance policy that amends and alters the coverage provided in the policy. Also called a Rider. Back to Top
A contractual provision in an insurance policy that denies coverage for certain perils, persons, property, or locations. Back to Top
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. Back to Top
Homeowners Insurance
A "package" policy providing coverage against property and liability perils facing homeowners. Back to Top
The person(s) entitled to coverage in case of an accident or loss. Back to Top
The insurance company providing the insurance. Back to Top
Individual responsibility for causing, through negligence, injury to another person or damage to another person's property. Also called Personal Liability. Back to Top
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. Back to Top
The maximum amount of benefits the insurance company agrees to pay in the event of a loss. Back to Top
Market Value
The price for which something would sell under current market conditions. Back to Top
The termination of an insurance policy at its normal expiration date. Back to Top
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. Back to Top
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. Back to Top
A property insurance term referring to the possible cause of loss such as a fire or a windstorm. Back to Top
Personal Property
All tangible property not classified as real property. Back to Top
A written contract for insurance between the insurance company and the policyholder, stating which perils and damages are covered and which are not. Back to Top
The money paid for an insurance policy based upon the coverage provided. Typical homeowners insurance premiums are charged annually. Back to Top
Premium Finance Company
A lending institution that finances insurance premiums for a fee. Back to Top
A term applied to an agent, solicitor or other person who sells insurance. Back to Top
Property Coverages
Insurance that covers damage to or loss of the policyholder's property Back to Top
An estimate of the cost of insurance based on information supplied to the insurance company. Back to Top
Real Property
Land and most things attached to the land such as buildings and vegetation. Back to Top
Renters Insurance
A form of homeowners insurance offering coverage for personal property and liability, but excluding real property. Back to Top
Replacement Cost
Replacement cost is the cost of replacing lost or damaged property with new property of like kind and quality, in the local market, without deducting for depreciation. Back to Top
This material is intended for general information only. It does not expand coverage beyond the policy contract. Please refer to your policy contract for any specific information or questions on applicability of coverage.