Home Insurance Glossary | predictmyrisk.com

Use these definitions to understand the conversation. Your policy’s definitions and applicable law control the actual coverage.

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Actual cash value (ACV): A way to value covered property that accounts for depreciation. The policy and applicable law determine the calculation. It is different from the amount needed to buy a new replacement. Read more about actual cash value (acv).
Additional living expenses (ALE): Protection that may pay qualifying increased living expenses when a covered loss makes the home uninhabitable. Coverage triggers, limits and time restrictions depend on the policy. Read more about additional living expenses (ale).
Admitted insurer: An insurer licensed as an admitted carrier in the state. The label does not guarantee that a particular policy covers every loss or that every obligation qualifies for guaranty protection. Read more about admitted insurer.

Binder: A temporary insurance contract providing coverage pending the formal policy. A quote request or an email inquiry is not a binder. Read more about binder.

Cancellation: Ending a policy before its scheduled expiration, subject to the contract and applicable law. It differs from a nonrenewal at the end of the term. Read more about cancellation.
Claims history: A record of reported insurance claims associated with a person or property. It is separate from a record of repairs and improvements. Reporting periods and insurer evaluation periods are not necessarily the same. Read more about claims history.

Declarations page: The policy summary showing items such as the insured, property, coverage limits, deductibles and policy period. It does not contain every exclusion, condition or endorsement. Read more about declarations page.
Deductible: The part of a covered loss assigned to the policyholder under the policy’s deductible terms. Some deductibles are dollar amounts and others use a percentage; confirm the calculation base and event that triggers it. Read more about deductible.
Defensible space: Work around a structure to reduce available wildfire fuels and interrupt potential ignition pathways. Distance zones and requirements differ; it is not a promise that a home will survive a fire. Read more about defensible space.
Difference-in-conditions (DIC) policy: A policy designed to address specified gaps or differences in other protection. Its actual terms control. Do not assume it fills every gap in a FAIR Plan or is available in every state. Read more about difference-in-conditions (dic) policy.
Dwelling coverage: Protection for the home’s structure as defined in the policy, subject to covered causes of loss, limits, deductibles, exclusions and conditions. Often labeled Coverage A in a homeowners policy. Read more about dwelling coverage.

Endorsement: A document that changes a policy. It can add, restrict or otherwise modify protection, so it needs to be read with the policy it amends. Read more about endorsement.
Exclusion: Policy language that removes specified events, property or circumstances from coverage. An exclusion must be read with the other policy provisions and endorsements. Read more about exclusion.

FAIR Plan: A Fair Access to Insurance Requirements plan intended for owners unable to obtain coverage through the regular market. Eligibility and protection vary by state and plan. Read more about fair plan.
Force-placed insurance: Insurance a mortgage servicer obtains when required coverage is missing or insufficient. It often protects only the lender and usually costs more than coverage a homeowner obtains. Ask the servicer how to provide proof of suitable coverage. Read more about force-placed insurance.
FORTIFIED: An IBHS resilience standard and designation program. Having one feature does not establish that a roof or home has earned the designation; requirements and verification apply. Read more about fortified.

Guaranty association or fund: A state mechanism that may cover eligible claims after an insurer fails. Limits and eligibility vary. Do not assume surplus-lines policies have this protection. Read more about guaranty association or fund.

Home inventory: A record of belongings, supported where possible by descriptions, photos, receipts and other details. It can support documentation without guaranteeing coverage or claim payment. Read more about home inventory.

Mitigation: Measures intended to reduce a particular vulnerability or potential loss. The effectiveness and insurance treatment depend on the measure, circumstances and applicable policy or program. Read more about mitigation.

Named perils: A policy approach covering only specified causes of loss, subject to the other terms and exclusions. It does not establish that every event involving the named cause will be covered. Read more about named perils.
Nonadmitted insurer: An insurer that is not licensed as an admitted carrier in the state where the risk is placed. Eligible surplus-lines transactions are subject to applicable requirements; nonadmitted does not mean unregulated. Read more about nonadmitted insurer.
Nonrenewal: A decision not to continue a policy after its scheduled expiration. It differs from cancellation during the policy term. Notice and review requirements vary. Read more about nonrenewal.

Premium: The price charged for insurance coverage. Ask whether a proposal includes separate taxes or fees and what the total payment will be. Read more about premium.

Replacement cost: A basis for valuing covered repairs or replacement without subtracting depreciation, subject to policy terms and payment conditions. It is not unlimited coverage or the home’s market value. Read more about replacement cost.

Surplus lines / E&S: The excess-and-surplus-lines market, which can provide options for certain risks difficult to place with admitted insurers. Availability, placement requirements and policy terms vary. Read more about surplus lines / e&s.

Underwriting: The process an insurer uses to evaluate a proposed or existing risk and decide whether and on what terms to offer coverage. This website’s readiness check is not underwriting. Read more about underwriting.