Property Insurance Terms



Actual Cash Value – Cost of replacing damaged or destroyed property with new material of like kind and quality less allowance for physical deterioration and depreciation, including obsolescence.

All Perils – Also known as an “Open Perils” policy will cover all losses unless specifically excluded.

Coinsurance – Coinsurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of tangible property. The penalty is based on a percentage which is typically anywhere from 80% to 100% and is reported on the declarations page of the policy. Depending on the policy and the carrier it is possible to remove the coinsurance clause for additional premium. To avoid any penalties it is imperative that the property value is reported accurately.   

Declarations Page – The page in your policy that shows the name and address of the insurer,policy term, coverage outlined within the policy, and the premium associated with the coverage.

Deductible – The amount that a policyholder agrees to pay on a claim before the insurer is liable for any damages.

Dwelling Coverage (Cov A) – Dwelling Coverage protects against the damage and possible loss of your home in the event of a covered loss.

Earned Premium – The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has earned.

Endorsement – A written amendment attached to a policy that modifies the terms and/or coverage outlined within the insurance contract.

Equipment Breakdown Coverage – Equipment breakdown coverage is a type of home warranty that extends to your essential home systems and appliances. It provides protection in the event of an unexpected mechanical or electrical breakdown not caused by normal wear and tear or corrosion.

Exclusion – Specific situations, conditions, or circumstances listed in your policy that are not covered by your policy.

Extended Replacement Cost – This option extends replacement cost loss settlement to personal property.

Floater / Valuable Articles Coverage – Itemized coverage for valuable personal property such as  jewelry, fine art, antiques, sports equipment, musical equipment, or guns which is protected by an agreed dollar amount. In most cases there is no deductible applied and the coverage extends anywhere in the world.

Hazard – Insurance coverage that compensates for physical damage to a property from a covered loss.

Indemnity – To financially restore someone after a loss, through payment, repair or replacement.

Inflation Protection – An optional property coverage endorsement that increases the policy’s limits of insurance during the policy term to keep pace with inflation.

Insurance Binder – Temporary evidence of insurance until the formal policy documents have been processed and received by the insured.

Lapse – When a policy holder fails to make payments and the policy becomes null and void.

Liability – The state of being legally responsible for something causing a loss to another.

Limit of Liability – The maximum amount of damages an insurer is bound to pay in case of a loss.

Loss of Use (Additional Living Expense / Cov D) – Loss of use coverage, sometimes referred to as “Coverage”, provides for your living expenses in the event that you cannot live in your home due to a covered claim. This type of coverage typically covers hotel and restaurant bills and other living expenses you may incur while your home is being repaired. Coverage limits for loss of use is usually around 20% of your dwelling coverage.

Loss Assessment – Loss assessment coverage helps protect you from paying out of pocket for damage or liability that exceeds your condominium association master policy limits. When you own a condominium, and damage to community owned property costs more than it’s insured for, you and other condo owners could be responsible for paying the difference out of pocket. Loss assessment coverage helps compensate for this out-of-pocket difference.

Medical Coverage (Cov F) – Medical Payments Coverage,sometimes referred to as “MedPay”, helps cover medical expenses that you might be held responsible for due to an injury sustained on your premises when there is no lawsuit. These payments are not based on the law of negligence; that is, no negligence on the part of the insured has to be proven for payment to be made.

Minimum Earned Premium – The minimum earned premium is generally placed on surplus lines and non-standard policies to prevent customers from buying an insurance policy with the intention of canceling it after a single event or project. For example if you bind a policy with a 25% minimum earned premium clause and your policy is $2000/yr then the carrier will retain $500 non-refundable regardless if the policy is cancelled early.

Named Perils – Perils specifically list what is covered on insured property.

Other Structures (Cov B) – Other Structure Coverage, protects structures on your property such as detached garages and sheds. The typical coverage limits for other structures is 10% of your dwelling coverage-although higher amounts may be purchased if necessary.

Peril -A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, lightening, hail, smoke damage or theft.

Personal Liability Coverage (Cov E) – If someone other than a family member is injured or property is damaged and you are held legally responsible, personal liability coverage helps cover the cost of hospital bills, medical treatment, repairs, or legal expenses incurred from a lawsuit.

Personal Offense Coverage – Personal offense coverage is an optional coverage that protects against libel or slander liability.

Personal Property Replacement Cost – Personal property replacement cost coverage will help pay for the actual cost to replace your personal belongings that are lost, stolen or destroyed as a result of a covered loss.

Personal Property Coverage (Cov C) – Personal Property Coverage, sometimes referred to as contents coverage, protects your personal items and household contents in the event of a covered loss.

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

Premises Liability – Premises liability coverage includes both personal injury protection and medical payments. Personal injury covers wrongful eviction or entry, invasion of privacy, libel and slander. Medical payments helps cover hospital bills and medical care expenses for guests if they are injured on your rental property and you’re held responsible

Premium – The total cost or amount you pay in exchange for one policy term of coverage.

Property Damage – Destruction or loss of use of tangible property.

Replacement Cost Coverage – The amount it currently cost to repair or replace covered property with new material of like kind an quality.

Special Personal Property – Special Personal Property coverage extends all risk coverage for physical loss to the personal property limits unless specifically excluded on the policy.

Subrogation – The right of the insurance company after payment of a loss to recover from the responsible party.

Vandalism/Malicious Mischief – A type of coverage that protects against losses sustained as a result of an individual or individuals intentionally causing injury or damage to the property.

Unearned Premium – The insured’s remaining premium equity in the policy.