Homeowners Insurance Glossary

Also called base floodplains, the 100-year floodplain refers to any area that has a one percent chance of experiencing a base flood in any given year. They're designated as Special Flood Hazard Areas (SFHAs).

The actual cash value of your home or personal property is calculated by subtracting depreciation from the replacement cost. Insuring property for its actual cash value means you receive what the item is worth at the moment of the loss, not what it costs to replace it.

An additional insured is a person or organization added to an insurance policy so they can receive some of its protections. Additional insureds do not own the policy, so they can’t add, cancel, or change coverage.

The person who investigates claims for an insurance provider, which includes assessing damaged property, interviewing witnesses, and reviewing police and hospital records.

An admitted carrier is licensed in the state to write and sell certain types of insurance. They are backed by the state’s guaranty fund that protects policyholders if a carrier goes bankrupt.

Animal liability covers damage caused by your pets, most notably dogs. If you have a dog, it's worth understanding whether you need animal liability coverage, and whether it covers damage or injury caused by your animal off of your property.

This is the rate of interest you’re charged annually for a loan. APR includes the interest rate plus any costs rolled into the loan such as closing costs or origination fees.

An appraisal is a professional assessments of a property’s value. Your home, belongings, and property losses can be appraised.

An assignment of benefits (or AOB for short) is an agreement that gives your claims benefits to someone else.

These are large lump sum payments made at the end of a loan that allow borrowers to pay lower installments throughout the loan’s term. A balloon payment is usually at least two-times the amount of regular payments.

The height floodwaters are expected to reach during a 100-year flood. This metric is used to determine flood insurance rates in a given area.

Any harm caused to a person’s physical condition, including pain and illness. It's usually covered by personal liability coverage.

A type of insurance that pays for damage caused by low-probability, high-cost events, such as floods, earthquakes, and hurricanes.

Catastrophic ground cover collapse (CGCC) is a severe form of sinkhole loss when layers under the ground’s surface abruptly collapse, cause a visible depression in the ground, and make a home uninhabitable.

A request made to an insurance company asking for payment on a loss under a policy. If a claim is approved, your deductible will be subtracted from the covered amount.

Fees you pay when you close escrow on a house, such as. mortgage insurance premiums, appraisal fees, and property taxes.

A provision in your insurance policy that requires you to carry coverage equal to 80 percent of your home’s replacement value.

The date a policy is issued. This is different from the policy’s effective date which is when the coverage actually kicks in.

This is the first page of your insurance policy that lists key information about your coverage, such as policy limits and deductibles.

The amount of money, per claim, that you are responsible for covering. Deductibles only apply to approved claims. If you have a $1,000 deductible and a claim is approved for $20,000, Your insurance company will cover $19,000 of it. Some perils (like hurricanes or wind) may have their own deductibles.

The amount of value that an item loses over time. Items that depreciate are considered to have a specific length of time that they are considered useful, and will depreciate from 100% of their value when they are new, to 0% of their value when they have reached their useful age.

A zone in Texas located east of Highway 146 along the Gulf of Mexico that faces increased wind damage risk.

A DP1 policy is a type of home insurance that protects rental or vacant homes from nine named perils. It covers the property for its actual cash value, not replacement cost.

A DP2 policy is a type of property insurance that covers rental properties for 18 different types of damage. It provides this coverage on a replacement-cost basis.

A type of dwelling property insurance policy designed for homes used as investment properties or homes with older roofs. It offers many of the same coverages found in a standard homeowners insurance policy but is highly customizable to fit unique needs.

The date when an insurance contract is in force and effective.

This is an amendment to your insurance policy that updates its information, increases coverage or limits, or reduces or excludes coverage.

Excess and surplus lines insurance (E&S insurance) can insure folks who have been denied coverage because their homes are considered high risk.

Anything that isn’t covered in an insurance policy. Insurers may exclude perils, situations, hazards, or properties to narrow a policy’s coverage.

A program designed to ensure every homeowner can get insurance. FAIR plans are run by the state and are usually the last option for homeowners who can’t get coverage.

Also called fair rental income protection, this coverage is included in Coverage D of a landlord insurance policy. It can help cover lost rental income if the property is inhabitable because of a covered claim.

These are areas in California where physical conditions create varying degrees of wildfire risk. These areas appear on fire zone maps and range from moderate, high, and very high.

Coverage that can pay for losses if an accidental fire damages your property. Home insurance policies typically always include this coverage.

The first notice of loss (FNOL) is the first step in the claims process where the policyholder reports a loss to their insurance company.

A Special Flood Hazard Area (SFHA) close to lakes, ponds and other large bodies of water. Because of its low elevation and proximity to water, flood zone A is a high-risk flood zone.

A high-risk flood zone close to floodplains, rivers, lakes, and other bodies of water.

Areas close to water hazards that have a one percent chance of experiencing shallow flooding between one and three feet each year. Flooding in Zone AH usually comes in the form of ponding.

A high-risk flood zone often found near rivers and streams. Flood Zone AO may see floods that are one to three feet deep.

A moderate risk flood zone. Areas with this designation have approximately a 0.20 percent chance of a flood each year.

A minimal flood risk zone outside of the 500-year flood. That means there is less than a 0.20 percent risk of an annual flood.

A coastal area with an increased chance of flooding, especially from wind-driven waves.

A coastal area with an increased chance of flooding due to storm waves and tidal surges.

An area with low-to-moderate flood risk, as determined by the Federal Emergency Management Agency (FEMA).

An area the Federal Emergency Management Agency (FEMA) labels based on its likelihood for flooding.

If you have a mortgage and your home insurance policy lapses, watch out. Your lender may obtain a policy – called force-placed insurance – on your behalf.

Homeowners policies may provide fungi and mold insurance to pay for damage caused by fungi, bacteria, and mold that’s the result of covered claims.

An endorsement that can cover costs if you cause property damage or bodily injury while using your golf cart. It can also cover damage to the cart itself.

The timeframe between a missed payment due date and when your insurance company cancels your policy for nonpayment.

The portion of your homeowners insurance that protects the actual structure of your home from common perils such as fire, hail, and lightning. Mortgage companies usually want your policy to include coverage for these hazards to protect their investment.

Named-perils insurance that provides coverage for an owner-occupied, standalone home and its contents.

A broad form home insurance policy that can cover your home and personal property against 10 named perils.

A special form home insurance policy that covers your home and other structures on an open-perils basis and your personal property on a named-perils basis.

A renters insurance policy that protects a renter’s personal property on a named perils basis and covers their personal liability.

A comprehensive form home insurance policy that covers the home, other structures, and personal property on an open-perils basis.

A condo insurance policy that covers the unit from the walls in. It also covers the things inside the unit – appliances, fixtures, and belongings – as well as personal liability and more.

Also called mobile or manufactured home insurance, this type of home insurance protects mobile and manufactured homes for all perils except those listed as exclusions. It covers your belongings on a named-perils basis.

A modified coverage form that provides home insurance for older buildings with replacement costs that outweigh the market value.

Charges assessed by a community’s homeowner association to maintain common areas.

This is a commercial insurance policy that covers the exterior of a condo and common areas. Because it doesn't cover interior units, condo owners need their own insurance to complement this policy.

A third-party, unbiased assessment of your property’s value based on other comparables in the neighborhood.

A visual examination of a house. The person performing the inspection looks at all the major components of the house to make sure things are operational and to note if repairs are necessary.

Money you borrow to purchase a habitable property, such as a house, condo, or apartment. Taking out a home loan allows you to finance the purchase of the property by making payments over time.

A contract between a homeowner and a warranty company that provides financial protection when the home’s systems or appliances malfunction. Home warranties usually last one year.

Typically homeowners’ insurance providers impose a separate Hurricane Deductible to your Standard Deductible. Your Hurricane Deductible is based on a percentage of your home’s value, and is the amount you will pay out of pocket should your home be damaged as a result of a hurricane.

If you have a screened enclosure, it's likely not covered by your basic insurance policy. The good news is that additional coverage is available, and not exorbitantly expensive.

Identity fraud insurance covers expenses related to the consequences of having your identity stolen. Some examples include attorney and tax advisor fees, credit report fees, loss of income due to absence from work while dealing with the fraud, loan re-application fees, notary fees and costs for certified mail. Kin offers identity fraud add-ons to all policies. Be sure to ask your agent about it if you're interested.

In the insurance industry, insurance agents are intermediaries between the people who want to buy insurance and the carriers that develop the policies.

An official hold on issuing new policies or changing coverage for existing policies in response to an approaching storm or ongoing wildfires or civil unrest.

A nationally run flood insurance provider managed by FEMA.

A statement of no loss is a signed letter that states you haven’t experienced any losses that could lead to claims.

Ordinance or law coverage applies if you are faced with having to rebuild your home after a covered loss and are required by ordinance or law to upgrade the rebuild to meet current codes. This includes construction, electrical, and plumbing codes, among others.

A specific risk, or cause of loss, covered by an insurance policy. Most Kin policies offer all risk coverage, which covers any and all perils except those that are specifically excluded.

Also called a claim history report, a personal property report documents your 7-year loss history. It gives insurers insight into how "risky" it might be to insure your home.

A type of insurance conventional lenders require when homebuyers don't make a down payment of 20 percent. Borrowers pay the premiums, but PMI insurance protects the lender if the borrower defaults on the loan.

Put simply, a protection class is a grade given to a home based on the community's fire fighting abilities. This is used as a major factor in determining premium. If you're close to a source of water, that can help reduce premium.

The amount it would cost to replace or rebuild an item of similar quality using materials and goods that are currently available.

Some types of personal property (like jewelry) have a predetermined coverage limit. You can make sure that individual items are covered by adding them to your policy as “scheduled property”. Some high-value items may require an appraisal. These scheduled items will then be covered up to the amount of the appraised price.

Sinkhole insurance provides coverage for damage to your home, other structures on your property as well as your personal property within these structures if they incur damage or loss due to a sinkhole on your property. Certain states require home insurers to offer catastrophic ground collapse coverage as part of their homeowners insurance, while others require earth movement to be made available as an optional extra.

Also called single entity coverage or studs in coverage, this covers a condo building from the exterior framing to the walls in the condo unit. It is usually purchased by a homeowners association.

Water backup and sump overflow coverage can usually be added to your homeowners insurance to help pay for damage caused by backed up sewers, drains, and sump pumps.

The amount you’re responsible for when your home is damaged by wind, hail, tornado, wind-driven rain, or similar events. However, when the loss results from a storm system that the National Hurricane Center names, a hurricane deductible applies, depending on your policy’s language.

The process of making your home more resistant to wind damage. This can save you a lot of money on your home insurance.

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