Homeowners Insurance Glossary

Any area that has a one percent chance of experiencing a base flood in any given year; also called base floodplains

What it costs to repair or replace property minus depreciation, deterioration, or obsolescence

A person or organization added to an insurance policy so they can receive some of its protections

A person who investigates claims for an insurance provider

An insurance company that is licensed in the state to write and sell certain types of insurance.

Coverage for damage or injury your pets may cause

The yearly interest charged for a loan that includes the interest rate plus any costs rolled into the loan, such as closing costs or origination fees

An appraisal is a professional assessment 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.

A balloon payment is a large lump-sum payment made at the end of a loan that allow borrowers to pay lower installments throughout the loan’s term.

A base flood elevation is the height floodwaters are expected to reach during a 100-year flood.

An insurance binder is a temporary or interim insurance policy that an agent or insurance company issues before they issue the actual policy.

Bodily injury is harm caused to a person’s physical condition, including pain and illness. In a homeowners policy, this is usually covered by personal liability coverage.

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

Coverage for when a home is condemn after layers under the ground’s surface abruptly collapse and cause a visible depression in the ground, making the home uninhabitable.

An insurance claims is a request made to an insurance company asking for payment on a loss under a policy.

Closing costs are additional fees you pay above a home's sale price.

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

The date of issue is the day an insurance company creates a policy.

A declarations page is a summary of your insurance policy that lists key information about your coverage.

The amount of money that you’re responsible for covering in certain insurance claims. “AOP” stands for all other perils and applies to claims involving events like fire and theft.

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.

Dwelling is the primary structure on a property and is listed on your home insurance by its address.

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 uninhabitable 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.

Hazard insurance is the portion of your homeowners policy that protects the actual structure of your home from common perils such as fire, hail, and lightning.

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.

Home warranties are contracts between homeowners and warranty companies that help cover costs if a home’s systems or appliances malfunction.

This is a versatile homeowners policy that covers your home, attached structures, and belongings in a variety of situations.

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.

An insurable interest is a financial stake in the person, business, event, or property that’s being insured.

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

Insured means the person or entity that has a financial interest in the property and has the right to the proceeds during a claim.

An insurer is a company that provides protection from the financial repercussions of certain losses, such as theft or fire, in exchange for premiums.

A jewelry appraisal is an official report documenting the value of a particular piece of jewelry or watch.

An insurance lapse is the time between the termination or expiration of an insurance policy and when new coverage is in place.

The limit of liability is the maximum amount that an insurance company pays for a specified loss, such as damage to your home or property, or accusations that you caused someone else harm.

The market value of a home is the amount someone would pay for it on the open market.

Moral hazards exist in contracts when one party has either entered the contract in bad faith or has an incentive to take abnormal risks.

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 named insured is the person or entity that is protected by an insurance policy.

A nationally run flood insurance provider managed by FEMA.

Negligence is acting in a way that no reasonable person would act, disregarding prudence and safe practices.

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

Non-renewal means that your insurance company has decided to discontinue your policy once the current term expires.

An occurrence is an event that causes damage or physical injury to a third party and triggers a claim on an insurance policy.

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.

An insurance policy is the legally binding contract between you, the policyholder, and your insurance company.

A policy term is the time between an insurance policy's effective and expiration dates.

A policyholder is the person who buys an insurance policy and who has the right to change, cancel, or continue the coverage.

An insurance premium is the amount of money you pay for an insurance policy.

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.

Proof of insurance is documentation from the insurance company or agent that shows you have an insurance policy.

Property and casualty insurance is a line of insurance products that cover losses stemming from your possessions or injuries and damage you cause to others.

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.

A quote is an estimate of what your policy will cost.

Real property is land, anything permanently attached to the land, and the owner’s right to use the land.

Reinsurance is how insurance companies transfer some of the risk they take on when they sell insurance policies.

An insurance renewal is when you continue your coverage for another term.

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.

The act of substituting one party for another. When subrogation occurs, the party that’s taking the place of the other also accepts the original party’s legal rights and duties.

Theft is when someone intentionally takes your personal property to deprive you of its use, and it’s a covered peril in most homeowners insurance policies.

The insurance underwriting process is the way insurance companies evaluate the risk of offering coverage to applicants.

Vandalism is willful or malicious behavior that causes someone else’s property to be altered, defaced, or destroyed.

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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