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 COVERAGES
& TERMS - HOME INSURANCE |
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A
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Coverage A - Residence or Dwelling |
This is the basic home coverage which provides insurance for
the home, attached and permanently affixed structures. |
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Actual Cash Value (ACV) |
Actual cash value is a settlement type. Damage settled on
an ACV basis is subject to depreciation. Technically, ACV=Replacement Cost
- Depreciation. |
| B |
Coverage B - Other or Related Private Structures |
This is for coverage on structures unattached to the home,
and usually a list of other specific items that may be added to a structure
or located on the premises. |
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Burglary |
Not as broad a coverage as "theft", since evidence
of forced entry and a police report attributing the loss to burglary is
normally required. |
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C
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Coverage C - Personal Property |
Coverage for Personal Property, subject to specific
lists of items and amounts in the policy. |
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Credit Card & Depositors Forgery |
Provides limited coverage for loss due to unauthorized use
of a credit card, loss due to forgery or acceptance of counterfeit money.
Has a max limit, and due to "identity fraud," companies are tightening
requirements, so read your policy! |
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Collapse |
This coverage is listed separately because it is usually NOT
caused by sudden and accidental damage, but by an unknown condition or defect
over time. The key is "unknown", and there are limitiations on
this coverage. |
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Co-Insurance |
Co-Insurance is a "penalty" within the policy that
reduces the amount that is paid by the company on a claim when the home
is insured for less than 80% of the replacement cost. It applies on all
claims to the home, even partial losses. |
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| D |
Coverage D - Additional Living Costs & Loss of
Rent |
Pays the amount, subject to a limitation, of expenses over
and above normal, when the home is uninhabitable because of a covered peril. |
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Debris Removal |
Provides coverage to remove debris deposited on your premises
by a covered peril. This applies to stuff from away from your premises as
well as wreckage of your property that must be cleared to effect repairs. |
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Deductible |
The deductible is that portion of the loss that must be paid
for by the policyholder before the insurance company begins to pay. The
standard deductible on the HO policy is $250, but most policies now are
being written at $500 or more. It is always worth checking the premium difference
before deciding. |
| E |
Earthquake |
Earthquake and earth movement are not perils covered in base
policies, but must be added by endorsement. In some states, like California,
there are a number of statutes that require the coverage to be offered,
and coverage can be made available on a separate policy. |
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Exclusions |
Exclusions are used in policy language to modify a general
coverage description. IN a HO policy, almost every coverage has at least
one. Important also to cross reference endorsements to see if they modify
coverage through exclusion. |
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F
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Fire Department Service Charge |
This coverage is intended to reimburse you for charges billed
to you by responding fire departments. While some jurisdictions do not have
such charges, many do. |
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Flood |
Flood is not a covered peril and is excluded from the homeowners
policies. It is available from your agent through a Federal program. More
details at www.fema.gov/nfip/ |
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Functional Replacement Cost |
This is an alternative settlement option used mainly for older
residences which have a replacement cost that far exceeds their market value,
because they were constructed with materials and craftsmanship that is not
commonly used today. Instead of matching the original material and construction,
repairs or total reconstruction is done with commonly used materials and
construction. |
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| G |
Guaranteed Replacement Cost |
This is a guarantee that your home will be replaced, even
if the cost exceeds the amount of insurance you have for Coverage A - Residence.
Usually has a maximum limit and requires 100% insurance to replacement cost
value. |
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Glass Breakage |
Some policies cover this without a separate coverage description.
May have a max limit, and may exclude damage if the residence is vacant
for more than 30 days. |
| H |
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I
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| J |
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K
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L
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Liability (Personal Liability) |
This coverage protects you by defending you when you are sued,
with exceptions, and making payments to settle such suits for which you
are legally liable, not to exceed the amount of insurance. Even though it
is attached to a homeowner policy, because it is "personal", it
is not soley based on conditons at the residence premises. |
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M
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Medical Payments To Others |
Sometimes it makes economic sense, and is the right things
to do, to make payment to reimburse someone's medical expense without getting
into who is at fault. This coverage, with its lower limit of liability,
is designed to allow that to occur. |
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Market Value |
Usually the amount that property would be worth on the open
market. May be used in conjunction with "actual cash value", and
in some policies and states, may be the same thing. Some limited coverage
policies may be written on a "market value" basis, where the amount
of coverage is establshed at market value rather than replacement cost. |
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Mold |
Mold is everywhere, but recently has created a significant
issue in homeowners lines. If damage is not repaired correctly, mold can
grow. However, mold will grow whenever the conditions are right, and many
times it is not covered because the homeowner has allowed those conditions
to exist. Mostnew policies have a new limitation on payment for "mold
and mold remediation", which is cleaning mold out. |
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N
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O
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P
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Property Coverages |
These are the coverages in the policy that apply to property,
as opposed to those that cover liability. |
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Q
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R
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Replacement Cost |
Replacement cost will normally be defined in the policy, but
means that, subject to some limitations, losses will be settled using the
amount to repair or replace using NEW materials. |
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S
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Scheduled Personal Property |
Specific types of personal property have exclusions, or may
have high values that would use up the Coverage C limit. These items are
insured and described individually on the Scheduled coverage form, and losses
are normally settled on a "valued" basis (for what the item is
agreed to be worth when the insurance is initiated). |
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T
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Trees, Plants, Shrubs, or Lawns |
Pays for damage, from a covered peril, to these items,
with specific limits. |
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Theft |
Theft differs from "burglary" or "robbery"
in that evidence of forced entry or personal threat is not required. Mysterious
disappearance may be excluded. |
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U
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V
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Vandalism & Malicious Mischief (VM&M) |
Refers to damage done by vandals or anyone seeking to damage
your property. Check for limitations in coverage if the property is vacant
for more than 30 days. |
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W
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Water Damage |
Most policies exclude all types of damage from water except
for rain which directly hits the residence (as opposed to causing a flood).
Flood, sewer backup, and seepage are excluded. Sewer backup can be added
back, but rates are rising significantly on all water issues because of
mold losses. |
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X
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Y
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Z
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essential
that you read your policy. Although there are a few organizations that
license insurance companies to use their policy forms (AAIS & ISO),
almost all companies will make variations. If you are insured by a large
insurer, most likely they have developed their own form, and while it
may use many similar terms and coverages, read carefully for the exclusions
and definitions.