When to insurance, it can feel like an agent is speaking a second language when they’re talking to you about policies and quotes and whatnot. There’s a lot of jargon that you need to deal with, and there are a lot of big words that maybe no one ever took the time to explain. It’s important that you know what these words mean. We’ve put together a list of twelve common home insurance words that you should know about.
12 home insurance words to know about.
Let’s be real, this is probably the one you’re most concerned about as far as home insurance words go. Why? Because it’s the one that means the rate you’re paying for your home insurance. There are many different factors that can influence your home insurance premium.
Your policy’s declaration page is probably towards the beginning of the policy. It gives a general overview of your coverage. It provides details like who’s insured, the property that’s insured, the premium, the amount of coverage, and so on. Should you ever have a quick question about your insurance, this can be a good first stop.
Your deductible is the amount you agree to pay if you have a claim. Let’s say your deductible is $1,000. Then you have a claim that comes out to be $8,500. You pay that $1,000 and the insurance company coughs up the remaining $7,500. Now, something to know – you could get a lower premium if you have a higher deductible, BUT you don’t want to set your deductible so high that it would be a huge burden if you had to pay it.
A peril is a cause of loss. Your policy outlines which perils are and are not covered, so it’s important to read that thing all the way through. You need to know what your insurance will do for you so that there are no nasty surprises down the road.
An endorsement is an addition to your policy that can alter the coverage. It can add coverage for certain perils. For example, a common endorsement is sewer backup coverage. Since sewer backup is typically excluded from home insurance, you can add this coverage as an endorsement.
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The limit of coverage is how much coverage you have. It’s the maximum that your insurance will pay before it stops. (And when it stops, you could be left to cover the rest of the claim.) It’s important to make sure that you have enough coverage to rebuild your house from the ground up and that you have enough coverage to protect your personal belongings.
A claim is when something has happened to your home and you would pretty please like your insurance company to give you money to fix it. The claims process is how you work through the situation with your home insurance company. There is some paperwork and such involved, so be forewarned.
The HO-3 is a common insurance policy. It’s basically your standard home insurance. It likely covers your home on an open-perils basis (meaning anything not specifically excluded is covered) and your belongings on a named perils basis (meaning that they are only covered for those things specifically named in the policy.)
Again, it’s important to read through your policy to make sure you know what is and isn’t covered – and how your home is covered. Plus you need to know things like how much coverage you have. Make sure to ask your agent if you have any questions about the wording in your policy.
Actual cash value:
Actual cash value is one way that an insurance company could reimburse you following a loss. It means that you would get the current value of your belongings, minus depreciation. (This may not be enough to replace them at today’s prices.)
Replacement cost value:
Replacement cost value is another way that you can be reimbursed after a loss. It means that you would be able to replace your belongings at today’s prices.
Additional living expenses:
These are expenses above and beyond your normal living expenses that you would incur if you were unable to live in your home due to a covered loss. These expenses could be covered by your home insurance, so if your home is uninhabitable due to a covered loss, save any receipts for expenses you wouldn’t have incurred if you could still live in your house.
This is a big one (and still falls within the realm of home insurance words.) The thing is that home insurance typically excludes flooding. So, if you have a loss due to a lot of water being on the ground outside where there usually isn’t a lot of water, you could be on your own…unless you have flood insurance, which can protect you from such losses. Make sure that you have enough coverage for your dwelling and your possessions.
So, there you have it. Twelve home insurance words that are handy to know about. We would be happy to help you get the home insurance you need to protect your house, and we (probably) won’t throw too many fancy insurance words at you – or if we do, we’ll explain them. Get in touch by filling out our online form, giving us a call, or messaging us on LiveChat.