Glossary of Common Dwelling Insurance Terms in the United States
Created | Updated Jul 16, 2012
With the increasing need of insurance in today's society, it is imperitive that consumers know what they are receiving when they get a policy. This article will go over the most common definitions that may be seen in homeowners, rental, and tenant policies in the United States.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Abandonment
Surrending to the company all interest in the property after a claim.
Accidental Death & Dismemberment (AD&D)
Accident insurance that pays a stated benefit to the insured or the beneficiary in the event of bodily injury or death.
Act of God
An event that could not have been prevented by reasonble foresight.
Actual Cash Value
A settlement method equal to the cost of replacing an item minus depreciation.
Additional Living Expense
Coverage that pays for additional expenses of living somewhere else while the insured's home is being rebuilt or repaired.
After Market
Installation of parts or equipment after original manufacture.
Agency
A business that has licensed insurance agents selling and servicing insurance policies.
Agent
A person licensed by the state they reside in, and by an insurance company, to sell insurance to customers for a commision.
Agreed Amount
A clause between an insured and a insurance company, where they agree on the amount that will be paid out in the event of a loss.
All Risk Insurance
Insurance against loss of or damage to property arising from any cause except those that are specifically excluded in the policy jacket.
Applicant
A person applying for insurance coverage.
Application
A questionnaire which must be filled out by the person(s) applying for insurance. It supplies the company with all of the applicable information.
Appraisal
A survey of property made to determine insurable value.
Appreciation
Rise in value.
Arson
The criminal act of burning or attempting to burn property.
Assigned Risk
A risk which underwriters do not wish to insure but which, because of state law or otherwise, must be insured. The insurance is assigned through a pool of insurers and assigned to companies in turn.
B
Binder
An oral or written agreement certifying that the insurance policy is in effect while the official policy is being prepared.
Brick Construction
Exterior walls constructed of masonry materials such as adobe, concrete, gypsum block, stone, tile, or similar materials.
Broker
A person who solicits insurance but does not represent an insurance company as an agent.
Burglary
Unlawful removal of property from a premises involving visible forced entry.
C
Cancellation
Termination of a contract before its normal ending period.
- Flat - Cancellation as of the effective date with no premium charge.
- Pro Rata - Cancellation mid-term with the unearned premium going to the customer, without any penalties.
- Short rate - Cancellation by the insured before normal policy expiration. The insured pays a penalty for cancelling early.
Carrier
An insurance company.
Casualty Insurance
Insurance which is primarily concerned with the losses caused by injury to persons, and the legal liability imposed upon the insurer for such injury or damage to property of others.
Catastrophe
A severe loss characterized by extreme force, such as hurricane, tornadoes, hail, etc. Specifically it refers to a single occurance that causes losses equal to or greater than 1 million dollars.
Certificate of Insurance
Evidence that an insurance policy has been issued, and shows the amount and type of coverage.
Chartered Property Casualty Underwriter
A professional designation conferred by the American Institue of Chartered Property Casualty underwriters. An agent with the CPCU designation, has taken courses to excel in the industry and has sworn to follow certain moral guidlines in their job.
Claim
When an insured seeks to recover payment under an insurance policy for a loss covered by that policy.
Claims Adjuster
A person who directly investigates a claim filed by the insured. The adjuster also assesses whether or not the loss is covered by the policy.
Condominium
A type of housing unit usually consisting of two or more units within a single structure.
Credit Report
A report from a credit bureau that contains certain financial information about individuals, such as debts and payment history.
D
Damage
Loss or harm resulting from injury to a person, to property, or to someone's reputation.
Damages
Monies awarded to a plantiff in compensation for his/her injuries and property damage caused by the defendant.
Dec
Declaration Page.
Declaration Page
The face page of a policy containing details of a particular policy contract.
Deductible1
The amount of the loss the insured is required to pay before the insurance policy pays.
Diminishing Deductibles
Deductibles that slowly decrease each year the insured has not filed a claim with the company.
Dwelling Fire Policy
A policy that insures against loss to property for fire, lightning, or other defined causes. This policy is not packaged. These policies can be written on owner-occupied, or rental homes.
E
Earned Premium
When a premium is paid in advance for a certain amount of time, the company is said to 'earn' the premium over time.
Endorsement
An amendment in writing added to and made part of the insurance contract.
Equity
The owners interest in relation to the worth of real property.
Exclusion
Something not covered by a policy and specifically stated in the insurance contract.
Expiration
The date on which an insurance policy will cease.
Exposure
The total amount of insurance coverage, either physical damage or liability coverages.
Extended Coverage
A group of perils that are packaged and offered as optional coverage for a dwelling fire policy.
F
Face Value
The amount if insurance provided by the policy.
Fair Credit Reporting Act
A federal statute which governs the collection, reporting and use of consumer credit information.
Fair Plan
An insurance program made to available to risks that are unable to be placed through regular channels
Family Member
A person who resides in the insured's household and is related blood, marriage, or adoption. This includes a ward or foster child.
Federal Flood Insurance
A goverment program to provide flood coverage for those who can not secure it elsewhere.
Fire Protection Class
All communities are assigned a fire protection rating based upon such factors as: availibilty of hydrants,water pressure, volunteer vs. full-time staff, and fire fighting equipment.
First Party
The first named insured on a policy
Force-Placed Policy
Protection for a lender on a loan for a specific piece of collateral.
Foreclosure
A proceeding against a piece of property to secure a debt.
Fraud
Willful misrepresentation of a material fact.
G
Ground
A connection between an electric circuit and the earth or a conducting body.
H
Hazard
A factor or condition that increases the chance and severity of a loss.
- Moral Hazard - Possibility that an insured might try to intentionally cause a loss.
- Morale Hazard - Carelessness by an individual that may cause a loss.
- Physical Hazard - Characteristics of persons, operation, or an insured's property that tend to increase the probability of a loss.
HO3
An ISO policy special form for providing coverage for all risk of physical loss to the dwelling.
HO6
ISO polci specifically designed to cover a condiminium for special form coverage.
Home Owners Policy
A policy for owner-occupied dwellings combining both property and liability coverage into one contract.
Housing and Urban Development
A department in the United States Government created in 1965, HUD's mission is to create a safe, sanitary, and decent home and living environment for every American.
HUD
Housing and Urban Development.
Hurricane
A storm with winds that exceed speeds of 74 miles per hour. The National Weather Service declares when a storm is a hurricane.
I
In-Force Policy
An insurance policy in "active/current" status.
Inflation Coverage
A term used to denote an increase in coverage limits to compensate for inflation.
Inland Marine
A class of insurance designed to cover specific items, such as furs, jewelry, collectables.
Insurance Services Office (ISO)
An independant services organization that provides both state-specific and multi-state products and services. The develop many of the standard policy contracts that are in use today.
Insurance to Value
Insuring a structure, dwelling, etc. to an acceptable percentage of its value.
Insured
A person covered by an insurance policy, but not necessarily named in the policy.
Insurer
The insurance company.
Insuring Agreement
The section of an insurance policy states which losses will be covered, what property will be covered, and what perils are insured against.
Intentional
A willful or deliberate act.
J
K
L
Lapse
A situation where a premium that is due is not paid.
Lease
A contract, either oral or written between the owner of a property and a tenant for the possession and use of land in return for the payment of rent.
Lessee
A person who possesses the right to use or occupy a property under a lease.
Lessor
One who holds title to, and conveys the right to use and occupy a property under a lease agreement.
Liability
Generally, any legally enforced obligation.
Liability Insurance
A two-part undertaking by an insurer to (1) indemnify its insured with regard to damages for which the insured is found to be liable; and (2) defend its insured in lawsuits seeking those damages.
Leinholder
Any person, firm, association, or other legal entity that holds a financial interest in the property of another.
Limit of Liability
The maximum amount an insurance company agrees to pay for a loss.
Loss
A valid claim for recovery under the policy.
Loss of Rents
If a loss covered by the policy damages that part of an insured dwelling that is rented to others, the insurance company will pay for the loss of income resulting from that dwelling not being fit to habitate.
M
Manufactured Home
Also known as a mobile home, these homes are built on a chassis to conform to a regulatory code established by HUD. Most rest on piers and are anchored to the ground by steel straps.[
Medical Payments
Coverage within a homeowners policy that will pay for injuries to guests or other members of the public who are injured on the premesis.
Modular Home
Homes that are built in a factory and delivered in complete sections to a building site for set-down on a permanent foundation.
Mortgage
A conditional right to real or personal property usually granted by the property owner to a lender in order to secure a loan made to the owner by the lender.
Mysterious Disappearance
Disappearance of property without knowledge of place, time or manner of loss.
N
Named Insured
The person designated on the policy as the insured.
Named Perils
A policy that specifies the perils which are insured against.
National Association of Insurance Commisioners
An organization which coordinates insurance regulation among the states.
National Flood Insurance Program
A Federal program through which a home owner may obtain flood coverage.
National Insurance Crime Bureau
A not-for-profit organization dedicated to combating insurance-related crimes.
Negligence
Failure to do what a resonably prudent individual would do under normal circumstances. Negligence may involve acts of omission, commision, or both.
Nonrenewal
When an insurance company does not renew a policy for another term.
Notary
A public officer who has authority to attest and certify deeds and other documents.
O
Other Structures
Structures which appertain to the primary structure insured, such as a garage or boat house.
P
Peril
The risk or hazard insured against by an insurance policy.
Personal Effects
Personal items owned by the insured.
Personal Umbrella Policy
A form of umbrella liability that provides excess liability coverage over the insureds liability coverage provided on their insurance policy.
Policyholder
A person who pays a premium to an insurance company in exchange for insurance protection.
Power of Attorney
A written document by which the authority of one person to act in the place and instead of another as his or her attorney in fact is set forth.
Premises
An insured's home and other structures incidental to the insureds use of the home as dwelling. May also include cementary plots and burial vaults.
Premium
The amount a policyholder pays the insurance company for a policy.
Q
R
RC
Replacement Cost
Renewal
Continuation of an insurance contract beyond the original date of expiration.
Replacement Cost
The cost to repair or replace damaged property with new property of like kind and quality without deduction for depreciation.
Repossession
Ifa buyer of a unit fails to make loan payments, the unit may be taken back and sold to pay off the debt.
Robbery
Criminal act of theft either by violence or threat of violence.
Row House
Any dwelling composed of more than two residences which share a common wall. See also condominium.
S
Seasonal
Any dwelling that is occupied for less than five months during any one year period.
Settlement
The act by which parties who have been dealing together strike a balance or agree on a final amount of solution that satisfies their own sense of value and justice.
Statue of Limitations
A statue prescribing limitations to the right of certain coverages on a policy.
Stick-Built
Term used to describe a home that is built on a site and not premanufactured.
Subrogation
The act of recovering payment from a third party after an insurance company pays a claim.
T
Theft
The fradulent taking of personal property that belongs to another person without his or her consent.
Tie-downs
Metal straps placed across the top of a mobile home and anchored to the ground to reduce the risk of loss in high winds.
Title
Proof of legal ownership or ownership rights to a property.
Total Loss
Loss to the insured of the entire value of goods or property.
U
Underwriters
Officials of an insurance company whose duty it is scrutinize risks for acceptability.
Underwriting
The process of determining if a risk would be able to be written by the insurance company.
Unearned Premium
The portion of the premium on a policy which applies to the time policy still has to run.
Unit
Generic description of a piece of property.
Unoccupied Dwelling
A dwelling without human inhabitants but containing enough furnishing or other personal property to show an intent to retain and occupy the dwelling.
V
Vacant Dwelling
A dwelling containing no property of value and not regularly lived by people.
Vandalism & Malicious Mischief
Damage done maliciously by vandals.
W
Waiver
Relinquishing of a right.
Warranty
A statement in a policy of the existence of a fact which, if untrue, will void the policy.
Workers Compensation
Coverage required by state law to compensate workers who are injured on the job.
X
Y
Z
1Also known as excess
