Glossary of property insurance definitions

Actual cash value (ACV) is the amount paid to replace damaged or stolen personal property, minus depreciation, at the time of the loss.

Additional living expenses helps cover costs associated with an increase in living expenses, up to your policy's limit, if you're unable to stay in your home while it's being repaired or rebuilt due to a covered loss.

An attractive nuisance is a hazardous condition or situation on a premises that could entice children, putting their safety in danger, which may lead to the owner of the premises being held legally responsible for a child's injury.

Bundling is the act of buying multiple insurance products through a single insurer. When products are bundled, like home and auto, the policies often come with discounted rates.

Condo insurance often protects the interior of the home from the drywall inward, but this varies based on your insurer. Personal belongings, depending on the coverage selected, may also be protected by a condo insurance policy. The physical structure and grounds of the condo are usually the responsibility of the condo association.

A deductible is the amount of money the policyholder is responsible for paying out of pocket toward a covered claim.

Dwelling coverage, also referred to as Coverage A in a homeowners insurance policy, protects your home's structure (roof, walls, etc.) as well as attached structures, like a porch.

An endorsement is used to add, delete, or change parts of the policy. An endorsement may also be referred to as an insurance rider.

Escrow is a pre-arranged hold on funds until a specific condition has been met. Escrow serves multiple purposes, but it primarily guarantees that money is available to pay specified costs. Mortgage lenders often use escrow accounts to collect monthly payments to cover homeowners insurance premiums and property tax and then automatically pay those bills on behalf of the homeowner.

Exclusions may describe property, perils, hazards, or losses arising from specific causes that are not covered by the policy.

Flood insurance protects homes against damage from floods. Standard homeowners insurance policies don’t typically provide this type of coverage. Instead, coverage is typically provided by a separate policy purchased through the National Flood Insurance Program (NFIP) or private flood insurers.

As it relates to home insurance, a hazard is a cause or situation that increases the chance of a peril occurring.

A home inventory is an itemized list of household possessions, allowing for an updated record of everything in a home. This inventory is helpful in the event of a claim.

A home warranty is a separate plan from your homeowners insurance policy that may protect your appliances and home systems such as a refrigerator or air conditioner.

Homeowners insurance is a policy that may include dwelling coverage, other structures coverage, loss of use coverage, liability coverage, and personal property coverage.

An insurance coverage limit is the maximum amount an insurance provider may pay for a claim, as stated in the policy. Policies tend to have different types of coverages with separate coverage limits.

A peril is an event or circumstance specified in an insurance policy, such as vandalism or fire, that results in damage to or loss of property. Some insurance policies are known as named-peril policies and only cover damage caused by specific threats.

Personal liability coverage may help cover the cost of someone else's injury on your property or damage to another's property, up to the applicable policy limits, if a person covered by the policy is legally responsible.

Personal property coverage may help cover the cost of personal items that are destroyed, damaged, or stolen due to a covered peril.

An insurance premium is the money paid to an insurance company in return for insurance protection.

Private mortgage insurance is a type of insurance coverage that protects the lender if you're unable to pay your mortgage loan. Private mortgage insurance (PMI) is typically a condition of a mortgage if the down payment is less than 20% of the home's purchase price.

Renters insurance protects a tenant's personal property in case of loss caused by a covered peril and may also cover the tenant if they're liable for someone else's injuries or damaged property.

For dwelling coverage: Pays for the cost to repair or replace damaged structures without factoring in deductions for depreciation, but payment is limited to a maximum dollar amount.

For personal property: Pays for the cost to replace damaged items at their current value without factoring in depreciation.

See endorsement.

A sub-limit on an insurance policy is a limit within a limit. For example, a policy may have a $150,000 personal property coverage limit, but a much lower limit for items such as jewelry, artwork, and cash.

An umbrella policy is a separate policy that may cover claims in excess of the underlying homeowners or auto insurance policy limits.