Home Insurance Glossary – All the Tough Words Defined!

Understanding your insurance policy can be extremely difficult if you aren’t familiar with the words contained therein. Below is a list of the most common home insurance glossary terms that most people don’t understand. By understanding these concepts, you are better prepared to make confident insurance decisions.Dwelling. Dwelling is the actual home that you live in. Your dwelling is your home and any attached structures to your home.Other Structures. Other Structures is any structure that is on your property and not connected to your home. This includes but is not limited to: mailbox, shed, greenhouse, swimming pool, etc.Personal Property. Personal Property is your belongings. Your TV, washing machine, bed, couch, clothes, etc. are all classified as Personal Property. Basically anything you own is considered your Personal Property.Loss of Use. Loss of Use is a coverage that will reimburse you for expenses above and beyond what you would normally spend if your home is damaged by a covered peril, and as a result you can’t live there for a time. Loss of Use expenses include temporary lodging, food, and travel.Liability. Most reputable insurance policies come with liability coverage. The liability portion of your home insurance will protect you and your family from liability lawsuits that may occur as a result of living life.Peril. A Peril is considered anything that could harm you or your property. Wind, lightning, vehicles, and tornados are all examples of perils.Covered Peril. A Covered Peril is a peril that is covered under your current insurance policy.Named Peril. Named Peril refers to the type of home insurance policy you have. There are two types of home insurance policy; Named Peril and Open Peril. A Named Perils policy specifically lists all the perils that your insurance covers.Open Peril. Open Peril is the second type of home insurance policy available. It is a nicer, more extensive policy. This type of policy does not specifically list covered perils; instead it lists perils NOT covered. If a peril is not on the exclusion list, then it is covered.Claim. A claim is a request to get reimbursed for a peril that damages your home. Whenever something damages your home, a claim is what you file to get your home repaired or replaced.Effective Date. The effective date of the policy is the day that your insurance policy started.Policy. Policy is the term used to describe the obligation your insurance company has to repair or replace damage to your home caused by a covered peril, as long as you continue to make your insurance payments. The policy outlines what is and isn’t covered, and what the insurance company will be responsible for if something happens.Premium. Premium is the dollar amount you pay for the insurance. It’s the total cost of the policy.Exclusion. An exclusion on your policy is a peril that is not included and thus will not be covered on your home insurance.Replacement Cost. Replacement Cost coverage is the preferred way to insure your home. Replacement cost coverage will repair or replace any damage to your home caused by a covered peril without taking into account depreciation of materials. Basically, the only thing you will have to pay will be the deductible.Actual Cash Value. Actual Cash Value is the less preferred way to insure your home. Actual Cash Value coverage will repair or replace any damage to your home caused by a covered peril less your deductible and less depreciation. In other words, with an Actual Cash Value policy, you may be paying much more than just your deductible to repair your home.