One of the most rewarding moments in someone’s life is becoming a homeowner. That same moment can be both exciting and overwhelming. For some individuals the most overwhelming aspect can be obtaining homeowners insurance. As a homeowner you realize the importance of protecting your investment, but do you understand what it all means? The information provided here is intended to do just that; to assist in understanding your policy. Homeowner’s insurance can cover a broad range of causes of loss including fire, burglary,theft as well as other perils. The following terms and definitions have been broken down to help new and veteran homeowners understand their homeowners policy.

ACCIDENT: An event that is both unexpected and out of the insured’s control witch results in a loss

ACTUAL CASH VALUE (ACV): The amount it costs to replace items and/or property at the time of a loss minus depreciation

COINSURANCE: A clause that requires the policyholder to carry a specified percentage of the property value in order to recieve the full payment amount of a loss

DEDUCTIBLE: The amount of a loss that the insured is responsible to pay before the insurance company will pay a claim

DEPRECIATION: A decrease in value due to things such as age, wear and tear

ENDORSEMENT: Also known as a rider, used to add and/or delete coverage

EXCLUSION: Specific conditions and clauses which are listed and not covered by the policy

LIABILITY INSURANCE: Pays for losses that the policyholder is legally obligated to pay due property damage or bodily injury to another person

LOSS OF USE INSURANCE: Pays for losses as a result of the policyholder being unable to use a property due to a covered loss

PERIL: The cause of a possible loss

POLICY LIMIT: The maximum amount a policy will pay

REPLACEMENT COST: The cost to replace or repair an insured item

REPLACEMENT VALUE: The cost to replace or repair an insured item with no deduction for depreciation

The above terms and definitions are by no means an all inclusive list of homeowners insurance policy terms, however it is a foundation to build upon. Most insurance policy will include a section specifically detailing the definitions for the terms within the policy. The best way to become familiar with the terms of your policy is to read it, and if you are uncertain about the specific meaning of a term be sure to ask your agent.