Additional Living Expense
Fire damage or other covered loss could increase your living costs—you may be paying for a hotel, restaurant meals or laundromat, for example. In a standard homeowner policy, Loss of Use (Coverage D) will reimburse you for any additional living expenses incurred by you in an attempt to maintain a normal standard of living if your home is made uninhabitable by a covered peril. See Loss of Use.
In a property insurance policy, “appurtenant structures” are buildings on the same premises as the main, insured building. Appurtenant structures like garages or barns on your property and are usually covered by homeowner insurance policy.
In your property insurance contract, the arbitration clause provides a means for settlement when you and your insurer cannot agree on an acceptable claim payment. Appraisers representing each party select a neutral arbitrator; a judgment by any two of these three constitutes a binding settlement.
Business Personal Property
In a homeowner policy, “business personal property” refers to items or “contents” owned by your business or company—like the lap top you might bring home over the weekend. Coverage is usually limited to $2,500.
Called “Dwelling”, this is the part of your home insurance policy that covers the home itself—frame, flooring and fixed objects. The amount of Coverage A is the cost to replace the structure of your home in the event of total loss. Other coverages are usually based on a percentage of Coverage A.
“Medical Payments” pays medical costs if someone is injured on your property. A homeowner policy automatically covers $1,000. You can increase this coverage in $1,000 increments, up to $5,000. In order to collect more than this, the injured party must file for compensation under Coverage E.
Debris Removal Clause
While most property policies cover only direct damages caused by an insured peril, the “debris removal clause” covers the cost of removing debris produced by the peril’s occurrence. For example, a hurricane sweeps through the state; a fallen tree will be removed only if it lands on your house. Debris Removal reimburses you for the cost of cleaning all the broken limbs and rubble.
This is a damage or loss resulting as a direct consequence of an insured peril. For example, a computer lost in a fire is a direct loss; the data destroyed inside the computer is considered an indirect loss.
An acronym for “Fair Access to Insurance Requirements,” FAIR offers insurance to people in high-risk areas who might otherwise be denied coverage. Reinsured by the United States government, FAIR is a pooling plan with policies for fire and allied perils.
In property insurance, “fire” refers to the unintentional or “hostile” occurrences of flame and combustion. Damage caused by fire in your fireplace, for instance, is not covered under your homeowner policy. But if your rug were ignited by a spark from that same fireplace, you would be covered.
Unfortunately, no one can make a building completely undamageable by fire. Today, insurers use the term “fire-resistive” to describe buildings which are practically resistant to most fire damage.
A temporary submersion, partial or complete, of ordinarily dry land by water or mud. Floods are typically caused by an overflow of waters, whether inland, tidal or from any accumulated runoff from any source. Flood is excluded under a typical homeowner insurance policy.
Guaranteed Replacement Cost
Guaranteed Replacement Cost coverage on homeowners insurance means that your home will be repaired to its value at the time of loss, reguardless of the amount of coverage carried. For example, you estimate your home to have a full replacement value of $162,000. On your homeowner policy, you carry $162,000 coverage for the structure. If you have guaranteed replacement cost endorsement on your policy and the home is lost in a fire and the house costs $168,000 to rebuild, the policy will pay $168,000.
Combined property and liability insurance that covers homeowners and renters for damage to or theft of their property and liability, in case they are responsible for injury to another person.
Increased Cost of Construction Insurance
Commonly added as an endorsement to homeowner policies, “increased cost of construction insurance” covers the additional costs of building repair or reconstruction when you rebuild with more expensive services, materials and techniques required by local ordinances.
Property insurance terms are tailored to the nature and use of the property as it exists when the policy is written. Should you introduce dangerous materials or activities into the property, like making fireworks, you will have added an increased hazard whose liabilities would not be covered by your policy.
Also known as consequential loss or damage, indirect loss results from, but is not caused directly by, a peril. If your business property burned down, for instance, the property itself is a direct loss, while the lost business revenues would be considered an indirect loss.
If policies or endorsement forms are broadened through legislation or rating authority rulings—and do not require premium increases—the “liberalization clause” automatically includes the broadened coverage in similar, existing policies.
Loss of Use Coverage
If your home becomes uninhabitable because of an insured peril, Loss of Use (Coverage D) provides compensation for additional living expenses incurred in an attempt to maintain a normal standard of living. Loss of Use is automatically included as 20% of the Replacement Cost amount you carry in Coverage A . If your home were covered for $200,000, for example, Loss of Use coverage would provide up to $40,000 for additional living expenses. See Additional Living Expenses .
Masonary Noncombustible Construction
Refers to buildings constructed from noncombustible materials such as masonry walls of brick, cinder block, stone, tile, or other similar materials, and floors and roofs made of metal or other noncombustible materials.
In policies covering mortgaged property, the “mortgage clause” protects the interests of the mortgagee for loss reimbursement and other rights of recovery, regardless of any acts or neglect by the insured.
National Flood Insurance Program (NFIP)
A program backed by the United States government to provide flood insurance for fixed property. The NFIP writes policies directly and offers reimbursement to private carriers offering flood insurance.
Coverage you can obtain for personal property or “contents” which are away from the principle, insured property. In most cases, the amount of this coverage is limited to a percentage of the property’s total coverage.
Generally detached structures, such as a garage or tool shed, sharing property with the insured dwelling. Under a homeowner policy, “other structures” are automatically covered for 10% of the limit chosen for Coverage A.
Any of your property, such as furniture, clothing and consumer electronics, other than real estate property. Your homeowner policy covers the personal property of you and your family members.
Coverage for the cost of replacing damaged property at the time of loss with that of similar kind and quality. If you carry replacement cost coverage and have a loss, the insurer pays for the cost of a new replacement, minus any policy deductible.
A special form of earth movement, covered by some homeowner insurance, referring to the sudden collapse or sinking of land into empty, underground spaces eroded by water. Most other forms of earth movement remain excluded from ordinary policies.
In your policy, you may choose to cover certain items for a specific amount. In the event of loss, the insurer pays the stated amount regardless of the property’s actual value. If, for example, you insured a painting for a stated amount of $15,000, in the event of theft you would recover the $15,000 (minus your deductible), even if the painting had accrued value after the policy had been signed.
Property without people occupying or living within it. As opposed to vacant property, unoccupied property may hold furnishings. Unoccupancy beyond a specified period of time is prohibited by the standard homeowner policy. See Vacant.
A building with nothing in it. While an “unoccupied” building is defined by not having people in it, a “vacant” building is also devoid of furnishings and other items. Vacancy beyond a specified period of time is prohibited by the standard homeowner policy. See:Unoccupied .