Glossary

259 terms defined in plain English. Each one links to the latest coverage in the index, and to the tools and guides that use it.

By topic

A

A-PLUS property report: Verisk's claims history report on a property or applicant, a counterpart to the LexisNexis database that insurers use to check past losses.

Actual cash value: What an insurer pays for damaged property: the cost to repair or replace it today, minus a deduction for age and wear, so less than a new-for-old payment.

ACV roof endorsement: An endorsement that pays wind and hail roof damage at replacement cost less depreciation, even when the rest of the home is settled at full replacement cost.

Additional insured: A person or organization added to a policy so it receives the policy's liability protection, typically an owner who does not live in the home.

Additional interest: A person or business with a financial stake in the insured property, such as a lienholder, listed on the policy to get notices but not coverage.

Additional living expenses: The increase in your normal costs of living, such as hotel bills, restaurant meals and extra mileage, after a covered loss forces you out of your home.

Adjuster: The person who investigates a reported loss, decides what the policy covers and how much it will pay, and negotiates the settlement.

Admitted insurer: A company licensed by a state to sell insurance there, with its rates and forms under regulator review and its claims backed by the state guaranty fund.

Agreed value: A value the insurer and policyholder settle on in advance, which the policy then pays in a total loss without a later dispute over what the item was worth.

All other perils deductible: The basic amount you pay first on covered losses not subject to a separate wind, hail, hurricane or earthquake figure, listed on your declarations page.

All-in coverage: A condo master policy type insuring the building plus each unit's interior finishes and owner upgrades, leaving mainly belongings and liability to the owner.

AM Best rating: The letter grade, from A++ to D, that the insurance rating agency AM Best assigns to an insurer's ability to meet its ongoing policy obligations.

Amendatory endorsement: An add-on that rewrites parts of the base policy, usually to match a state's insurance laws, and that takes priority wherever it conflicts with the form.

Animal liability exclusion: Policy wording that removes liability coverage for injuries caused by a named dog, a listed breed or an animal with a bite history.

Anti-concurrent causation clause: Exclusion wording that denies a loss whenever an excluded cause contributes, even if a covered cause also played a part or came first.

Appraisal clause: A policy condition that lets either side demand a neutral panel to set the dollar amount of a loss when you and the insurer cannot agree on its value.

Assessment: An extra charge raised after a state-backed insurer or guaranty fund runs short of money, collected from insurers and sometimes passed on to policyholders.

Assignment of benefits: A signed agreement that transfers your right to claim payments to a contractor or other vendor, who then deals with the insurer directly.

Attorney-in-fact: The company that manages a reciprocal exchange for its policyholders under a power of attorney, running underwriting, sales and claims in return for a fee.

Attractive nuisance: A legal doctrine that can hold a landowner responsible when a child is hurt by a tempting hazard on the property, such as a pool or trampoline.

B

Bad faith: An insurer's unreasonable claim handling, such as denying or delaying payment with no reasonable basis, that can bring damages beyond the policy benefits.

Bare walls coverage: A condo master policy type that insures only the structure and common areas, leaving everything from the interior surfaces inward to the unit owner.

Base flood elevation (BFE): The height, in feet above a standard reference level, that floodwater is expected to reach in a flood with a 1% chance of occurring in any year.

Binder: A short-term written confirmation that coverage is in force while the full policy is being issued, often used as proof of insurance at a home closing.

Blanket coverage: A single limit that applies across several buildings, locations or kinds of property instead of a separate limit for each one.

Bodily injury: Physical harm to a person, including sickness, disease and resulting death, that triggers liability and medical payments coverage under a homeowners policy.

Builder's risk: Temporary property insurance on a structure being built or substantially renovated, covering materials and work in place until the project is finished.

Building code upgrade: Work local building rules require when a damaged home is repaired or rebuilt, beyond restoring what was there, such as updated wiring or wind bracing.

Business pursuits exclusion: A liability exclusion for injury or damage arising from your trade, profession or other paid activity, with narrow exceptions for small or volunteer work.

C

Cancellation: The ending of a policy before its expiration date, either by the homeowner at any time or by the insurer for reasons the policy and state law allow.

Captive agent: An agent who sells for a single insurance company or group, usually under an exclusive contract, so every quote comes from that company's products.

Catastrophe bond: A security sold to investors that pays interest, but whose principal goes to the insurer that sponsored it if a defined disaster occurs, serving as reinsurance.

Catastrophe model: Software that simulates thousands of possible hurricanes, quakes, wildfires and storms to estimate the losses an insurer's policies could suffer.

Catastrophic ground cover collapse: A Florida-defined event in which the ground abruptly collapses, a visible depression forms, the building is structurally damaged and authorities condemn it.

Claim number: The reference code an insurer assigns when it opens a file on your loss, used to track the adjuster's notes, estimates, payments and correspondence.

Claims-free discount: A premium credit for homeowners with no paid claims over a set number of recent years, verified from the insurer's records and claims history reports.

Class 4 roof: A roof covering that earned the top impact rating under the UL 2218 test, which simulates hail with a dropped steel ball, and that insurers may discount.

CLUE report: A LexisNexis report of the auto and property claims tied to a person and an address over roughly seven years, which insurers pull when underwriting.

Coinsurance: A policy clause that reduces a claim payment when the insurance carried falls below a required percentage of the property's value, usually 80% for homes.

Collapse: Under most policies, the abrupt falling down or caving in of a building or part of it so it cannot be used as intended, covered only for listed causes.

Combined ratio: An insurer's loss ratio plus its expense ratio, where a result under 100% means premiums covered claims and costs and over 100% means an underwriting loss.

Concurrent causation: The question of how to decide coverage when a covered cause and an excluded cause combine to produce one loss, such as wind and storm surge in a hurricane.

Construction class: The category an insurer assigns a house by its walls and structure, such as frame, masonry veneer, masonry or fire-resistive, used for rating and rebuild cost.

Constructive total loss: A loss where the building is not wholly destroyed but repair would cost so much, or be so restricted by law, that it is treated as a total loss.

Contents inventory: An itemized list of belongings that were damaged, destroyed or stolen, with quantity, description, age and cost, used to support a personal property claim.

Cosmetic damage exclusion: An endorsement that excludes hail dents, pitting and surface marks that do not stop a roof or siding from doing its job, often in exchange for a lower premium.

D

Debris removal: Coverage for hauling away the wreckage of covered property after a loss, and in limited cases fallen trees, with a small allowance beyond the limit.

Declarations page: The summary page at the front of a policy listing the insured, the property, policy dates, limits, deductibles, premium, mortgage lender and attached forms.

Deductible: The amount of a covered property loss you pay yourself before the insurer pays the rest, shown on your declarations page as a dollar figure or a percentage.

Defensible space: The managed buffer of trimmed, thinned and cleared vegetation around a house that slows a wildfire and gives firefighters room to defend the structure.

Demotech rating: A financial strength grade from an independent firm that rates mostly small and regional property insurers, often those AM Best and S&P do not cover.

Department of insurance: The state agency that licenses and supervises insurers and agents, reviews policy forms and rates, and takes consumer insurance complaints.

Depopulation: A state program that moves policies out of a state-backed insurer and into private companies, shrinking the plan's exposure to the next catastrophe.

Depreciation: The loss in an item's value from age, wear and obsolescence, which an adjuster subtracts when pricing what a claim should pay.

Desk adjuster: A claims adjuster who handles a claim from an office or home by phone, email, photos and estimating software, usually without visiting the property in person.

Difference in conditions (DIC) policy: A separate policy built to sit beside a primary policy and pay for perils and coverages the primary one leaves out, such as theft, water damage and liability.

Direct premiums written: The total premium on the policies an insurer issues itself in a period, counted when written and before any share is passed to reinsurers.

Direct writer: An insurer that sells straight to consumers by website, phone, app or its own employees rather than through independent agents who represent several companies.

DP-1 (basic dwelling form): The basic dwelling form: it covers a short list of named perils to the building, typically at actual cash value, with no liability coverage built in.

DP-2 (broad dwelling form): A broader named-perils dwelling form that adds falling objects, water discharge and freezing, and typically pays building losses at replacement cost.

DP-3 (special dwelling form): The special dwelling form: open-perils coverage on the building and other structures, the closest match to an HO-3, common for rentals and second homes.

Duties after loss: The steps a homeowners policy requires after damage occurs: reporting it, protecting the property, documenting the loss and cooperating with the insurer.

Dwelling coverage (Coverage A): The part of a homeowners policy that pays to repair or rebuild the house itself, including attached structures such as a garage, porch or deck.

Dwelling fire policy: A property-only policy for a house, usually one that is rented, vacant or seasonal, sold without the liability package of a homeowners policy.

E

Earth movement: A group of ground-shifting events, including earthquake, landslide, mudflow, subsidence and sinkhole, that homeowners policies exclude from coverage.

Earthquake deductible: The share of the insured value you pay before earthquake coverage responds, expressed as a percentage that is far higher than a regular home deductible.

Earthquake insurance: Separate coverage, or an add-on endorsement, for damage from ground shaking, which standard homeowners policies exclude as earth movement.

Efficient proximate cause: A legal test that decides coverage by asking which cause set the others in motion and dominated the loss when covered and excluded causes combine.

Elevation certificate: A form completed by a licensed surveyor, engineer or architect that records a building's key elevations against the mapped base flood elevation.

Endorsement: A written change attached to a policy that adds, removes or alters coverage, limits or conditions, and controls over the base form wherever the two conflict.

Equipment breakdown coverage: An optional add-on that pays to fix home systems and appliances that fail suddenly from a mechanical or electrical fault, which standard policies exclude.

Escrow account: A lender-held account that collects a share of your annual property tax and insurance bills with each mortgage payment and pays them when due.

Evidence of insurance: A short document from your insurer or agent confirming that a policy is in force, with its limits and the lender to notify. It is not the policy itself.

Examination under oath: A formal, recorded question-and-answer session under oath that an insurer can require of a claimant, usually led by the insurer's attorney.

Excess and surplus lines: The specialty market where non-admitted insurers cover unusual, high-hazard or hard-to-place risks that standard carriers will not write at filed rates.

Excess flood insurance: Extra flood coverage that sits above a primary flood policy, usually the NFIP maximum, to pay for losses beyond the first policy's limits.

Exclusion: A policy provision that removes coverage for a stated cause, type of loss, property or circumstance that the coverage would otherwise reach.

Expense ratio: The share of premium an insurer spends on commissions, salaries, marketing, taxes and other costs of selling and running its business, excluding claim payments.

Extended replacement cost: Extra dwelling coverage, often 25% or 50% above the Coverage A limit, that helps pay to rebuild when the actual cost after a loss exceeds the limit.

F

FAIR plan: A state pool, funded by the insurers doing business there, that sells basic property coverage to owners who cannot find it in the regular market.

Fair rental value: Payment for the rent you lose when a covered loss makes a part of your home that you rent to someone else, or hold for rent, unfit to live in.

File and use: A rate-regulation system in which an insurer files new rates with the regulator and may start charging them right away or after a short waiting period.

Financial strength rating: An independent agency's grade of an insurer's ability to meet its obligations and pay claims, issued by firms such as AM Best, S&P, Moody's, Fitch and Demotech.

Fire protection class: The 1 to 10 number on a home insurance quote that reflects how close and well equipped the nearest fire department and water source are.

First notice of loss: The first report you or your agent makes to the insurer that damage has occurred, which opens the file and starts the insurer's response deadlines.

Floater: Coverage that insures listed movable items, such as jewelry, art or cameras, at stated values wherever they go, free of a standard policy's low limits.

Flood exclusion: The standard homeowners provision that excludes flood, surface water, tides and overflowing water bodies, leaving flood damage to a separate flood policy.

Flood insurance rate map (FIRM): FEMA's official map of a community showing flood zones, base flood elevations and floodways, which lenders use to decide whether flood insurance is required.

Flood zone: A map designation, such as Zone AE, VE or X, that classifies a property's flood risk and helps decide whether a lender will require flood insurance.

Florida Hurricane Catastrophe Fund: Florida's state-run reinsurance program, set up after Hurricane Andrew, that reimburses residential insurers for part of their hurricane losses.

Force-placed insurance: Coverage a mortgage servicer buys on your home and bills to you when it believes your own policy has lapsed or falls short of loan requirements.

FORTIFIED Home: A voluntary construction standard from the insurer-funded IBHS that strengthens a house against wind, hail and storm damage, with certified designations.

Four-point inspection: A limited inspection of an older home's roof, electrical, plumbing and heating and cooling systems that insurers may require before writing a policy.

Fronting carrier: A licensed, rated insurer that issues policies for another company's program and passes most of the risk to reinsurers, keeping a fee for lending its license.

G

Grace period: Extra days after a premium due date during which coverage may stay in force while you pay, where the policy or state law provides for it.

Gradual damage: Harm that builds up over weeks, months or years, such as a slow leak, rot or corrosion, which most homeowners policies exclude.

Guaranteed replacement cost: Dwelling coverage under which the insurer agrees to pay the full cost to rebuild, even above the policy limit, if the owner meets the policy's conditions.

Guaranty fund: A state safety net, financed by charges on licensed insurers, that pays covered claims up to a cap when an insurer is declared insolvent.

H

Hail damage: Dents, bruises, cracks and punctures that falling ice causes to roofs, siding, windows and outdoor equipment, covered under the windstorm or hail peril.

HO-1 (basic form): The oldest and narrowest ISO homeowners policy, insuring a short list of named perils; it has been largely discontinued.

HO-2 (broad form): A named-perils homeowners policy covering 16 listed causes of loss for the house and belongings: broader than the basic form, narrower than the special form.

HO-3 (special form): The most common homeowners policy: open-perils coverage for the house and other structures, and named-perils coverage for belongings.

HO-4 (contents broad form): The renters policy: it covers a tenant's belongings, loss of use and liability, but not the building, which the landlord insures.

HO-5 (comprehensive form): A premium homeowners policy insuring the house, other structures and belongings against any cause of loss not excluded, often for newer or higher-value homes.

HO-6 (unit-owners form): The condo owner's policy: it covers belongings, the parts of the unit the association's policy leaves to you, loss assessments, liability and loss of use.

HO-7 (mobile home form): A homeowners-style policy for owner-occupied mobile and manufactured homes, adapting property and liability coverage to how those homes are built and sited.

HO-8 (modified coverage form): A named-perils policy for older homes whose rebuild cost far exceeds market value, paying to repair with common materials rather than replace like for like.

Holdback: The part of a claim payment the insurer keeps back until repairs are finished and documented, usually the depreciation on a replacement cost claim.

Home business endorsement: An add-on that gives a small office, studio, school or similar operation run from the house liability and business property coverage the base policy lacks.

Home hardening: Upgrades to a house's roof, openings, vents and materials so it resists a specific hazard such as wind, hail or wildfire embers, not just insures against it.

Home-sharing endorsement: An add-on that extends a homeowners policy to cover renting all or part of the home to short-stay guests through platforms such as Airbnb or Vrbo.

Homeowners association (HOA): An organization that enforces rules and maintains shared property in a subdivision, condominium or planned community, funded by dues from the owners.

Host liquor liability: Your legal exposure when a guest who drank at your private gathering later injures someone, usually covered under a homeowners policy's personal liability.

Hurricane deductible: A separate amount you pay first, usually a percentage of the dwelling limit, that applies to wind damage from a hurricane in place of your regular flat amount.

I

Ice dam: A ridge of ice at a roof's edge that traps melting snow and forces water under the shingles and into the house, a common winter source of ceiling damage.

Identity theft coverage: An optional add-on that reimburses the out-of-pocket costs of repairing your name and credit after someone uses your personal information to commit fraud.

Impact-resistant roof: A roof built with a covering tested to withstand hail and debris impact, which can earn a premium credit from some insurers in hail-prone states.

Increased cost of compliance (ICC): Flood policy coverage of up to $30,000, apart from the damage claim, toward elevating, relocating or demolishing a substantially damaged building.

Independent adjuster: A claims adjuster who works for an adjusting firm or on contract, hired and paid by insurers to handle claims, especially surges after storms and wildfires.

Independent agent: An agent or agency appointed by several insurance companies that compares their coverage and prices for a customer and is paid by commission.

Inflation guard: An endorsement that raises your coverage limits a set percentage each year so they keep pace with rising rebuilding costs between renewals.

Insolvency: The condition of an insurer that cannot pay its claims and debts as they come due, or whose liabilities exceed its assets or required capital.

Installment fee: A small charge added to each payment when you pay your premium in monthly or other installments instead of in one lump sum.

Insurable interest: The financial stake in a property that you must hold, so that its damage or loss would cost you money, before an insurer can cover it or pay you for a claim.

Insurance broker: A licensed intermediary who places coverage on the buyer's behalf with whichever insurers will take the risk, often including surplus lines markets.

Insurance commissioner: The state official who heads the insurance regulator, oversees insurers and agents, reviews rates and forms, and handles consumer complaints.

Insurance score: A number built from your credit report data that insurers use to predict how likely you are to file claims, and therefore how to price your policy.

Insurance to value: The ratio of the coverage on a home to what it would cost to rebuild it today; 100% means the limit matches the rebuild cost.

Insurer of last resort: A state-created or state-sponsored insurer that sells coverage to property owners who cannot get a policy from a private company.

Insurtech: A company that uses software, data and automation to sell, price or service insurance, as a licensed insurer or as an agency or MGA backed by carriers.

Intentional loss: An exclusion for damage arising from an act that an insured commits or conspires to commit with the intent to cause a loss, such as arson of one's own home.

ISO (Insurance Services Office): The industry organization, now part of Verisk, that drafts standard homeowners policy forms, rating data and fire protection grades that insurers use or adapt.

L

Landlord policy: Insurance for a home you own and rent to tenants, covering the building, lost rent and the owner's liability, but not the tenant's belongings.

Liquidation (insurer): The final stage of an insurer failure, when a court orders the company wound up, its policies ended and its assets sold to pay claims and creditors by priority.

Loss assessment coverage: Coverage for your share of a bill that a condo or homeowners association charges owners after a covered loss that its own insurance does not fully pay.

Loss history: The record of insurance claims tied to you and to your property over the past several years, which underwriters use to judge risk and set price.

Loss of use (Coverage D): Coverage that pays extra living costs or lost rent when a covered loss makes your home unfit to live in, such as hotel bills or a tenant's missed rent.

Loss payee: A party named on a policy to receive claim money for a particular item or property up to its financial stake, such as a lender or lessor.

Loss ratio: The share of earned premium an insurer pays out or sets aside for claims, shown as a percentage and used to judge profitability and set rates.

M

Managing general agent (MGA): An agency that a carrier authorizes to quote, underwrite, bind and often service policies for a defined book of business, paid by commission and profit share.

Manufactured home: A house built in a factory on a permanent chassis to the federal HUD code, in effect since June 15, 1976, and insured on forms written for that construction.

Market conduct exam: A state regulator's review of how an insurer treats policyholders, covering underwriting, rating, sales, complaints and claim handling rather than its finances.

Market share: An insurer's portion of all premiums written in a given line, state and year, calculated by dividing its direct premiums written by the market total.

Market value: The price a willing buyer would pay a willing seller on the open market, which includes the land and location and is not the basis for dwelling coverage.

Master policy: The property and liability policy a condominium or homeowners association buys for the shared structure and common areas, paid for through dues.

Matching: Whether an insurer must also replace undamaged siding, shingles or flooring so repaired areas look uniform, which depends on state rules and policy wording.

Medical payments to others (Coverage F): No-fault coverage that pays the medical bills of a guest hurt on your property, whether or not you were at fault, up to a small per-person limit.

Mitigation credit: A premium discount for building features shown to reduce storm or wildfire damage, such as a reinforced roof, impact windows or defensible space.

Mitigation of damages: Your duty to take reasonable steps after a loss, such as tarping a roof or shutting off water, to keep damage from spreading; the policy usually pays for it.

Mold exclusion: Policy wording that removes or caps coverage for mold, fungus and wet rot, usually leaving a small limit for growth that follows a covered water loss.

Moral hazard: The risk that holding insurance leads someone to cause or inflate a loss, or to take less care, because the insurer rather than the owner bears the cost.

Moratorium: A temporary legal bar, triggered by a disaster declaration, on insurers canceling or declining to renew policies in the affected area.

Mortgagee: The lender that holds the mortgage on the home, listed on the declarations page so it gets cancellation notices and shares in payments for dwelling damage.

Mortgagee clause: The policy condition that gives the lender its own right to be paid for dwelling losses and protects that right even when the owner's claim is denied.

Multi-policy discount: A premium reduction for buying your home policy and another policy, usually auto, from the same insurer or insurance group.

Mutual insurance company: An insurer owned by its policyholders rather than outside shareholders, which can return surplus to them as dividends or keep it to strengthen the company.

N

NAIC: The standard-setting group governed by the chief insurance regulators of the 50 states, D.C. and five U.S. territories, founded in 1871.

NAIC complaint index: A ratio comparing an insurer's share of confirmed consumer complaints with its share of premium, where 1.00 means complaints in line with its size.

Named insured: The person or people listed on the declarations page as the policy's owner, who hold the contract rights and receive notices and claim payments.

Named perils: Coverage that applies only to the causes of loss listed in the policy, so a claim is paid only if the damage came from one of them.

Named storm deductible: A separate amount you pay first, often a percentage of the dwelling limit, when damage comes from any storm the National Hurricane Center has named.

National Flood Insurance Program (NFIP): The federal program, run by FEMA since 1968, that makes flood insurance available to owners and renters in communities that adopt floodplain management rules.

Neglect: Failure to use all reasonable means to save and protect property at and after the time of a loss, which the policy excludes to the extent the damage grows.

Non-recoverable depreciation: The age-and-wear deduction an insurer takes from a claim payment and never pays back, because the policy settles at depreciated value or repairs are not made.

Nonrenewal: An insurer's decision to end coverage at the end of the policy period by declining to offer another term, as opposed to ending it partway through.

O

Open perils: Coverage that applies to any direct physical loss unless the policy specifically excludes the cause, so the insurer must point to an exclusion to deny a claim.

Opening protection: Impact-rated glass or tested shutters over a home's windows, doors, skylights and garage door that keep debris and wind from breaching the walls in a storm.

Ordinance or law coverage: Coverage for the extra cost of repairing or rebuilding a damaged home to current building codes and zoning rules, which the dwelling limit does not pay.

Other structures (Coverage B): Protection for buildings on your lot that stand apart from the house, such as a detached garage, shed, gazebo or fence.

P

Parametric insurance: Insurance that pays a preset amount when a measured trigger, such as earthquake intensity or wind speed near your home, is hit, whatever your actual damage.

Percentage deductible: The share of your insured dwelling limit, rather than a fixed dollar figure, that you pay first on a loss, commonly 1% to 5% for wind, hail or hurricane damage.

Peril: A specific cause of loss, such as fire, wind, theft or water, that a policy covers or excludes; it is the cause of the damage rather than the damage itself.

Personal injury: Liability coverage for non-physical wrongs such as defamation, false arrest, invasion of privacy and wrongful eviction, usually added by endorsement.

Personal liability (Coverage E): Coverage that defends you and pays damages if you are legally responsible for injuring someone or damaging their property, at home or away from it.

Personal property (Coverage C): Coverage for the movable things you own, such as furniture, clothing, electronics and tools, whether they are at home or elsewhere in the world.

Policy fee: A flat charge some insurers add to a new or renewed policy for administrative costs, separate from the premium calculated for your coverage.

Policy limit: The most an insurer will pay for a covered loss under one coverage, set separately for the house, other structures, belongings, living costs and liability.

Policy period: The span between a policy's effective date and expiration date, usually 12 months, during which a loss must occur to be covered.

Policyholder surplus: An insurer's assets minus its liabilities under statutory accounting, the capital cushion that absorbs losses beyond its reserves and premiums.

Premises liability: The legal duty of an owner or occupier to keep property reasonably safe, and the exposure when a visitor is hurt by a wet step, loose railing or icy walk.

Premium: The price of a policy for its term, set by rebuilding cost, location, claims history, roof, deductible and other rating factors.

Price optimization: Pricing a policy by how much a customer will tolerate or how likely they are to shop, not by expected loss, a practice a number of states have restricted.

Prior approval: A rate-regulation system in which an insurer must have the state regulator approve its proposed rates before it may charge them to policyholders.

Private flood insurance: Flood coverage issued on an insurer's own form and rates instead of through the federal program, which a lender may accept in place of an NFIP policy.

Pro rata cancellation: A cancellation method that refunds the unused part of the premium in exact proportion to the days remaining, with no penalty deducted.

Probable maximum loss: A modeled estimate of how big an insurer's loss from a single severe catastrophe could be, stated at a probability such as a 1-in-100-year event.

Prompt payment law: State rules that set deadlines for an insurer to acknowledge a property claim, decide it and pay it, often with interest owed on late payments.

Proof of loss: A signed, sworn statement of what happened and what you are claiming, which most policies require within a set number of days.

Property damage liability: Coverage that pays when you are legally responsible for physically damaging someone else's tangible belongings or building, or for taking away their use.

Protective device discount: A premium credit for installing safety equipment such as monitored burglar or fire alarms, sprinklers, smoke detectors, deadbolts or water-leak shutoffs.

Public adjuster: A licensed claims professional hired by the policyholder, not the insurer, who documents and negotiates the claim for a fee, usually a share of the payout.

Public Protection Classification (PPC): A 1 to 10 grade, assigned by Verisk's ISO unit, of how well a community's fire department, water supply and dispatch can fight a house fire.

R

Rate filing: The package of proposed prices, rating factors and supporting data that an insurer submits to a state regulator before or when it changes its homeowners rates.

Rate increase: A rise in the price an insurer charges per unit of coverage, which is only one of several reasons the premium on your renewal notice can go up.

Rating territory: A geographic area, often a ZIP code or county, that an insurer prices as a unit because losses from weather, fire and theft differ from place to place.

Reasonable repairs: Coverage for the cost of temporary steps you take to stop covered damage from getting worse, such as tarping a roof or boarding up a broken window.

Receivership: A court-supervised takeover of a troubled insurer, run by the state's insurance regulator or a designee, to either repair the company or wind it down.

Reciprocal exchange: An unincorporated group of policyholders, called subscribers, who insure one another through an exchange run by a separate manager under a power of attorney.

Recoverable depreciation: The part of a replacement cost payment an insurer withholds at first and releases after you finish the repair or replacement and send proof of the cost.

Redlining: The unlawful practice of refusing to insure, or charging more to insure, homes in certain neighborhoods because of residents' race or other protected traits.

Rehabilitation (insurer): A court-ordered effort, run by a state-appointed rehabilitator, to restore a financially troubled insurer, which can end in recovery, a sale or a wind-down.

Reinstatement: Putting a canceled or lapsed policy back in force after you pay what is owed and the insurer agrees, with or without a gap in coverage.

Reinsurance: Insurance that an insurance company buys from other companies, which reimburse part of its claim payments, especially after a large disaster.

Reinsurance tower: The stack of reinsurance layers an insurer buys one above another, each starting where the layer below ends, to cover progressively larger catastrophe losses.

Renewal: The insurer's continuation of your policy for another term, usually with a new premium and sometimes with changed deductibles, limits or conditions.

Replacement cost: What it would cost to repair or rebuild with materials of like kind and quality at today's prices, with no deduction for age or wear.

Replacement cost estimate: A calculation of what it would cost to rebuild a home today, from its size, construction details and local labor and material prices.

Reservation of rights: A written notice that an insurer is investigating or paying a claim but keeps the option to deny coverage or limit payment later if the facts warrant it.

Residual market: The state-created plans and pools that cover property owners the private market declines, as opposed to coverage insurers sell by choice.

Rider: A form added to a policy to change its coverage; in homeowners insurance, an everyday word for an endorsement such as scheduled jewelry or water backup.

Risk Rating 2.0: FEMA's current method of pricing NFIP flood policies by each home's own flood risk and rebuilding cost rather than mainly by flood zone and elevation.

Roof surfacing payment schedule: An endorsement that pays roof damage as a set percentage of replacement cost based on the roof's age and material, not full cost or a depreciation estimate.

Roof-to-wall connection: The hardware that fastens roof rafters or trusses to the top of the walls, which decides whether a high wind can lift the roof off the house.

S

Salvage: What remains of damaged property after a loss, and the insurer's option to take it or deduct its leftover value once the claim is paid.

Scheduled personal property: Individually listed valuables, such as jewelry, art and collectibles, insured for a stated amount each, with broader protection than standard contents coverage.

Scope of loss: The written list of damaged areas and repairs an adjuster decides are needed and covered, which becomes the basis for the estimate and the payment.

Secondary water resistance: A second layer on the roof deck, such as a self-adhering membrane over the seams, that keeps rain out of the house if the shingles blow off in a storm.

Service line coverage: An add-on that pays to repair or replace the buried water, sewer, gas or electric lines running from your house to the street or the utility's connection.

Short-rate cancellation: A cancellation method that returns less than the full unused premium when you end a policy early, so the insurer keeps a penalty on top of what it earned.

Sinkhole loss: Structural damage to a building, including its foundation, caused by ground settling into underground voids, excluded unless the policy adds sinkhole coverage.

Special flood hazard area (SFHA): The land FEMA maps as having at least a 1% chance of flooding in any year, where lenders must require flood insurance on federally backed mortgages.

Special limits of liability: Low dollar caps on categories such as cash, jewelry, firearms, silverware and business property that apply no matter how high your belongings limit is.

Staff adjuster: A claims adjuster who is a direct employee of an insurance company and handles that insurer's claims under its own guidelines and settlement authority.

Stated value: The amount you declare for an item on a policy, which caps the payout but may be reduced if its actual worth or repair cost at the time of loss is lower.

Stock insurance company: An insurer owned by shareholders who supply its capital and receive its profits, as opposed to one owned by the people it insures.

Storm surge: The abnormal rise of seawater that a hurricane or strong storm pushes onshore above the normal tide, treated as flood and excluded from homeowners policies.

Sublimit: A cap on payment for one type of loss or coverage that is lower than the main policy limit, such as a set dollar amount for mold or sewer backup.

Subrogation: The insurer's right, after paying your claim, to step into your place and recover that money from whoever caused the loss.

Sudden and accidental: Wording insurers use to separate covered, abrupt losses such as a burst pipe from slow, foreseeable damage like a leak that has dripped for months.

Suit limitation clause: The policy condition that sets a deadline, often one or two years from the date of loss, for filing a lawsuit against the insurer over a claim.

Supplemental claim: A request for more money on a loss you already reported, usually for damage found or costs incurred after the first estimate was written.

Surcharge: An extra amount added to a premium because of a specific risk factor, claim history or state-required assessment, usually shown apart from the base rate.

Surface water: Rain or melted snow that spreads across the ground without a defined channel, treated as flood damage and excluded from homeowners policies.

Surplus lines insurer: An insurer not licensed in a state that may write risks the standard market declines, with freer rates and forms and usually no guaranty fund backing.

T

Takeout policy: The private-market policy offered to a state-backed insurer's customer when a company takes over a block of that plan's policies.

Total loss: A loss in which the home is destroyed or too damaged to repair, so the insurer pays toward rebuilding up to the dwelling limit rather than for repairs.

U

Umbrella policy: Extra liability coverage, typically sold in $1 million steps, that applies above your home and auto liability limits and may cover some claims they exclude.

Umpire: The neutral third person who breaks the tie when the two appraisers in a claim appraisal cannot agree on the amount of a loss.

Underinsurance: Carrying a coverage limit below what a loss would cost to repair or rebuild, which leaves the owner to pay the gap.

Underwriting: How an insurer evaluates a home and its owner, decides whether to offer coverage and on what terms, and sets the price.

Underwriting guidelines: An insurer's internal rules for which homes it will write, which it will decline, and what conditions, limits or surcharges apply to the ones it accepts.

Underwriting profit: What an insurer keeps from premiums after paying claims, claim-handling costs and operating expenses, before any investment income is counted.

Unfair claims settlement practices act: State laws, modeled on an NAIC template, that list claim-handling conduct insurers may not engage in and let the insurance commissioner discipline violators.

Unoccupied: Describes a furnished home that nobody is living in for a time, which can limit coverage under some policies, unlike a vacant home that is empty of contents.

Use and file: A rate-regulation system in which an insurer may put new rates into effect first and then submit them to the regulator within a set period afterward.

V

Vacancy clause: Policy language that removes or limits coverage for certain losses, such as vandalism and glass breakage, once a home has sat empty beyond a set number of days.

Vacant dwelling policy: A specialty property policy for a house nobody lives in, written because owner-occupied forms restrict coverage once a home sits empty.

W

Walls-in coverage: Condo unit-owner coverage for everything from the interior wall surfaces inward, which is the part of the unit the association's master policy does not insure.

Water backup coverage: An optional add-on that pays for damage when water or sewage comes up through drains or sewers, or when a sump pump fails or overflows.

Water damage exclusion: Policy language that excludes certain kinds of water loss, either the standard flood, backup and groundwater group or a broader endorsement an insurer adds.

Wear and tear: The slow breakdown of materials from age, weather and ordinary use, which homeowners policies exclude because insurance pays for sudden loss, not upkeep.

Wildfire risk score: A number a modeling vendor assigns to a property to estimate its exposure to wildfire, which insurers use to accept, price or decline coverage.

Wind exclusion: A provision or endorsement that removes wind and hail from a homeowners policy, so the home needs separate wind coverage from a wind pool or another insurer.

Wind mitigation inspection: An inspector's checklist of a house's storm-resistant features, such as roof fastening and window protection, that insurers use to apply wind discounts.

Wind-only policy: A policy that covers only wind and hail damage, often sold by a state wind pool to coastal homeowners whose main policy excludes wind.

Wind/hail deductible: A separate amount you pay first, flat or a percentage of the dwelling limit, on damage from wind or hail in place of the standard flat amount.

Windstorm: The peril of damage from high winds, including hurricanes, tornadoes and thunderstorm gusts, which most policies cover, sometimes with a separate deductible.

Write Your Own (WYO) insurer: A private insurance company that sells and services federal flood policies under its own name while the federal government carries the flood losses.

X

Xactimate: Estimating software from Verisk that adjusters and contractors use to price repairs line by line from regional unit-cost price lists.