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Costs and Fees terms
Costs and Fees in Homeowners Insurance: the news, the names and what changed.
All other perils deductibleThe basic amount you pay first on covered losses not subject to a separate wind, hail, hurricane or earthquake figure, listed on your declarations page.DeductibleThe 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.Escrow accountA lender-held account that collects a share of your annual property tax and insurance bills with each mortgage payment and pays them when due.Force-placed insuranceCoverage 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.Grace periodExtra 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.Inflation guardAn endorsement that raises your coverage limits a set percentage each year so they keep pace with rising rebuilding costs between renewals.Installment feeA small charge added to each payment when you pay your premium in monthly or other installments instead of in one lump sum.Loss payeeA 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.Market valueThe 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.MortgageeThe 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 clauseThe 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.Percentage deductibleThe 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.Policy feeA flat charge some insurers add to a new or renewed policy for administrative costs, separate from the premium calculated for your coverage.PremiumThe price of a policy for its term, set by rebuilding cost, location, claims history, roof, deductible and other rating factors.Pro rata cancellationA cancellation method that refunds the unused part of the premium in exact proportion to the days remaining, with no penalty deducted.Short-rate cancellationA 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.SurchargeAn 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.