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The following definitions will help you
make a more informed decision when buying homeowners
insurance.
Actual Cash
Value
Actual cash value is the amount needed to repair or replace
damaged areas of your home after depreciation. For example,
your insurance company would deduct for the age and
condition of a 17-year-old roof with a 20-year life
expectancy.
Additional
Living Expense (ALE)
Additional living expense (also called loss-of-use) is
coverage that pays for certain extra, above-normal expenses,
such as food and lodging, while the policyholder's home
undergoes repair (not applicable to children living away at
college).
All-Risk or
Special-Form Policy
An all-risk or special-form policy is one that covers the
loss of property or damage that results from any peril,
except those specifically excluded in the contract.
Cancellation
Cancellation is the termination of an insurance policy by
the insurance company or policyholder before it expires.
Claim
A claim is a request for reimbursement for a loss covered by
the policy. For example, the insured may file a claim for
items stolen from his or her home.
Deductible
A deductible is the amount a policyholder must pay per claim
or loss before the company will begin paying. Deductibles
are fixed amounts specified in the policy. Some companies
offer percentage deductibles for certain perils, such as
windstorm, hurricane or hail.
Depreciation
Depreciation is the decrease in the value of your home or
personal property due to normal wear and tear from the time
your home was built or the personal property was purchased.
Endorsement
An endorsement is a change added to an insurance policy that
modifies the original terms.
Exclusions
Exclusions are persons, property, perils or situations not
covered under a standard homeowners policy. Some common
examples in Florida include flood damage, hurricanes, sewer
backup and mold damage.
Insured Loss
Insured loss is a loss (to theft, damage, etc.) the
insurance policy will pay for in full or in part.
Liability
A liability is a legal obligation.
Licensed Agents
and Companies
Licensed agents and companies are approved and monitored by
the Department of Financial Services to sell insurance in
Florida.
Limit
A limit is the maximum amount of benefits an insurance
policy will pay in the event of a loss.
Named Perils
Named perils are perils specifically covered by and named in
a policy, such as lightning and vandalism.
Package Policy
A package policy is an insurance policy that includes
several kinds of coverage. For example, homeowners policies
usually include property damage, additional living expenses,
personal liability and medical payments.
Peril
A peril is the cause of a loss to a policyholder, such as
fire or theft. An insurance policy will specify the types of
losses covered.
Premium
A premium is the amount a policyholder pays for an insurance
policy. Premiums can be paid monthly or annually, depending
upon the payment plan offered by the company.
Replacement
Cost
Replacement cost is the amount needed to replace or repair
your damaged property with materials of similar kind and
quality, without deducting for depreciation.
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