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Common homeowners insurance terms

March 13, 2014

When reviewing a homeowners insurance policy, does it feel like you’re reading a foreign language? There are plenty of terms and acronyms that you should know so you get the coverage you want and need to protect your investment. Here is a quick glossary of the most common home insurance terms. Actual Cash Value: The value of your property at the time it is loss, damaged, or destroyed. This figure is calculated deduct depreciation from the replacement cost, so you might have out-of-pocket expenses. Assessed Value: The taxable value of your property, as assessed by your municipality. Betterment: An improvement you make to your home or property. Blanket Policy: One policy covers more than one person or piece of property, such as multiple residences. Deductible: The amount of money you are required to pay out-of-pocket; i.e., not paid by the insurance company. Dwelling or Residence Coverage: Protection for your home and any structures directly attached to it. Flood Insurance: Protection for damage caused by floods, which is not covered under traditional homeowners insurance; required for dwellings in designated flood planes. Hazard Insurance: Coverage that provides compensation for physical damage caused by such hazards as fire, vandalism, and natural events like earthquakes and storms (excludes flood and acts of war or civil unrest). Loss of Use/Additional Living Expenses Coverage: If you cannot live in your home as a result of a covered loss, such as fire, this coverage pays for your living expenses, such as hotel, travel, and meals. Medical Expenses Coverage: Coverage that pays medical expenses for someone who is injured on your property or from any injury caused by a resident of your home (including a pet), regardless of where the injury occurs. Other Structures Coverage: Protection for structures that are not permanently attached to your home, such as a detached garage or shed. Personal Liability: Your legal responsibility for personal damages, such as if someone is injured in your home or bitten by your dog. Personal Property/Contents Coverage: Protects your personal property, both at home and when you’re traveling. If, for example, your laptop is stolen from a hotel or airport, the loss is covered. You may need additional riders for expensive items like original artwork, antiques, or fine jewelry. Replacement Cost: The current market value for an item that needs to be replaced. Rider: An amendment or addition to your coverage.

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