Home Insurance Terms Made Simple | Excalibur Insurance

Purchasing home insurance is a must, not an option that only people of higher income can choose. Home insurance protects you and your loved ones, as well as your biggest investment. However, it can be confusing. To simplify, Excalibur has created this guide to simplify some of the most common terms and phrases you will come across in your home insurance policy.

Common Home Insurance Terms Defined:

Actual Cash Value (ACV): You can choose one of three levels of coverage. Actual cash value (or ACV) is one of them. ACV covers your house for its cost plus the total value of its contents after deducting depreciation (how much the items are worth now and not their market value).

All Perils: A form of coverage that offers protection against most risks to your home, contents, and liability, excluding only the exposures specifically listed on your policy.

Appraisal: The process of determining the value of an item. Your insurance provider may request an appraisal if you have an engagement ring that you want insured.

Captive Agent: An insurance agent or insurance professional who sells insurance through a single company.

Deductible: The amount you pay out of pocket before the insurance company will begin to cover the cost of repairs. For example, if your deducible is $1,000 and you have a sewer back-up claim that costs $15,000 to repair. You would pay the first $1,000 and your insurance would cover the remaining $14,000.

Depreciation: A decrease in the value of your home or its contents over a number of years due to use, wear and tear, or general obsolescence.

Detached Private Structures: Structures separate from your home itself but still on your property, ex. storage sheds, fence, or other structures.

Dwelling: Your home and any attached structures, permanent outdoor equipment or features, and any materials or supplies that are currently being used to build, repair, or renovate your home or any structures on your property.

Endorsement: Sometimes also referred to as an add-on or a rider, an endorsement may alter the limits of your existing insurance policy or change its terms/add coverage where it is needed.

Endorsement: When something is added, removed or modified on your current policy.

Floater: Similar to an endorsement, a floater is a term for insurance for items that may be moved from location to location and covers them wherever a loss may occur. This is generally purchased to cover furs, jewellery, and other valuables not typically (fully) covered in a home policy.

Indemnity: Compensation provided by an insurance provider against a loss up until the extent that the policy states. The policyholder cannot receive more than what the actual loss was worth.

Insurance Fraud: Concealment or fraudulence by the insured in order to obtain payment for a claim that under normal circumstances would not be paid.

Limit of Liability: The maximum amount of liability an insurance company can be required by law to pay for any one claim.

Living Expenses Coverage: Coverage that pays for accommodations in the event that you have a claim and cannot live in your home for a period of time.

Loss of Use: A component of homeowner’s insurance that would provide reimbursement for expenses incurred while one’s home is uninhabitable due to an insured loss, including motel/hotel rooms, meals, and other necessary expenses.

Market Value: The cost of your home or its contents that would sell for present market conditions.

Multi-Policy Discount: Some insurance companies offer a discount if you have more than one policy with their company.

Named Perils: A form of coverage that offers compensation for the perils specifically named in your policy, such as fire, explosion, falling objects, vandalism, and more. This is typically more affordable than all risk coverage.

Overland Water Coverage: Protects you against damage caused when water from above ground enters a home though the windows and/or door openings. It also covers damage caused by fresh water floods such as the overflow of a river, as well as the sudden and accidental accumulation of water due to a heavy rain.

Personal Liability: Personal liability coverage helps to protect you from lawsuits and also provides coverage for your legal defense.

Peril: Another word for exposure or the possible inciting incident that may result in a loss, like a falling tree or a fire.

Premiums: This is the amount of money you may pay annually or even monthly (whichever you choose) for your home insurance policy. Your premiums may differ depending on your policy type, coverage, risk level, deductible, and more.

Policy Holder: The individual(s) named on the insurance policy.

Policy Term: The period of time your policy is in effect.

Rates: The cost of an insurance product pre-determined by provincial regulators and insurance providers. This may serve as the basis for your premiums.

Replacement Cost: All household items lose value over time, when you carry replacement cost coverage it means depreciation is waived, and the insurer will replace the damaged or stolen item at today’s current value.

Risk: The chance of a loss due to a peril or exposure.

Scheduled Items: Provides special coverage allowances and values to specific items such as jewelry, high-end sports equipment, art, bikes, musical instruments, photography equipment, etc. Scheduled items also typically benefit from reduced or removed deductibles.

Sewer Backup Coverage: Protects you against losses occurring due your sewer or septic system backing up into your home.

Uninsured Perils: Also known as exclusions, these are risks that are not included in your insurance policy. Popular exclusions include floods, earthquakes, and damage as a result of lack of maintenance.

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