Home Insurance Terms Made Simple

We created this guide to simplify some of the most common terms and phrases you’ll come across in your home insurance policy.

Deductible: The amount you pay on 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 sewer back up repairs that cost $15,000 to repair. You would pay the first $1,000 and your insurance would cover the remaining $14,000.

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.

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

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.

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

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.

Policy Holder: This individual name(s) on the insurance policy.

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

Policy Premium: The amount of money you must pay for insurance during your policy term.

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.

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