Insurance Simplified.

Glossary Terms

Coverages

Coverage A: Dwelling – To properly insure your home, think of this in terms of how much would it take to rebuild my home instead of how much is my home worth. If you are standing on your front lawn watching your home burn to the ground, this is the amount it would take to rebuild your home for you.  Real estate market value will not be the same as the construction costs to rebuild the home.

Coverage B: Other Structures – The cost of rebuilding or repairing structures unattached to the home, for example sheds, detached garages, fences, etc.

Coverage C: Personal Contents – When choosing this coverage amount you should think of turning your home upside down and shaking it, everything that falls out would be considered personal contents.  Personal property would include furniture, detached appliances, clothing, jewelry etc.  When you have a loss we will take the value of the items damaged, minus depreciation for years of use (Actual Cash Value ACV) as your claim payment.

Coverage D: Loss of Use – Your policy, under this coverage will pay for additional expenses you might incur if a covered event makes your home uninhabitable while being repaired or rebuilt. For instance, windstorm causes a small hole in your roof just above your kitchen.  While repairing your kitchen you are not able to cook, the cost to eat out would be considered an additional expense for you.

Coverage E: Personal Liability – Coverage for claims of bodily injury and property damage sustained by someone else for which you or covered residents of your home are legally responsible.  This could be someone walking up to your door and because there is ice and snow on your steps that have not been removed, falls and injures his back. (Bodily Injury) Or, your son shoots his BB gun into the neighbor’s window and it now needs replacing. (Property Damage)

Coverage F: Medical Payments – Another type of liability coverage to pay for guest injuries on your property no matter who’s at fault.  This minor amount of insurance is mostly used for those small incidents whereby your visiting friend’s child falls off the swing set and breaks a leg.  You could reimburse the ER visit and other small out of pocket expenses to the limit you chose.  This will many times keep folks from suing.

Loss Settlement

Covered Peril – Your homeowners policy covers many different types of perils depending on which coverage your loss falls under.  Peril, in insurance, means a potential event or factor that can cause a loss.  A leaky roof causes damage to your living room furniture but what caused the leak?  If the cause was lack of maintenance, it will not be a covered peril under your policy.  However, if the leak was caused by a tree blown into your roof by a windstorm, causing the hole, the “peril” would be the windstorm which would be a covered peril under most all homeowners policies.

ACV vs. RCV – Actual Cash Value (ACV) values the item then applies depreciation for time owned or used.  Replacement Coverage Value (RCV) pays the full replacement cost (with no depreciation) of the covered item subject of course to limits in the policy.

Deductibles

All Other Peril Deductible – Your portion of the cost to repair or replace items lost by all covered events (perils) except those that are wind related.  The larger you make your deductible, the lesser your premium will be because you are “sharing” a larger portion of the risk.

Hurricane/Wind/Hail or Tornado Deductible – Your portion of the cost to repair or replace items lost by wind related activities.   The larger you make your deductible, the lesser your premium will be because you are “sharing” a larger portion of the risk.

Optional Coverages

Loss Assessment Coverage – Coverage for damages assessed to you by your Homeowners Association (HOA). This could be caused by the HOA not having enough coverage in their policy, to cover all damages done to the common grounds by a big storm. 

Special Computer Coverage – This optional coverage provides broader protection for your computer equipment than what is typically covered under your policy for direct physical loss. Under this endorsement, computer equipment typically includes hardware, software, operating systems or networks and other electronic parts solely designed for use with or connected to the equipment.

Jewelry, Watches & Furs: Increased Limits – While these items are covered under your Personal Contents (Coverage C), there are specified limits for these items.  For example, there may be a $1,000 limit for furs.  This option gives you the ability to expand that limit to a higher amount. 

Silverware, Goldware, Pewterware: Increased Limits – There are specified limits for these items in your Personal Contents (Coverage C).  This option gives you the ability to expand that limit to a higher amount.

Limited Fungi, Mold and Bacteria Coverage – This optional coverage pays for damage, cleanup, and repair of a loss caused by “fungi”, wet or dry rot, or bacteria if the loss was caused by a covered peril.

Water Back Up & Sump Discharge or Overflow – This optional coverage may help pay for water damage resulting from a backed-up drain or sump pump.  It’s important to remember that if you are found to be negligent and that is the reason for the overflow, your policy will not respond.

Ordinance or Law Coverage – If a covered loss to your home requires us to rebuild all or a portion of your home and new laws or ordinances have been passed that now require more cost to do so, your policy includes an additional amount of coverage at 10% of your Coverage A amount.  This will give you another 10% to cover those additional costs.  You may also “buy up” that amount to a higher percentage if you choose.  So, if your home is insured for $200,000, your policy gives you an additional $20,000 to help cover the additional cost to rebuild or repair. 

Identity Theft Protection – This optional coverage is designed to cover some of the costs related to identity theft, such as reimbursements for money spent on reclaiming your financial identity, repairing your credit report, lost wages as well as reasonable attorney’s fees.

Coverage A: Additional 25% Dwelling Coverage – If there is a covered loss to your home structure and it exceeds your Coverage A limit, with this optional coverage you could get up to an additional 25% of coverage A to pay for that loss.

Personal Injury Coverage – This optional endorsement provides coverage for damages and defense costs for personal injury to others such as, wrongful eviction, oral or written publication of material that violates a person’s right of privacy, false arrest, imprisonment and other items. This coverage will not extend if you cause the act with intent or had knowledge that the act would violate the rights of another, etc.

Coverage C: Personal Property Replacement Cost – This optional coverage allows loss of contents and personal belongings falling under Coverage C to be paid at Replacement Cost Value (RCV) rather than Actual Cash Value (ACV) which allows for depreciation.

Equipment Breakdown – This optional coverage provides for mechanical or electrical breakdown, rupture, bursting, bulging, etc. to boilers, pressure piping, mechanical, electrical, or fiber optic equipment. This endorsement also provides Spoilage Coverage up to $3,000 caused by a covered loss.

Discounts

Golden Age – Think of this as a Senior discount of sorts.  If a named insured on your policy is 60 years of age or older, you will receive this discount.  Most homeowners insurers only give this discount on auto.

E-Policy – Your ability to access your homeowners policy online with 24/7 access is valuable in and of itself, but some insurers will give a discount to all policyholders for appreciating this.

Building Code Discount – This discount rewards you for strengthening the structure of your home as well as installing approved mechanical systems, plumbing and heating/cooling systems that meet the International Residential Building Code.

Window & Door Opening Protection – If you have hurricane shutters or approved coverings for all windows and doors on your home, you can receive a discount.  You will need to prove that you have them and in the event of a storm you can put them up.

Secured Community Discount – When your home is located in a neighborhood protected by a 24-hour manned security or passkey gates protecting all entrances to the community, you qualify for this discount.

Burglar Alarm – Most insurance companies will reward you with a discount if you have a local burglar alarm, but if you have your alarm reporting to a Central Station the discount is larger.

Fire Alarm – We reward you with a small discount if you have a local fire alarm but if you have your alarm reporting to a Central Station the discount is larger.

Military/First Responder – We are proud to offer this discount to those named insureds who are currently serving or are veterans of any branch of the U.S military.  We also provide this discount to any first responder such as firefighters, paramedics, police and other emergency service providers.

Companion Policy – Most frequently insurers will give this discount If you purchase both your home and auto with the same insurance company.  Now we are seeing insurers give this discount even if you have your auto insured with the same agency as your homeowners policy.