Glossary of Home Insurance Terms. List 2

FAIR plans | State-run insurance plans that provide property insurance to people in high-risk areas who might not otherwise have access to coverage. Floater Insurance that provides additional coverage for personal belongings. Standard home, renters and condo insurance policies set dollar limits on coverage for valuables, such as jewelry, antiques, fine art and firearms. A policyholder with a large fine art collection would need to buy a floater to cover the full value of the artwork. Flood An overflow of water from a lake, stream, river or other body of water. Flood damage is not covered under standard renters, condo or home insurance. Coverage can be obtained by buying a separate flood insurance policy. Overflow of water from a broken pipe in a home does not constitute a flood. Flood insurance | A special policy that provides protection against damage caused by floods. Flood insurance is backed and administered by the federal government through its National Flood Insurance Program and sold by home insurance companies. Grace period | The period of time an insurance policy remains in effect after the premium due date has passed without a payment being made. The grace period for home, condo and renters insurance is relatively short, such as two weeks. Group policy | Home insurance that's purchased through a group, such as a professional association or employer. Group home insurance rates can be lower than individual home insurance rates. Home insurance | Insurance for private homes. The policy covers the house, garage and other structures on the property and personal belongings against fire, theft, wind and a variety of other perils. Home insurance also provides personal liability protection for the homeowner and additional living expenses if the home is uninhabitable while undergoing repairs after a disaster. Home inventory | A record of personal possessions for home, condo or renters insurance purposes. The inventory can include written information as well as video recordings and photographs of belongings. Insurers recommend homeowners and renters maintain a complete inventory of their household contents to ensure they purchase enough coverage and to help the claims process go smoothly. Independent adjuster | An independent contractor who investigates and settles claims for insurance companies. An independent adjuster works on contract for insurers but is not employed by insurance companies. Individual policy | A home insurance policy sold directly to an individual. The purchaser of an individual policy does not have to belong to a specific group to qualify for the insurance. Insurance binder | A document that provides temporary proof of insurance coverage. The insurance binder is issued to cover the property until a formal policy is issued. When purchasing a home, the binder gives proof to the mortgage lender that the home is insured. Permanent home insurance must be purchased before the binder's expiration date. Insurance risk score | A score based on credit reports that insurers use to help them determine the risk for selling a policy to an individual home insurance applicant. A poor insurance risk score can trigger higher premiums. Lapse The discontinuation of an insurance policy because the premium was not paid before the end of the grace period. A homeowner who allows a policy to lapse generally will face higher premiums to reinstate the policy. Liability coverage | Insurance coverage that pays for damage or injuries a policyholder accidentally causes to others. These are costs for which the policyholder has a legal responsibility. Loss of use | Inability to use a home while it's being repaired or rebuilt after a disaster. Loss of use coverage in a home insurance policy provides a policyholder with additional living expenses to find and rent a home while the insured home is undergoing repair. Market value | The estimated price for which a property can be expected to sell in the open market. A home insurance policy should provide enough coverage to rebuild the home in the event it is destroyed, and such costs can exceed a home's market value. Master policy | Insurance that covers the common areas of a condominium complex, such as building exteriors, pools, hallways and grounds. The master policy, funded by residents' monthly dues, is a collective policy that does not cover personal belongings. Condo owners should know what their condominium association's master policy covers so they can choose appropriate individual condo insurance. Personal property | Personal belongings not attached to the structure of the home, such as furniture, clothing, artwork and appliances. Most home insurance policies cover personal property up to 40 percent of the amount for which the home is insured. There are also specific limits for valuables, such as jewelry and firearms. Public insurance adjuster | An adjuster who works on behalf of policyholders to help them evaluate damage and rebuilding costs after a disaster, and to guide them through the insurance claims process. Public adjusters charge a fee, typically 3 percent to 10 percent of the claim, to help clients get what they deserve from insurers. Rated policy | An insurance policy with a higher-than-standard premium for property rated at a higher risk. Renters insurance | Insurance for renters to protect their personal belongings, which are not covered under a landlord or apartment complex's insurance policy. Renters insurance covers losses to personal belongings from a wide variety of perils, including theft, fire, smoke, windstorm and vandalism. Renters insurance also provides liability coverage. Replacement cost coverage | Insurance that pays to replace damaged or destroyed belongings with new items. Replacement cost coverage is more expensive than actual cost coverage, which pays only the current value of the item (after factoring in depreciation) at the time it was destroyed. Scheduled items | Valuables covered by additional insurance protection in a rider on a home, condo or renters insurance policy. Standard insurance policies provide a limited coverage amount for costlier items, such as jewelry, artwork, antiques and firearms. Scheduling such items increases the policyholder's level of insurance coverage. Umbrella liability | A liability insurance policy that provides additional protection beyond what is provided in car, home, renters or condo insurance policies. Insurers often require buyers to purchase up to the maximum liability limits on their home and car insurance policies before purchasing an umbrella liability policy. Underwriter The insurance company that assumes risk and issues the policy. It also refers to an insurance company professional who determines how to classify an insurance applicant's risk level and whether the risk is worth assuming.