Familiarize yourself with these common terms used in home insurance policies.
When you purchase something like home insurance, it’s often because you know you need coverage and it’s required. While it’s great to protect your home and belongings, you should know the ins and outs of your policy. Just like any industry, insurance has its own jargon that doesn’t always make sense until you know the definition. To help you better understand your home insurance policy, check out these common terms you should know.
Actual cash value (ACV) – The value of your property, based on the current cost to replace it minus depreciation. Also see “replacement value.”
Additional living expenses (ALE) – Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable. Policies cap the amount of ALE payable to 20 percent of the policy’s dwelling coverage.
Adjuster – An individual employed by an insurer to evaluate losses and settle policyholder claims.
Endorsement – A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy.
Floater – Property insurance for items that are moved from location to location, covering losses where they occur. This is typically bought to cover items of high-value such as jewelry and antiques.
Replacement value – The cost of replacing property without deducting for depreciation.