Insurance Terms for Homeowners
Whether you’re new to the world of homeowners insurance or not, deciphering the insurance policy can sometimes seem like a hassle. Becoming familiar with all those insurance terms might not be the most exciting thing you’ll do today, but it will certainly make it a lot easier for you to properly understand what’s included in your coverage.
Homeowners Insurance Terms You Need to Know
Replacement Cost Value (RCV)
When you purchase this type of coverage, if you choose to replace or repair your property due to damage, you will be reimbursed for the cost without deduction for depreciation.
As a policyholder, there’s a portion of a covered loss that is your responsibility. Let’s say your policy includes a $2000 deductible. You will have to pay that amount towards the repair of the damage; otherwise, it will be deducted from your claim payment.
Actual Cash Value (ACV)
In the property insurance world, this term is related to the market value of your home before and immediately after your loss. This is usually calculated as the replacement cost value minus depreciation.
The company you’ve acquired a mortgage with who has financial interests on your property.
Decrease in the value of property over a period of time due to use, wear and tear, and obsolescence.
An unpredictable reduction in the quality, quantity, or value of something. For example, bodily injury, disease, property damage, physical disappearance of property, incurred expenses, death, etc.
Loss of Use Coverage
If your home were to be damaged by any kind of event covered by your insurance policy and you can no longer live in it, this coverage pays your living expense. This might be limited to a certain percentage of your policy limit.
If you were to move, this would be the items (or property) that you would be able to take with you such as clothing, furniture, etc.
If your loss was caused by another party, your insurance company may sue them for the loss and collect the money, if it wins. This money may go toward repaying you for your deductible.
Need Help with Your Policy? Let’s talk
At AAI Central, we not only sell the homeowners insurance policy but take the time to explain it so our clients understand how the policy will work at the time of claim. If you have any questions, give us a call or talk to an agent. We’re here to guide you.