Oregon Insurance Glossary: Homeowners Insurance
Additional
Living Expense
Fire
damage or other covered loss could increase your living costs—you
may be paying for a hotel, restaurant meals or laundromat,
for example. In a standard homeowner policy, Loss of Use (Coverage
D) will reimburse you for any additional living expenses incurred
by you in an attempt to maintain a normal standard of living
if your home is made uninhabitable by a covered peril. See
Loss of
Use.
Bodily
Injury (BI)
An important type of liability coverage, BI will pay legal
damages awarded for injury or death for which you are held
legally responsible.
Appurtenant
Structure
In a property insurance policy, "appurtenant structures"
are buildings on the same premises as the main, insured building.
Appurtenant structures like garages or barns on your property
and are usually covered by homeowner insurance policy.
Arbitration
Clause
In your property insurance contract, the arbitration clause
provides a means for settlement when you and your insurer
cannot agree on an acceptable claim payment. Appraisers representing
each party select a neutral arbitrator; a judgment by any
two of these three constitutes a binding settlement.
Broad
Theft Coverage
An endorsement to a dwelling policy which provides theft
coverage for contents to a named insured, owner occupant.
Business
Personal Property
In a homeowner policy, "business personal property" refers
to items or "contents" owned by your business or company—like
the lap top you might bring home over the weekend. Coverage
is usually limited to $2,500.
Coverage
A
Called "Dwelling", this is the part of your home insurance
policy that covers the home itself—frame, flooring and fixed
objects. The amount of Coverage A is the cost to replace the
structure of your home in the event of total loss. Other coverages
are usually based on a percentage of Coverage A.
Coverage
B
This part of your policy covers "Other Structures"—barns,
sheds, garages.
Coverage
C
"Personal Property" covers your belongings automatically
for 50% of Coverage A.
Coverage
D
"Loss of Use" takes into account expenses you'll have
if your home is uninhabitable because of a covered loss. It
pays for temporary lodging and living expenses.
Coverage
E
"Personal Liability" covers you for your legal responsibility
for injury caused to others whether on or away from your own
property.
Coverage
F
"Medical Payments" pays medical costs if someone is injured
on your property. A homeowner policy automatically covers
$1,000. You can increase this coverage in $1,000 increments,
up to $5,000. In order to collect more than this, the injured
party must file for compensation under Coverage E.
Debris
Removal Clause
While most property policies cover only direct damages
caused by an insured peril, the "debris removal clause" covers
the cost of removing debris produced by the peril’s occurrence.
For example, a hurricane sweeps through the state; a fallen
tree will be removed only if it lands on your house. Debris
Removal reimburses you for the cost of cleaning all the broken
limbs and rubble.
Direct
Loss
This is a damage or loss resulting as a direct consequence
of an insured peril. For example, a computer lost in a fire
is a direct loss; the data destroyed inside the computer is
considered an indirect loss.
Direct
Writer
When an insurance company offers its policies directly
to consumers through its own employees, it’s called a "direct
writer." Electric Insurance Company is a direct writer.
Dwelling
Forms
These are polices which cover a residence dwelling or
building and the personal property inside. You can buy dwelling
forms which vary by the degree of coverage they offer.
Earthquake
Endorsement
Most homeowner policies exclude coverage for earthquake
damage. People who are concerned about the risk of earthquakes
can add an Earthquake Endorsement to cover damages.
Easement
An "easement" entitles its holder to specific interests,
such as a right of way, in land owned by someone else.
FAIR
An acronym for "Fair Access to Insurance Requirements,"
FAIR offers insurance to people in high-risk areas who might
otherwise be denied coverage. Reinsured by the United States
government, FAIR is a pooling plan with policies for fire
and allied perils.
Fire
In property insurance, "fire" refers to the unintentional
or "hostile" occurrences of flame and combustion. Damage caused
by fire in your fireplace, for instance, is not covered under
your homeowner policy. But if your rug were ignited by a spark
from that same fireplace, you would be covered.
Fire
Resistive Construction
Building construction using fire-resistive materials in
its roof, floors and exterior walls. See also Modified Fire-Resistive
Construction.
Fire
Wall
A wall designed to contain or seal off fires in a building.
Fireproof
Unfortunately, no one can make a building completely undamageable
by fire. Today, insurers use the term "fire-resistive" to
describe buildings which are practically resistant to most
fire damage.
Flood
A temporary submersion, partial or complete, of ordinarily
dry land by water or mud. Floods are typically caused by an
overflow of waters, whether inland, tidal or from any accumulated
runoff from any source. Flood is excluded under a typical
homeowner insurance policy.
Flood
Insurance
Policies sold to cover property owners from losses caused
by floods or flooding, usually offered in conjunction with
a government flood insurance plan.
Frame
Construction
The most common form of housing construction, frame buildings
are made primarily of wood frames and joists.
Guaranteed
Replacement Cost
Guaranteed Replacement Cost coverage on homeowners insurance
means that your home will be repaired to its value at the
time of loss, reguardless of the amount of coverage carried.
For example, you estimate your home to have a full replacement
value of $162,000. On your homeowner policy, you carry $162,000
coverage for the structure. If you have guaranteed replacement
cost endorsement on your policy and the home is lost in a
fire and the house costs $168,000 to rebuild, the policy will
pay $168,000.
Homeowner
Policy
Combined property and liability insurance that covers
homeowners and renters for damage to or theft of their property
and liability, in case they are responsible for injury to
another person.
Increased
Cost of Construction Insurance
Commonly added as an endorsement to homeowner policies,
"increased cost of construction insurance" covers the additional
costs of building repair or reconstruction when you rebuild
with more expensive services, materials and techniques required
by local ordinances.
Increased
Hazard
Property insurance terms are tailored to the nature and
use of the property as it exists when the policy is written.
Should you introduce dangerous materials or activities into
the property, like making fireworks, you will have added an
increased hazard whose liabilities would not be covered by
your policy.
Indirect
Loss
Also known as consequential loss or damage, indirect loss
results from, but is not caused directly by, a peril. If your
business property burned down, for instance, the property
itself is a direct loss, while the lost business revenues
would be considered an indirect loss.
Inflation
Guard Coverage
"Inflation Guard Coverage" provides automatic periodic
increases on the building’s property insurance, to reflect
the effects of inflation on building replacement expenses.
Inherent
Vice
A property flaw or fault which causes its own destruction.
Damages from inherent vices are usually not covered through
insurance.
Liberalization
Clause
If policies or endorsement forms are broadened through
legislation or rating authority rulings—and do not require
premium increases—the "liberalization clause" automatically
includes the broadened coverage in similar, existing policies.
Loss
of Use Coverage
If your home becomes uninhabitable because of an insured
peril, Loss of Use (Coverage D) provides compensation for
additional living expenses incurred in an attempt to maintain
a normal standard of living. Loss of Use is automatically
included as 20% of the Replacement Cost amount you carry in
Coverage A. If your home were covered for $200,000, for example,
Loss of Use coverage would provide up to $40,000 for additional
living expenses. See Additional Living Expenses.
Loss
Payable Clause
To protect lenders or lien holders, this clause extends
coverage to parties with an insurable interest in your property,
most often the institution holding your mortgage.
Masonary
Noncombustible Construction
Refers to buildings constructed from noncombustible materials
such as masonry walls of brick, cinder block, stone, tile,
or other similar materials, and floors and roofs made of metal
or other noncombustible materials.
Mobile
Home Policy
A homeowner policy for a permanently situated mobile home.
Modified
Fire-Resistive Construction
Building construction featuring exterior walls, floors
and roofs made of fire-resistive materials such as masonry
or metal.
Mortgage
Clause
In policies covering mortgaged property, the "mortgage
clause" protects the interests of the mortgagee for loss reimbursement
and other rights of recovery, regardless of any acts or neglect
by the insured.
Mortgagee
A lender or creditor, typically a bank, who holds the
mortgage, and lends money secured by the value of the mortgaged
property.
Mortgagor
Usually the homeowner who, as debtor, receives money in
return for a property mortgage granted as a security for the
loan.
Named
Perils
Named Perils Insurance covers specific perils listed in
a policy, as opposed to an "all-risk insurance" covering all
losses except the ones excluded by name in the policy.
National
Flood Insurance Program (NFIP)
A program backed by the United States government to provide
flood insurance for fixed property. The NFIP writes policies
directly and offers reimbursement to private carriers offering
flood insurance.
Occupancy
Property insurance rates reflect the way the property
is used. In general, "owner occupied" homeowner policies are
less expensive than "non-owner occupied" policies.
Off
Premises
Coverage you can obtain for personal property or "contents"
which are away from the principle, insured property. In most
cases, the amount of this coverage is limited to a percentage
of the property’s total coverage.
Other
Structures
Generally detached structures, such as a garage or tool
shed, sharing property with the insured dwelling. Under a
homeowner policy, "other structures" are automatically covered
for 10% of the limit chosen for Coverage
A.
Personal
Property
Any of your property, such as furniture, clothing and
consumer electronics, other than real estate property. Your
homeowner policy covers the personal property of you and your
family members.
Physical
Damage
Actual damage to your property.
Red-Lining
Unfair discrimination against a risk based solely on its
location. For example, the denial of property insurance to
the owner of a building located in a depressed area.
Rental
Value
Insurance Protection against loss of rental value or actual
rent should the owner’s insured property suffer damages prohibiting
property use or tenant occupation.
Renters
Insurance
See HO4.
Replacement
Cost
Coverage for the cost of replacing damaged property at
the time of loss with that of similar kind and quality. If
you carry replacement cost coverage and have a loss, the insurer
pays for the cost of a new replacement, minus any policy deductible.
Residence
Premises
Where you, the insured, live. In homeowner insurance,
this includes the dwelling, grounds and other structures,
or that part of any other building in which you live.
Riot
Violent activity by more than one person. The number of
persons it takes to constitute a riot varies by state. Your
policy may cover riots through extended coverage or direct
reference.
Scheduled
Personal Property
Personal belongings that are worth more than the limits
of liability set in your policy can be insured by adding this
endorsement.
Sinkhole
Collapse
A special form of earth movement, covered by some homeowner
insurance, referring to the sudden collapse or sinking of
land into empty, underground spaces eroded by water. Most
other forms of earth movement remain excluded from ordinary
policies.
Smoke
Damage
As opposed to fire damage caused by combustion, heat or
burning, this is damage attributable to the smoke itself.
Stated
Amount
In your policy, you may choose to cover certain items
for a specific amount. In the event of loss, the insurer pays
the stated amount regardless of the property’s actual value.
If, for example, you insured a painting for a stated amount
of $15,000, in the event of theft you would recover the $15,000
(minus your deductible), even if the painting had accrued
value after the policy had been signed.
Tenants
Policy
Another term for Renters Insurance. See HO4.
Unoccupied
Property without people occupying or living within it.
As opposed to vacant property, unoccupied property may hold
furnishings. Unoccupancy beyond a specified period of time
is prohibited by the standard homeowner policy. See Vacant.
Vacant
A building with nothing in it. While an "unoccupied" building
is defined by not having people in it, a "vacant" building
is also devoid of furnishings and other items. Vacancy beyond
a specified period of time is prohibited by the standard homeowner
policy. See: Unoccupied.
Vandalism
and Malicious Mischief (V&MM or VMM)
Your homeowner policy should automatically cover you for
willful destruction or damage performed by others to your
property.
Yearly
Renewable Term (YRT) (See Annually Renewable Term)
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