8 Homeowners Insurance Terms You Need To Know
When applying for a mortgage, you need to obtain homeowners insurance, and you’re bound to come across many terms you don’t understand. Here are eight terms you will most likely hear, and thanks to this article, fully comprehend.
Actual Cash Value – This is the cost of replacing damaged or destroyed items with comparable new items, minus depreciation.
Broker-Agent – Used to describe an independent salesperson who works for a particular company, but might also work as a broker by searching other companies to get a customer the best deal. You are most likely to come across these guys when buying property.
Liability Insurance – This type of insurance is primarily concerned with losses caused by injuries to persons in your home, and the legal liability imposed upon you for such injury. When having a friend help out with handiwork around the house, even if it's just handling moving boxes, you might want this insurance.
Earned Premium –The amount of premium that has been paid in advance or has been "earned" by virtue of the fact that time has passed without claim.
Extended Replacement Cost – This coverage pays a certain amount above the policy limit to replace a damaged home, generally 120 or 125 percent. It can cover items outside the home as well as inside the home.
Hurricane Deductible - Many insurers in hurricane-prone states are selling homeowners insurance policies with percentage deductibles for storm damage, instead of the traditional dollar deductibles used for claims such as fire and theft. Percentage deductibles vary from one percent of a home's insured value to 15 percent, depending on many factors that differ by state and insurer.
Umbrella Policy - This insurance will cover you for losses above the limit of underlying policies such as homeowners and auto insurance.
Waiver of Premium - A provision in some insurance contracts which enables an insurance company to waive the collection of premiums while keeping the policy in force if the policyholder becomes unable to work because of an accident or injury. The waiver of premium for disability remains in effect as long as the insured is disabled.
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