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Home Insurance Glossary

Updated: Dec 4, 2023

When it comes to insurance, there are so many words and terms that may seem foreign to people who don’t actually work in the industry. We are here to help with that. We’ve compiled a simple glossary of terms that you might see when shopping around for home insurance, to help you better understand exactly what your home insurance policy is talking about.

  • Actual cash value (ACV): the cost to replace an item at the time of a loss with an item of like kind and quality, less depreciation

  • Actuary: someone who assesses risks and their likelihood of occurring to determine how much an insurance premium should be

  • Additional living expenses: coverage for reasonable and necessary purchases if you are unable to live in your home while it is being repaired (including hotels, food, toiletries, etc.)

  • All risk: insurance policy that covers all accidental causes of loss or damage except for those that are excluded

  • Appraisal: process of determining how much something is worth

  • Binder: written confirmation that insurance coverage is in effect until final policy documents are issued

  • Contents insurance: protects your personal belongings, including furniture, appliances, clothing, jewelry, antiques, etc. You can purchase additional coverage under this section to cover specific items like art or jewelry

  • Deductible: the amount that you are responsible for if you file a claim. Usually between $500-$2,500. The higher the deductible the lower your premium, and vice versa

  • Endorsement: an amendment made to your insurance policy that alters the provisions of the contract (typically to add or remove coverage, or to increase the limits of coverage)

  • Exclusions: perils or hazards that are not included in your insurance policy, like mold damage or wear and tear

  • Extended water damage: extra insurance coverage that protects you from water damage due to sewer backup or flooding

  • Extensions of coverage: provide additional coverage to an insurance policy for specific property or circumstances

  • Floater: provides additional coverage beyond what is provided in a habitational policy for items that are moveable or float from location to location

  • Guaranteed Replacement Cost (GRC): a claims-settlement option where the insurer will pay the cost of repair or replacement to a dwelling building even if it exceeds the limit of insurance on the policy, subject to stated conditions

  • Indemnity: the amount the insurer will pay to repair or replace damaged property

  • Insured peril: risks (perils) that could cause damage or result in losses to your property. Includes events like windstorm, hail, lightening, fire, theft, etc.

  • Liability: protects you if someone is injured or killed on your property

  • Loss of use: protects you if you are unable to live in your home while it is being repaired

  • Mortgagee: entity who lends money to someone (usually a bank)

  • Mortgagor: a person who takes a loan from a lender (typically a homeowner)

  • Named Perils: a type of coverage that insures your property against named perils such as fire, wind, lightening, water damage, and theft

  • Peril: an event that causes a loss

  • Policy period: period that your policy is in effect, usually one year

  • Policy: contractual document with details about the terms and conditions of your insurance coverage

  • Premium: price of insurance for a risk for a specified period of time

  • Replacement cost: also known as Actual Replacement Value, this is the total cost to repair or replace your home and personal property with similar kind and quality, without any depreciation

  • Risk: probability of loss, damage, liability, or bodily injury

We hope that this glossary helps you to better understand the terms and conditions of your home insurance policy.

If you have any questions about home insurance, feel free to reach out to one of brokers in Sundre, Sylvan Lake, Lacombe, Stettler, or Lacombe.


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