Actual Cash Value (ACV)
The value of property at a certain time, measured in cash and arrived at by deducting from the property’s replacement cost an amount for depreciation caused by physical wear and tear and/or obsolescence. It is generally described as the property’s replacement cost minus depreciation or ACV = R – D.

Additional Living Expense and Loss of Rents
In homeowners policies, a coverage that reimburses the insured for costs incurred because the residence premises is not fit to live in as the result of a covered loss. These include additional living expenses, such as hotel or rental costs, and the fair rental value of any part of the dwelling the insured normally rents to others.

Deductible
A certain dollar amount specified in most property insurance policies beyond which insurance coverage begins. The insured assumes the loss up to the amount of the deductible, then the insurer pays any covered loss over that amount.

Depreciation
A decrease or loss in value because of wear, age or other cause.

Earned Premium
The portion of the premium representing coverage already provided. Each day an insurance policy is in force represents a day of earned premium.

Floater Policy
A policy that covers movable property wherever it may be, such as a policy on tourists’ luggage.

Guaranteed Home Replacement Cost
An optional coverage endorsement that provides coverage beyond the policy limit of insurance for Coverages A or B, if needed, to repair or replace damaged property.

Incidental Business Occupancy
In homeowners policies, refers to a business conducted in a dwelling used primarily as a residence with no other businesses operating on the same premises. Individual insurers have specific guidelines about types of incidental business permitted, but examples include business or professional offices and private schools or instructional studios.

Insurable Interest
Relationship such that loss or destruction of property or life would cause a financial loss. In the case of property insurance, that interest must exist at the time of the loss to be compensable by an insurance policy.

Liability Insurance
A line of insurance under which an insurer agrees to pay, on behalf of the insured, amounts the insured may be legally required to pay to others as the result of the insured’s actions. May cover bodily injury or damage to property of others or both.

Misrepresentation
Refers to written or verbal statements that are untrue or misleading, whether made by the insured or by the insurer or its agent, regarding the insurance.

Mortgagee
The party that lends money to another to purchase real estate and therefore holds a lien against the property; usually a commercial financial institution.

Other Structure
A structure located on the premises of the insured but not directly attached to the dwelling structure. For example, a garage that is detached from a dwelling is considered an other structure.

Perils
Causes of loss; events that can trigger coverage under an insurance policy, such as fire, windstorm, explosion, vandalism and others.

Personal Property
Most property of the insured, other than real estate, common to a residence.

Personal Property Replacement Cost
An optional coverage endorsement that removes the consideration of depreciation during the settlement of personal property losses. This is also known as “new for old” coverage.

Property Damage (PD) Insurance
A liability insurance coverage protecting the insured’s legal liability for damage to or destruction of property of others.

Replacement Cost
The cost of replacing damaged or destroyed property without taking a deduction for depreciation.

Scheduled Coverage
A method for providing property insurance under which properties to be covered are listed separately with individual limits of insurance.

Seasonal Dwelling
A dwelling that is occupied less than 180 days during any one year.