Thursday, March 23, 2017

Home Insurance Terms to Know to Better Understand Your Policy

Having insurance coverage at the Lake of the Ozarks is an important part of home ownership. Understanding your home insurance policy can be difficult if you're not familiar with the jargon typically used in policy contracts. Insure the Lake at Lake of the Ozarks knows not everyone is an insurance term guru. So we've put together a list of terms to help you better understand your insurance policy coverage at the Lake of the Ozarks.

Here is a list of terms you'll likely see in your policy paperwork:

Actual cash value (ACV) - The value of your property, based on the current cost to replace it minus depreciation.

Additional living expenses (ALE) - Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable.

Adjuster - An individual employed by an insurer to evaluate losses and settle policyholder claims.

Agent - A person who sells insurance policies.

Application - A form you fill out with information about you that an insurance company will use to decide whether to issue you a policy and how much to charge.

Appraisal - An evaluation of a home insurance property claim by an authorized person to determine property value or damaged property value.

Binder - A temporary insurance contract that provides proof of coverage until you receive a permanent policy.

Cancellation - Termination of an insurance policy by the company or insured before the renewal date.

Claim - A policyholder's request for reimbursement from an insurance company under a home insurance policy for a loss to property.

Claimant - A person who makes an insurance claim.

Company profile - A summary of information about an insurance company, including its license status, financial data, complaint history, and a history of regulatory action.

Complaint - A written communication primarily expressing a grievance against an insurance company or agent.

Contract - In most cases, an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.

Declarations page - The page in a policy that shows the name and address of the insurer, the period of time a policy is in force, the amount of the premium, and the amount of coverage.

Deductible - The amount the insured must pay in a loss before any payment is due from the company.

Depreciation - Decrease in the value of property over time due to use or wear and tear.

Effective date - The date on which an insurance policy becomes effective.

Endorsement - A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. Also known as a "rider."

- A provision in an insurance policy that denies coverage for certain perils, people, property, or locations.

Expiration date - The date on which an insurance policy expires.

First-party claim - A claim filed by an insured against his or her own insurance policy.

Inflation protection - Automatically adjusts your home insurance policy limits to account for increases in the costs to repair or rebuild a property.

Insured - The policyholder - the person(s) protected in case of a loss or claim.

Insurer - The insurance company.

Lapse - The termination of an insurance policy because a renewal premium is not paid by the end of the grace period.

Liability coverage
- Covers losses that an insured is legally liable. For homeowners insurance, liability coverage protects you against financial loss if you are sued and found legally responsible for someone else's injury or property damage.

Loss - The amount an insurance company pays on a claim.

Loss of use - A provision in homeowners and renters insurance policies that reimburses policyholders for the additional costs (housing, food, and other essentials) of having to live elsewhere while the home is being restored following a disaster.

Loss history - Refers to the number of insurance claims previously filed by a policyholder. A company will consider loss history when underwriting a new policy or considering a renewal of an existing policy. Companies view loss history as an indication of the likelihood that an insured will file a claim in the future.

Market value - The current value of your home, including the price of land.

Non-renewal - A decision by an insurance company not to renew a policy.

Peril - A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy. An all-risk policy covers all causes of loss except those specifically excluded.

Personal property - All tangible property (other than land) that is either temporary or movable in some way, such as furniture, jewelry, electronics, etc.

- The contract issued by the insurance company to the insured.

Policy owner - The person or party who owns an individual insurance policy. This person may be the insured, the beneficiary, or another person. The policy owner usually is the one who pays the premium and is the only person who may make changes to a policy.

Policy period - The period a policy is in force, from the beginning or effective date to the expiration date.

Premium - The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Property damage - Physical damage to property.

- The process by which a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.

Renewal - Continuation of a policy after its expiration date.

Renters insurance - A form of insurance that covers a policyholder's belongings against perils. It also provides personal liability coverage and additional living expenses. Possessions can be covered for their replacement cost or the actual cash value, which includes depreciation.

Replacement cost - Pays the dollar amount needed to replace the structure or damaged personal property without deducting for depreciation but limited by the policy's maximum dollar amount.

Surcharge - An extra charge added to your premium by an insurance company.

Third-party claim - A claim filed against another person's insurance policy.

Underwriter - The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.

Underwriting - The process an insurance company uses to decide whether to accept or reject an application for a policy.

Many people purchase policies without understanding what is covered, the exclusions that take away coverage, and the conditions that must be met in order for coverage to apply when a loss occurs. Reading and understanding your policy can help you avoid problems such as this with your insurance policy at the Lake of the Ozarks in the event of a loss. Now that you know and understand the terms you're likely to see in your insurance policy, you can be better prepared to work with your insurance agent at the Lake of the Ozarks to come up with a policy that will meet your coverage needs to the fullest.

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About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral