Insurance terms in plain English

Actual cash value

A settlement method that typically accounts for depreciation, subject to the policy definition and any applicable law. It may leave a larger replacement cost for you to pay.

Admitted insurer

An insurer authorized to transact the relevant insurance in the state. The designation does not mean every policy offers the same coverage.

Binder

Evidence of temporary coverage when validly issued by an authorized party. A submitted application or quote request is not automatically a binder.

Deductible

The portion of a covered loss assigned to the insured under the policy. A percentage deductible needs to be converted into dollars using the correct stated basis.

Dwelling coverage

Coverage addressing the insured building under the policy. Limits, settlement terms, covered causes of loss, and exclusions must be read together.

Endorsement

A document that changes the policy. An endorsement can add, narrow, exclude, or otherwise modify coverage.

Exclusion

Policy language that removes or limits protection for a particular cause, type of property, circumstance, or activity.

Flood

A separately defined water hazard. A homeowners or wind policy should not be assumed to cover flood or storm surge; read the applicable forms.

Guaranty association

A mechanism with statutory rules that may protect qualifying claims involving certain insolvent admitted insurers. Do not assume a surplus-lines policy has this protection.

Loss of use

Coverage that may address eligible additional living expenses or rental-related losses after a covered event, depending on the policy and occupancy.

Nonadmitted insurer

An insurer that is not admitted for the placement in the state. Eligible surplus-lines placement has its own legal framework.

Nonrenewal

An insurer’s decision not to continue the policy for another term. It is different from cancellation during the current term.

Replacement cost

A settlement basis related to repair or replacement without depreciation, subject to policy conditions, limits, exclusions, and sometimes repair requirements.

Surplus lines

A placement channel for eligible insurance with nonadmitted insurers under applicable requirements. It does not identify one standard homeowners policy form.

Wind and hail policy

A policy addressing specified wind and hail exposures. A separate wind policy is not a substitute for all other homeowners or flood coverage.

Definitions are educational summaries. The definitions in your policy and applicable law control.