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Insurance Terms

Reading a homeowners insurance contract between the policyholder and the insurer can be quite confusing especially if you are not familiar with the jargon that the industry uses. To familiarize yourself with homeowners insurance terms, you may refer to this glossary:

Actual Cash Value

The market value of the policyholder’s property at the time a damage occurred or a loss of an item inside the home occurred. It is computed by subtracting the depreciation of the item from the cost of replacement.


A property’s increase in terms of value due to economic factors. Antonym: Depreciation

Assessed Value

The value of an asset determined for taxation purposes.

Blanket Insurance

An insurance policy that covers more than one item or person.


Failure to do one’s end based on an agreement.


An individual asking for payment for an insurance claim.

Contents Coverage

Refers to the type of coverage that protects the policyholder in an event where the contents of one’s home are damaged or stolen. Also called personal property coverage, this type of coverage usually has a limit of up to 70% of one’s dwelling coverage.


This is the amount that the homeowner or policyholder is willing to pay out of pocket in an event where there are property-related expenses. When the said amount is already consumed, the home insurance policy will take over in paying for additional costs.

Dwelling Coverage

A basic coverage called Coverage A, dwelling coverage is a financial protection in an event where the home is damaged or ravaged by catastrophic events.


Items that are not included in the policy. To ensure that you are not victimized by your own policy, you should read all the exclusions and the fine print.

Hazard Insurance

This type of insurance compensates the policyholder for physical damages in their home. The hazard can either be a natural one or one from human causes.


When a policyholder does not make payments, the policy is no longer effective.


A specific risk i.e. floods, fire, windstorms, etc.

Personal Liability Protection Coverage

This coverage protects you and your family from expenses on lawsuits directed towards you due to an injury sustained in your home.

There are other homeowners insurance terms that one should learn. The homeowners insurance glossary above are the most basic items you should know about.