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Glossary of Homeowners Insurance Terms
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Glossary of Homeowners Insurance Terms


An alphabetized glossary of commonly used homeowners insurance terms.


Actual Cash Value (ACV) – The “Actual Cash Value” of your property is calculated by subtracting any depreciation from its current replacement cost.

Additional Living Expenses (ALE) – “ALE, or Additional Living Expenses” (including but not limited to essentials such as food and housing) may be reimbursed to the policyholder in an amount up to 20% of the policy’s dwelling coverage if the home made temporarily uninhabitable due to damage from a covered peril.

Adjuster – “Adjusters” are individuals employed by insurers to help evaluate losses before settling claim. “Public insurance adjusters” may be independently hired by homeowners, but the policyholder must pay out of pocket for such appraisals.

Agent – Individuals who sell insurance policies are referred to as “agents”.

Application – Insurance companies require the filling out of a form called an “application” to gather information about you and your home. This information will be used to decide if they will issue you a policy, and if so, on what terms.

Appraisal – An “appraisal” is conducted by an authorized person who is qualified to determine property value and damaged property value. Most insurance policies provide for an appraisal process to settle claim disputes. The insurance company and the homeowner both hire an independent appraiser, and the two appraisers agree on the selection of a third appraiser to act as “umpire”, who is paid half by the insurance company and half by the homeowner. The appraisers review the claim and loss amount, and come to an agreement, with the umpire settling any disputes between the appraisers. The umpire’s decision is binding for the loss amount, and both the homeowner and the insurance company must comply. Settlement of any dispute over what is covered must be handled separately; the appraisal only covers loss amounts.


Binder – After a policy has been tentatively approved, a “binder” is presented to the homeowner. It contains documents proving insurance coverage until the permanent policy is finalized and delivered.


Cancellation – If an insurance policy is terminated by either the insured or the insurer before the renewal date, this is “cancellation”.

Claim – A “claim” is a request from the policyholder for reimbursement from an insurance company for a loss to property, according to the terms of their home insurance policy.

Claimant – The “claimant” is the person who files the insurance claim.

Company profile – A “company profile” is a collection of summarized information about an insurance company. This can include but is not limited to the company’s financial information, license status, and history of complaints or regulatory actions.

Complaint – A “complaint” is a communication (normally written) that expresses some form of grievance against an agent or insurance company.

Complaint history – The “complaint history” of an insurance company refers to the information collected or maintained by the state regarding the number and disposition of complaints against the insurer.

Contract – In the insurance field, an insurance policy is considered to be a “contract” made between the policyholder and the insurance company.


Declarations page – The “declarations page” of an insurance policy denotes the time period the policy is in force, the amount of coverage and premium, and the name and address of the insurer and insured.

Deductible – The “deductible is the fixed amount or percentage of a claim which must be covered by the insured before the insurer pays out.

Depreciation – “Depreciation” is the reduction in value of property due to normal wear and tear or aging over time.


Earned premium – The “earned premium” is the portion of a policy premium an insurance company has “earned” through coverage provision. The “unearned premium” is the portion yet to be “earned. For example, a six-month policy paid in advance, after two months, has 2 months earned and 4 months remaining unearned – which could be applied to a different policy or an upgrade in policy if the policy is changed midterm.

Effective date – The “effective date” is when an insurance policy takes effect.

Endorsement – An “endorsement”, also called a “rider”, consists of a written agreement attached to a policy which expands or limits the payable benefits described therein.

Escrow – Money held by a third party until specified conditions are met is referred to as being in “escrow”.

Exclusion – An “exclusion” is an insurance policy provision that specifically denies coverage for certain perils, people, property, or locations.

Expiration date – The “expiration date” is when an insurance policy expires.


File and Use – Residential property rates are implemented under a system called “file and use.” This means that insurance companies file their rates with state, but don’t need approval in advance if they decide to implement new rates. If the state later determines that the new rates are excessive, the company may be ordered to pay refunds to overcharged policyholders, but these adverse rate decisions may be appealed before payment.

First-party claim – A “first party claim” occurs when the primary insured files against his or her own insurance policy.


Grace period – The “grace period” is the number of days (usually 31) that a policy remains in force after if a premium comes due but not paid. The policy will lapse retroactively to the date the premium was originally due unless the premium is paid before the end of the grace period (or the insured dies.)

Group of companies – A “group of companies) refers to several insurance companies operating under common ownership (and often common management.)



Independent adjuster – An “independent adjuster” is a third party which charges a fee to adjust a claim.

Inflation protection – “Inflation protection” will automatically adjust your policy limits to account for increased costs of property repair or replacement.

Insurable interest – A financial or emotional interest in a property or person insured by a third party is called “insurable interest”.

Insured – The “insured” is the policyholder who is protected in case of a loss or claim.

Insurer – The insurance company is the “insurer.”


Justified complaint – A “justified complaint” is one which exposes an apparent violation of a policy provision, contract provision, rule, or statute. It may also show that a practice or service could be regarded as below customary business standards.



Lapse – A “lapse” in regard to an insurance policy means that the renewal premium was not paid by the end of the grace period, causing insurance coverage to be terminated retroactively to the premium due date.

Liability coverage – Losses for which an insured is legally liable require “liability coverage” – this can protect you against financial loss if you are found legally responsible for someone else’s injury or property damage.

Loss – The “loss” is the amount of the claim as determined by the adjuster; the insurance company will pay the loss less the deductible.

Loss of use – A homeowners and renters insurance policy may reimburse policyholders for “loss of use”, including housing, food, and other essentials associated with having to live elsewhere if their home has been subject to a disaster.

Loss history – The number of insurance claims previously filed by a policyholder makes up their “loss history”.


Market value – The current value of a home and land is the “market value”.

Material misrepresentation – A misstatement in an application form that is significant and could have caused the insurer to reject said application is called a “material misrepresentation.”


Non-renewal – A “non-renewal” decision by an insurance company is their prerogative to not renew a policy.



Peril – A “peril” refers to any of many and varied risks or causes of loss such as a fire, windstorm, flood, or theft. A named-peril policy will provide coverage only for the risks named in the policy. An all-risk policy specifically excludes any perils not covered, and covers all other causes of loss.

Personal property – All tangible, temporary or movable property other than land is “personal property” (items such as electronics, furniture, jewelry, etc.)

Policy – The “policy” refers to the contract between the insured and insurer.

Policy owner – The “policy owner” is person or party who owns the policy; they usually pay the premiums and are the only one allowed to make changes to the policy, whether they are the insured, the beneficiary, or another person.

Policy period – The “policy period” is the effective dates of the policy from its initial approval to its expiration date.

Premium – The “premium” is the amount paid by an insured for their insurance policy.

Property damage – “Property damage” means any physical damage caused to property, normally resulting in its devaluation.

Public insurance adjuster – An “public insurance adjuster” is a person employed by a policyholder to negotiate a claim with the insurance company. Such adjusters must normally be specially licensed by the state, and usually charge a percentage of the claim settlement.



Refund – A “refund” refers to an amount of money returned to the policyholder (for case in which the insurance company has not earned out the premium or the insured has been judged to have overpaid their premium.)

Reinstatement – If an insurance policy lapses because of nonpayment of renewal premiums, the company may be willing to do a “reinstatement” upon payment of outstanding balances.

Renewal – A “renewal” is the continuation of a policy after its expiration date; this may be the same policy or changes may be made.

Renters insurance – “Renters insurance” covers a policyholder’s belongings against perils and also provides for personal liability coverage.

Replacement cost – The dollar amount needed to replace a structure or damaged personal property is the “replacement cost” – depreciation is not considered.

Residual market – Some insurers exist to provide coverage for the “residual market” – those in need of insurance who cannot purchase it from traditional companies.

Return premium – The “return premium” is the amount which may be returned to an insured for amending a policy or canceling before the term is up.

Rider – A “rider” or “endorsement” is a written agreement attached to the policy which can expand or limit benefits otherwise payable under the policy.


Single interest insurance – “Single interest insurance” may be taken out by a mortgage company or lender, and provides protection only for the policy owner, not the homeowner.

Staff adjuster – A “staff adjuster” is a member of an insurance company’s claims department.

Subrogation – The right held by most insurance carriers to legally pursue a third party who caused an insurance loss. This allows recovery of the amount of the claim paid by the insurance carrier to the insured for the loss, without making the homeowner wait to have their claim handled by the third party.

Surcharge – An “surcharge” can be any one of many potential extra charges added to your premium by an insurance company.


Third-party claim – A “third party claim” is filed against another person’s insurance policy.


Underwriter – The “underwriter” is responsible for reviewing an application for insurance to decide if the applicant is acceptable and to set a premium rate.

Underwriting – The “underwriting” process determines if an insurance company will accept or reject an application for a policy.

Unearned premium – The “unearned premium” is the amount paid to the insurance company allocated to future monthly coverage premiums. If an insurance policy were to be canceled, the company would return this portion of paid funds.






What is an HO3 policy?

An HO3 insurance policy is the most commonly written type of homeowners insurance policy. It covers anything that happens to your home except things which are specifically excluded – meaning they are written down in a list in your policy as not covered. An HO3 policy will generally cover any and all damage to your home with the exception of flooding (which is generally covered separately in the State of Florida by policies issued through the National Flood Insurance Program), damage done to vacant properties by vandals or unattended pipes, damage caused by neglect, damage caused by earthquake, nuclear disaster, or terrorism, etc. Reading your HO3 policy thoroughly and understanding the exclusions is an important part of purchasing a homeowners insurance policy. Ask your Olympus Insurance agent to help you determine if you need more coverage than an HO3 policy provides.

Am I required to carry homeowners insurance?

The State of Florida does not require that you carry homeowners insurance. However, if you carry a mortgage on your home, your financial institution will almost certainly require that you carry insurance to protect their interests. If you own your home free and clear, you may opt to carry homeowners insurance to help protect your investment. If you buy into a condominium or townhouse, the board may require you carry part or all of the insurance responsibility. If you own an investment home that you rent out, you may need to carry renters insurance. Ask your agent which type of policy is appropriate for your needs.

What factors can affect my homeowners insurance premiums?

Homeowners insurance premiums may be affected by the age of your home, roof and its construction, or by its location and proximity to dangers (such as flood zones) and emergency services (such as the fire department). Protective devices like burglar alarms, upgraded door and window locks, smoke and CO2 detection systems, or fire extinguishers and sprinkler fire suppression systems may help lower your premium, as can impact resistant glass or hurricane shutters. If you have a pool, the type of security in place around it may also affect your premiums. Ask your agent if you think any of the above may apply.

What is a home inventory?

A home inventory is a list of all valuables in your home. A good home inventory will also include photographs of each item, including any model or serial numbers, and receipts showing when and where each item was purchased as well as the price paid, along with any recent appraisals of high ticket items. Having a home inventory can help your insurance company reimburse you correctly after a home disaster or robbery. Ask your agent if they have suggestion about items you may wish to list.

Do I need extra insurance for my jewelry / fur / gun / baseball card collection?

Your homeowners insurance may have a caps on coverage limits that can vary based on your individual needs. If the limit is not sufficient to cover luxury items or valuable collections you own, you can purchase a separate policy that provides scheduled or enhanced coverage. This policy will help cover specific items of value in your home in case of theft or other loss. Ask your agent if you are unsure about an item’s value and whether or not it is covered.

Does my homeowners insurance policy cover my pool or outbuildings?

Policy language can be exceedingly specific and vary from carrier to carrier. At Olympus we cover damage to your home, pool, and any structures on your property such as pool screens, docks, or fences if damaged by a covered peril, but other carriers may offer different coverage options or exclude the coverage completely. Ask your agent if you are unsure about what is covered under your policy.

What do the different sections of my homeowners policy cover?

Section I of your homeowners insurance policy covers damage to your property. Section II provides personal liability coverage in case someone is injured on the property.

What is the difference between “actual cash value” and “replacement cost”?

An actual cash value reimbursement is equal to the current value of the item or structure, which depreciates over time. Replacement cost will cover whatever is necessary to replace the item or structure lost. Ask your agent about your specific policy and what it covers.

What is my deductible?

Your deductible is the dollar amount or percentage you will be responsible for in case of a claim. Your deductible will vary depending on your policy and any additional riders. Your hurricane deductible, which applies only to damage caused by named storms, may be a different amount than your “all other perils” (AOP) deductible, which covers damage done by other causes, such as burglary, fire, vandalism, water damage, or windstorms that are not part of a named storm. You may be able to secure a lower annual premium by raising your deductible, or a lower deductible by raising your annual premium.

My roof was damaged in a storm. A roofer who was looking at my neighbors’ houses came over and offered to fix it. What should I do?

Call Olympus first, no matter what kind of damage your home has sustained. We can help make sure you get the service you need from a reputable contractor. If anyone offers to eliminate your deductible, or asks you to sign anything – especially an Assignment of Benefits (AOB) form – politely decline and call Olympus to avoid fraud and help protect yourself. Ask your agent for more information about the correct claims process.

There is water damage due to a leak I just discovered. My friend said it won’t be covered because it’s been going on for over a month. What do I do?

Olympus doesn’t automatically exclude water damage due to a leak that has been occurring over two weeks or longer. Call Olympus first, and we can help you determine if your water damage is covered.

A tree from my neighbor’s yard fell on my house. What do I do?

Call Olympus first. We can work with you to get your claim settled quickly and your home restored. You won’t have to negotiate with your neighbor or their insurance company; we’ll take care of the details.

My new washing machine was either defective or installed improperly, causing water damage. What do I do?

Even if the damage to your home was the fault of a manufacturer or technician, call Olympus first. We can help you quickly restore your life to normal, and if necessary we can recover the costs of paying your claim later through subrogation of the responsible party.

What is flood insurance? Is it included in my homeowners policy?

Flooding is not covered under standard HO3 policies, but flood coverage can be crucial for protection of your Florida home. Flood insurance is available through insurance agents or directly from the National Flood Insurance Program, and premiums are set by FEMA for federal flood insurance policies purchased for moderate and low-risk areas. Flood insurance may be required by your mortgage holder if you live in a high-risk flood zone, and premiums for those regions may be higher than the national standard.

I can’t find a piece of valuable jewelry that I was certain was in my jewelry box. I’m not sure if it was stolen or lost. Am I covered?

Olympus provides protection in case of accidental loss, theft, or “mysterious disappearance” under our Scheduled Personal Property Coverage.

I work out of my home office frequently, and have a computer, printer, and other business items in my home. Are these covered?

Olympus offers up to $10,000 in coverage on property on the “residence premises” used at any time or in any manner for any business purpose when you purchase Spartan Enhanced Coverage.

What kinds of discounts are available to lower my homeowners insurance premium, and how can I qualify?

Olympus offers several types of discounts and credits on premiums. Having a particular type of roof or a roof 2002 or newer, or installing a home security system are just a few ways you may be able to lower your annual premium. Ask your agent about potential discounts and credits.

Is expanded coverage available?

Olympus offers Scheduled Personal Property Coverage for broader protection with higher coverage limits, and Spartan Enhanced Coverage to provide up to five times more protection for your home, personal property, and personal liability.

Can I report a claim 24/7?

Yes, to report a claim, call our Claims Team 24/7 at 866.281.2242 or complete our online claims form.

Do you provide any claims resources?

Yes, Olympus has prepared a comprehensive claims kit to assist you through the claims process if you should ever need to file a claim.