Home Insurance Snapshot Glossary

When you’re reviewing a client’s home insurance declaration page and encounter terms like replacement cost vs actual cash value, covered perils, ordinance and law coverage, or inland marine, this is your definitive reference. FP Alpha’s P&C Snapshot reads home and auto insurance declaration pages and generates visual summaries with coverage recommendations, this glossary explains the terminology behind those recommendations.

[DOWNLOAD HOME & UMBRELLA INSURANCE GLOSSARY PDF]

6-page glossary covering homeowner’s, umbrella, condo, and renter’s policy terms

Produced by: FP Alpha | Terms: 30+ definitions | Context: Accompanies the P&C Insurance Snapshot

What Is Homeowner’s & Umbrella Insurance?

Homeowner’s Insurance covers loss and damage to a dwelling, property, and other owned equipment in the event of a covered loss. These policies are generally packaged with personal liability coverage — legal responsibility for injuries and property damage to others caused by the insured party.

Umbrella Policy is a liability policy that provides coverage above the limits of an underlying homeowner’s or auto policy. Coverages may be the same or broader than the underlying policies. If a loss is covered by the underlying policy, no umbrella deductible applies. The deductible/retention only applies if the umbrella covers something the underlying policy does not.

Coverage & Valuation Terms

Term	Definition
Actual Cash Value	Pays damages equal to the replacement value of damaged property minus depreciation, wear and tear, or obsolescence. The payment reflects what the property was worth at the time of loss, not what it costs to replace it new.
Replacement Cost Insurance	Pays to replace damaged property with like kind and quality without deducting for depreciation. Usually limited by a maximum dollar amount or value percentage in the policy. More expensive than ACV but provides significantly better protection.
Insurance-to-Value	The ratio between the value of insurance purchased and the replacement cost of the insured property. If a home costs $500K to rebuild but is only insured for $400K, the insurance-to-value ratio is 80%. Most policies require 80–100% for full claim payment.
Market Value	The selling price of the property. Differs from insuring values (replacement cost and actual cash value) because it includes land value, location premiums, and market conditions that are irrelevant to rebuilding cost.
Depreciation	The reduction in property value due to age and wear. An ACV policy payment will reflect this depreciation. A replacement cost policy will not.
Blanket Insurance	Combines the value of different types of property (dwelling + contents) or different locations into a single insurance limit. Provides flexibility when values shift between categories.

Property Coverage Terms

Term	Definition
Covered Perils	Specific risks that trigger the insurance policy to respond. Policies may be All Risk (everything is covered unless specifically excluded) or Named Perils (only the listed perils trigger coverage). All Risk provides broader protection.
Exclusions	Policy provisions that eliminate certain protections. Common exclusions include flood, earthquake, and intentional damage. Understanding what’s excluded is as important as understanding what’s covered.
Customised Coverage	Endorsements available to overcome limitations or exclusions on standard policies. If a standard exclusion creates a gap, a customised endorsement may fill it.
Endorsement	A term used by insurers to clarify or revise particular provisions of a policy. Also referred to as “riders.” These add, remove, or modify coverage beyond the base policy.
Deductible	The fixed amount or percentage of an insured loss that is paid by the insured party before the insurance company pays. Higher deductibles reduce premiums but increase out-of-pocket costs at claim time.
Other Structures	Structures on the premises not attached to the insured building: detached garages, fences, retaining walls, outbuildings, pool houses.
Personal Property	A class of property distinct from real property or business property. Includes the contents of the insured residence and non-business possessions — furniture, electronics, clothing, etc.
Real Property	Structures and any property attached to the land: the house, pool, outbuildings, attached garage, landscaping structures.
Additions and Alterations	The value of materials and supplies used to alter or improve a physical unit. Coverage for these may be necessary when the policyholder is renting or does not personally own the building (e.g., condominium ownership).
Additional Living Expense	Reimburses essential costs (temporary housing, food) when the policyholder’s home becomes temporarily uninhabitable due to a covered peril. Also called “loss of use” coverage.

Specific Peril Coverage

Term	Definition
Earthquake Coverage	Property coverage for losses resulting from an earthquake and related earth movement. Usually excluded from standard homeowner’s policies and must be purchased separately.
Earth Movement	Refers to sudden land shifts such as earthquakes and mudslides. Protection is usually excluded from standard policies.
Fire Insurance	A type of property insurance providing coverage only for loss caused by the peril of fire. Most homeowner’s policies include fire as a covered peril.
Flood	Water damage caused by rising surface water entering the home. Different from Water Back-Up. Flood coverage is commonly excluded from homeowner’s policies and must be purchased separately or endorsed.
Water Back-Up Coverage	Supplemental insurance for water damage from water seeping up from sewers or drains. Not included in most standard policies. Can often be added through an endorsement.
Windstorm Pools	Also called beach plans. Insurance coverage devised by coastal states for wind damage to insured property. In high-exposure coastal areas, these shared pools may be the only catastrophic wind protection available.
Ordinance and Law Coverage	Pays for increased costs of rebuilding when revised building codes since the original construction require upgrades. Without this coverage, the gap between the old construction standard and the new code comes out of pocket.

Liability, Specialty & Policy Types

Term	Definition
Personal Liability	Covers the insured against legal liability to others for bodily injury and property damage. Protects against many personal liability exposures faced by homeowners unless specifically excluded.
Personal Injury	Liability coverage for discrimination, false arrest, illegal detention, libel, slander, mental anguish, or invasion of privacy. Broader than “bodily injury” coverage.
Medical Payments Coverage	Limited coverage for injured parties and medical payments due to an accident, regardless of fault. Covers guests injured on the property without requiring a liability claim.
Umbrella	Liability insurance above the limits of the primary homeowner’s or auto policy. Responds once the primary policy’s liability limit is exhausted. Often provides broader coverage than the underlying policies.
Occurrence	An unexpected single accident or event during the policy period that triggers the liability insurance to respond. The policy must be in force at the time of the occurrence.
Loss	The claim amount as determined by the adjuster. The insurance company pays the loss minus the deductible.
Inland Marine	First-party coverage for movable or scheduled property: jewellery, fine art, antiques, or items with collector’s value. Items with high value often need to be individually scheduled (listed and appraised) on the policy.
Identity Theft	Coverage for the appropriation of another person’s identity for financial advantage without authorisation. May cover costs of restoring identity, legal fees, and lost wages.
Insurance Score	A prediction ranking of likely future claims based on consumer credit information: loan payment history, open credit accounts, bankruptcy, and judgement filings.
Watercraft	Boat insurance. Standard homeowner’s policies have significant watercraft limitations. Liability is generally excluded for most watercraft except sailing vessels under 26 feet, outboards under 25 HP, or inboards under 50 HP. Direct damage coverage is usually limited to $1,500. Additional coverage requires a separate boat policy or endorsement.
Declarations Page	The page of the policy showing the coverage period, amount of coverage, premium, and the names/addresses of insurer and insured. This is the document uploaded to FP Alpha for the P&C Snapshot.

Policy Types

Term	Definition
Condominium Unit Owners Policy	A comprehensive policy similar to a homeowner’s policy but designed for condo owners. Provides coverage for unit alterations and improvements, personal possessions, loss of use, and liability. Works in conjunction with the condo association’s master policy.
Master Policy	An insurance policy covering multiple members on a group basis. Condo owners are part of a master policy that insures the common property and structure of the condominium or cooperative association. The unit owner’s policy covers what the master policy does not.
Unit Assessment	A portion of an assessment charged to all unit owners as a result of a loss to common areas. Applies to condominium insurance when the master policy’s deductible or uncovered loss is shared among owners.
Renter’s Policy	A personal insurance policy for those who rent apartments or houses. Covers personal property and personal liability but does not cover the building structure (that’s the landlord’s responsibility).
Rental Reimbursement	Optional insurance covering costs for a temporary replacement vehicle while the insured vehicle is being repaired after a loss. Note: this is an auto insurance term but often appears alongside homeowner’s coverage discussions.

How These Terms Appear on the P&C Snapshot

When you upload a client’s home insurance declaration page to FP Alpha, the P&C Snapshot extracts key coverage data and presents it visually. Here’s where the glossary terms typically surface:

Coverage summary: Dwelling coverage amount, replacement cost vs actual cash value, deductible, and insurance-to-value ratio
Liability section: Personal liability limits, medical payments coverage, and umbrella policy status
Property coverage: Other structures coverage, personal property limits, additional living expense coverage
Endorsements & exclusions: Flood, earthquake, water back-up, ordinance and law, inland marine (scheduled items)

Recommendations: FP Alpha generates insights based on coverage gaps, e.g., suggesting umbrella coverage if liability is below net worth, or flagging missing flood coverage in flood-prone areas

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Disclaimer: Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.