Home Insurance Terms Dictionary

Last updated: October 7, 2015

Definitions of Technical Terms

Actual Cash Value (ACV)

The amount it would take to repair or replace damage to your home after accounting for wear and tear (depreciation).

Basic Form

Coverage that insures your property with limited coverage against basic perils: fire or lightning; smoke damage; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; theft; vandalism and malicious mischief; glass breakage; and loss of property removed from premises endangered by fire or other perils.

Binder

Temporary authorization of coverage issued prior to the actual insurance policy.

Broad Form

Specific policy coverage that covers more perils and provides a broader protection base than basic form, including: falling objects; weight of ice, snow and sleet; collapse of building(s) or any part thereof; sudden accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system; accidental discharge, leakage or overflow of water or steam; freezing of plumbing, heating and air conditioning systems; sudden and accidental damage from artificially generated currents to electrical appliances and devices.

Deductible

The amount you must pay out-of-pocket before your insurance will begin paying on a claim.

Endorsement

A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Sometimes called a “rider.”

Fire Protection Class

A designation assigned to every property address in Kansas, whether in an incorporated city or un-incorporated county area, based on the firefighting capability of such city and/or county/township. The protection class assigned ranges from Class 1 (most protection and lowest fire insurance rates) to Class 8 (least protection and higher fire insurance rates) in incorporated towns and cities. Protection Classes 9 and 10 (least fire protection and highest fire insurance rates) are usually reserved for property addresses in the un-incorporated county area. These fire protection classes determine the amount of fire premium charge you will pay for homeowners or renters insurance cover age.

Insolvency

An insurer’s inability to pay debts.

Mortgage or Loss Payee Clause

A clause usually required by a bank or lending institution when a loan is taken out to purchase a home. The clause says that in the event a claim is made on the home or real property, any claim settlement amount paid by the insurance company will be made out to the named insured and the bank or lending institution as their interest may appear.

Peril

Events that cause damage to property, such as fire, windstorm and theft.

Replacement Cost

The amount it would take to repair or rebuild your home or replace damaged property with materials of similar kind and quality at today’s price.

Special Form

The most common of all forms of homeowners coverage. It usually offers all-peril coverage on the structure and named peril coverages on your contents.

Territorial Rating

Homeowners premiums charged in Kansas are based partially on the territorial rating of your home. In other words, your premium will vary depending on what part of the state you live in. Homeowners premiums charged in Kansas are based partially on the territorial rating of your home. In other words, your premium will vary depending on what part of the state you live in.

Underwriting

The process of an insurance company evaluating the insurance risks of a potential customer and determining whether or not to accept their policy and, if so, determining how much to charge.

This article is published on KansasMoney.gov. Find more information by contacting these state agencies: