Insurance Glossary
Common insurance terms explained in plain English, with a watchdog tip for each.
Actual Cash Value (ACV)
The amount of money your property is worth today (Initial cost minus depreciation). Carriers often default to ACV because it pays out less. Push for Replacement Cost coverage where possible.
Binder
A temporary insurance contract that provides proof of coverage before the formal policy is issued. Always get a copy of your binder immediately after purchase.
Deductible
The amount you pay out of pocket before your insurance coverage kicks in. High deductibles lower premiums but can be a trap after heavy storms.
Exclusion
Specific perils, circumstances, or properties that are NOT covered under your policy. This is where carriers hide the most "Gotchas." Check for "Water Intrusion" specifically.
Force-Placed Insurance
Insurance purchased by a lender (like a bank) if your own coverage lapses. This is almost always 2-3x more expensive than standard market rates. Avoid at all costs.
Premium
The regular payment you make to keep your insurance policy active. Bundle coverage to reduce individual premiums by up to 25%.
Replacement Cost
The amount it would cost to buy a new version of the item that was lost or damaged, without subtracting for depreciation. This is the gold standard for homeowners policies.