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Liberalization Clause
If policies or endorsement forms are broadened through legislation or rating authority rulings-and do not require premium increases-the "liberalization clause" automatically includes the broadened
coverage in similar, existing policies.
Loss of Use Coverage
If your home becomes uninhabitable because of an insured peril, Loss of Use (Coverage D) provides compensation for additional living expenses incurred in an attempt to maintain a normal standard of living. Loss of Use is automatically
included as 20% of the Replacement Cost amount you carry in Coverage A. If your home were covered for $200,000, for example, Loss of Use coverage would provide up to $40,000 for additional living expenses. See Additional Living Expenses.
Loss Payable Clause
To protect lenders or lien holders, this clause extends coverage to parties with an insurable interest in your property, most often the institution holding your mortgage.
Masonary Noncombustible Construction
Refers to buildings constructed from noncombustible materials such as masonry walls of brick, cinder block, stone, tile, or other similar materials, and floors and roofs made of metal or other noncombustible
materials.
Mobile Home Policy
A homeowner policy for a permanently situated mobile home.
Modified Fire-Resistive Construction
Building construction featuring exterior walls, floors and roofs made of fire-resistive materials such as masonry or metal.
Mortgage Clause
In policies covering mortgaged property, the "mortgage clause" protects the interests of the mortgagee for loss reimbursement and other rights of recovery, regardless of any acts or neglect by the insured.
Mortgagee
A lender or creditor, typically a bank, who holds the mortgage, and lends money secured by the value of the mortgaged property.
Mortgagor
Usually the homeowner who, as debtor, receives money in return for a property mortgage granted as a security for the loan.
Named Perils
Named Perils Insurance covers specific perils listed in a policy, as opposed to an "all-risk insurance" covering all losses except the ones excluded by name in the policy.
National Flood Insurance Program (NFIP)
A program backed by the United States government to provide flood insurance for fixed property. The NFIP writes policies directly and offers reimbursement to private carriers offering flood insurance.
Occupancy
Property insurance rates reflect the way the property is used. In general, "owner occupied" homeowner policies are less expensive than "non-owner occupied" policies.
Off Premises
Coverage you can obtain for personal property or "contents" which are away from the principle, insured property. In most cases, the amount of this coverage is limited to a percentage of the property's total coverage.
Other Structures
Generally detached structures, such as a garage or tool shed, sharing property with the insured dwelling. Under a homeowner policy, "other structures" are automatically covered for 10% of the limit chosen for Coverage A.
Personal Property
Any of your property, such as furniture, clothing and consumer electronics, other than real estate property. Your homeowner policy covers the personal property of you and your family members.
Physical Damage
Actual damage to your property.
Red-Lining
Unfair discrimination against a risk based solely on its location. For example, the denial of property insurance to the owner of a building located in a depressed area.
Rental Value
Insurance Protection against loss of rental value or actual rent should the owner's insured property suffer damages prohibiting property use or tenant occupation.
Renters Insurance
See HO4.
Replacement Cost
Coverage for the cost of replacing damaged property at the time of loss with that of similar kind and quality. If you carry replacement cost coverage and have a loss, the insurer pays for the cost of a new replacement, minus any policy deductible.
Residence Premises
Where you, the insured, live. In homeowner insurance, this includes the dwelling, grounds and other structures, or that part of any other building in which you live.
Riot
Violent activity by more than one person. The number of persons it takes to constitute a riot varies by state. Your policy may cover riots through extended coverage or direct reference.
Scheduled Personal Property
Personal belongings that are worth more than the limits of liability set in your policy can be insured by adding this endorsement.
Sinkhole Collapse
A special form of earth movement, covered by some homeowner insurance, referring to the sudden collapse or sinking of land into empty, underground spaces eroded by water. Most other forms of earth movement remain excluded from ordinary policies.
Smoke Damage
As opposed to fire damage caused by combustion, heat or burning, this is damage attributable to the smoke itself.
Stated Amount
In your policy, you may choose to cover certain items for a specific amount. In the event of loss, the insurer pays the stated amount regardless of the property's actual value. If, for example, you insured a painting for a stated amount of $15,000, in the event
of theft you would recover the $15,000 (minus your deductible), even if the painting had accrued value after the policy had been signed.
Tenants Policy
Another term for Renters Insurance. See HO4.
Unoccupied
Property without people occupying or living within it. As opposed to vacant property, unoccupied property may hold furnishings. Unoccupancy beyond a specified period of time is prohibited by the standard homeowner policy. See Vacant.
Vacant
A building with nothing in it. While an "unoccupied" building is defined by not having people in it, a "vacant" building is also devoid of furnishings and other items. Vacancy beyond a specified period of time is prohibited by the standard homeowner
policy. See: Unoccupied.
Vandalism and Malicious Mischief (V&MM or VMM)
Your homeowner policy should automatically cover you for willful destruction or damage performed by others to your property.
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