Insurance Definition Get Every Insurance Definition You Need

Every industry has its jargon. Ours is no exception! Some insurance definition terms are self-explanatory, but it can still get confusing.

Besides our commitment to shopping the most comprehensive insurance coverage and delivering those policies at the best price, we remain steadfast about educating our clients. It is the only way they as consumers may make informed decisions.

This list of commonly asked questions to any insurance definition is no substitute for a phone call with queries you have before or after your policy takes effect.

Please never hesitate to call your agent directly or our home office’s main number at 727-584-9999 to be connected.

Insurance Definition Guide


The following are definitions for the common coverages in your policy:

Type of Insurance aka Policy Form

The type of insurance is based upon the type of dwelling and what its use is. There are stand-alone dwellings that are your residence (HO-3), an apartment you rent to live in (HO-4), a condominium you either live in or rent to others (HO-6), or a property you own to rent to others (DP).


A deductible is the portion of a covered loss you must pay before your insurance company pays for any of the loss. Typically, your insurance company will simply subtract the deductible from the total amount of your claim, rather than requiring you to pay the deductible up front.

In Florida, the policy is split between two main perils: wind or hurricane and all other perils. Insurance companies calculate the hurricane/wind deductible as a percentage of the dwelling value. Example: $200,000 Coverage A * 2% = $4,000 deductible. All Other Perils is a flat dollar amount.

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Your dwelling is your house itself. The term “replacement cost” is defined or explained in the policy. Simply stated, it means the cost to replace the property on the same premises with another property of comparable material and quality used for the same purpose. This applies unless the limit of insurance or the cost actually spent to repair or replace the damaged property is less. The dollar value is the cost to rebuild your house or the replacement cost as calculated by specialized software, not the money you could get if you sell it or what you owe on your mortgage. These amounts are most often different.

Example: Several years ago, your house might have a sales value of $200,000 and now it might be $300,000. The mortgage value falls as it is repaid. So you might still owe $136,500 on your mortgage. The cost to replace the house may have been $225,000, when you bought it and will only change by inflationary factors and supply and demand for the materials.

If the dwelling is insured at actual cash value, this generally means: the cost to replace with new property of like kind and quality, less depreciation. Please refer to your policy.

Other Structures

This is for other structures you have on your property like: a detached garage, guest house, fence, tennis court, or storage building.

Personal Property

This is also known as contents. It’s best to think of contents as anything which would fall out of a house if you flipped it upside down. Personal property is usually valued at 25% of the value of the dwelling and greater.

Actual Cash Value (ACV)

  • The fair market value of the item less depreciation.

Replacement Cost

  • The cost to replace new.

Loss of Use

If you must live away from your home as the result of a loss, this covers the increase over normal living expenses.

  • Ordinance or Law Limit

This gives you a bit more money to rebuild your dwelling, if the building codes have changed. It is usually a percentage of the dwelling value.

Example: After Florida’s hurricanes in 2004, builders stopped using just nails to hold the roof trusses together and moved first to clips, then straps. Both are more expensive than nails.


There is usually a limited level of coverage for the items below, but they can be increased.

  • Limited Fungi, Wet or Dry Rot or Bacteria (Property): This is for mold in your ceilings or walls that must be remediated or fixed as it is a health hazard.
  • Limited Fungi, Wet or Dry Rot or Bacteria (Liability): Because mold is a health hazard, people may become ill as a result and can sue you. This covers that possibility.
  • Jewelry, Silver, Guns, Furs and Collections: Like electronics, these items carry higher costs and are therefore considered separately. If you own one or more expensive items or a special collection of stamps, coins, etc. whose value would be affected by loss or damage, you might consider adding more coverage here by endorsement — $2,500 is covered under the policy without adding more coverage.
  • Loss Assessment: This covers condominium or neighborhood association assessments for commonly owned property — $1,000 is covered under the policy without adding more coverage.
  • Sinkhole Coverage: All policies include catastrophic ground cover collapse for when the ground suddenly collapses affecting the foundation and the house is condemned. The sinkhole that just causes stress fractures in your walls or cracks in the driveway is covered under the sinkhole endorsement. This endorsement requires an inspection you must pay for and can take 30-60 days for review, underwriters can (and often do) deny offering the endorsement.
  • Equipment Breakdown: Some carriers will offer a coverage like a maintenance agreement on your appliances.
  • Identity Theft: Some carriers will offer coverage for losses from credit cards, etc. when your identity is stolen. Certain carriers also offer resolution cost coverage.
  • Water Damage: Older homes are more prone to sudden pipe leaks or bursts, therefore homes over a certain age receive limited water damage coverage. Usually when a dwelling reaches 50 years of age, the coverage is limited to $10,000. Some carriers will allow you to endorse the policy back to full water damage coverage upon receipt of a passable 4-point inspection.


Windstorm Protective Devices

Roof clips or straps, hurricane shutters, a new roof, etc. can reduce the cost of your insurance.

Secured Community

A gated and/or guarded community will receive a discount; while a neighborhood that is entered through a single-entry point receives a smaller discount.

Fire and Burglar Alarm

Upon receipt of a recent alarm certificate, a discount will be given.

Insurance Score

This is calculated from information on your credit report, it is a ‘soft hit’ on your report and does not affect your credit rating.

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Every insurance definition can be tied back to a frequently asked question. But there are no questions you should not ask. Each question is important, and its answer will give you the peace of mind you deserve. That’s why we’re here. Contact us at our home office at 727-584-9999.