PROPERTY INSURANCE TERMS
Actual Cash Value - There are two ways to calculate the value of your property. Replacement cost valuation is the full amount necessary to replace your property today with property of like kind and quality. The other valuation method is actual cash value, which is the cost to replace your property today with materials of like kind and quality, less depreciation.
Additional living expenses (ALE) - Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable. Policies cap the amount of ALE payable to 20 percent of the policy's dwelling coverage.
Replacement Cost - The dollar amount it costs today to replace or repair your damaged property with that of like kind and quality, without any deduction for depreciation.
Depreciation - A decrease in the value of property over a period of time as a result of use, wear and tear, or obsolescence.
Endorsement - A written amendment added to and made a part of an insurance policy to change the original insurance policy language. The change may restrict or broaden the coverage.
Exclusion - A written provision in an insurance policy that denies coverage for certain events, hazards, people, property or location.
Named Peril Policy - A property insurance policy that covers only losses caused by the perils specifically listed in the policy. This coverage contrasts to special form coverage, which covers property losses from all causes not specifically excluded.
Peril - the cause of a possible property loss, such as fire, windstorm, theft, explosion or riot.
Sewer and Drain Back-Up Protection - protects your business against losses caused by water backing up through your sewers or drains, or by water overflowing from a pump.
Subrogation - the assignment to an insurer, after payment of a loss, of an insured’s right to recover the amount of the loss from someone who is legally liable for the damages.