Anyone that’s ever tried to read their home insurance policy knows that they’re full of terms common within the insurance agency, but not to the average person. Even if you do ask what specific terms mean, you’re likely to get an answer that may not be completely clear. The following is policy language that you need to know to get the most out of your policy.
This is the person the insurance company will send to your home to assess the damage and assign a dollar value to it. That’s the amount the insurance company will pay to repair the damage. Bear in mind that the adjuster’s job is to minimize costs for their employer – the insurance company.
Actual Cash Value
If your policy provides actual cash value for damages, that means you’ll receive the amount the insurance company estimates the value to be – minus depreciation. The insurer will use the age and condition of each item to calculate the amount. Reimbursement will be lower than the cost to actually replace an item and all insurance agencies don’t calculate depreciation in the same way.
A policy that provides replacement value will reimburse you the current, actual cost to replace an item with a brand new one that’s the same or similar. A policy may have inflation protection to account for rising costs to replace a home or personal property.
Additional Living Expense
This will pay for the cost of a hotel or rent, meals and food, and storage if you can’t live in your home due to the damage. The insurer will calculate expenses at a percentage of the home’s insured value or the value of personal property. Those amounts can vary greatly.
Blanket coverage means that each building on the property is insured for the same amount rather than variable amounts for each structure.
The contents encompass the personal property within the home. It includes items ranging from furnishings and rugs to clothing and electronics.
This is the amount you’ll be responsible for paying toward any damages incurred before the insurer pays their part.
An exclusion is a list of personal property, damages or situations that the insurance won’t cover.