Home insurance terms, explained
What these terms mean when they appear on home insurance. Each definition describes the term itself, not what to do about it.
- Actual cash value
- Pays replacement cost minus depreciation for age and wear, so older items are paid at less than what it costs to replace them.
- Coverage A
- The dwelling limit: the most your policy will pay to rebuild the main structure of your home.
- Hurricane deductible
- A separate, usually percentage-based deductible that applies to hurricane damage, often larger than your standard deductible.
- Law and ordinance
- Helps pay the extra cost of rebuilding to current building codes after a covered loss, which a basic policy may exclude.
- Replacement cost
- Pays to repair or replace damaged property with new materials of like kind, without subtracting for age or wear.
- Water backup
- Coverage for water that backs up through sewers or drains, or overflows from a sump pump. It is a small add-on with its own limit, separate from flood.
Other policy types
These are general definitions. Your own policy is what governs your coverage, and the same term can be defined differently from one policy to the next. Read your own policy to see what these terms say in your document, cited to the page.