giving keys to a couple
General Articles

Decoding Homeowners Insurance: Top Terms for First-Timers

  • March 19, 2020

Common Home Insurance Terminology to Know


Homeowners who go looking for home insurance in Thousand Oaks, CA often come away more confused than when they began. As with any industry, there are a number of terms and phrases to know to better understand your options and coverage. To help, we’ve rounded up some essential phrases that you should know as a first-time home insurance buyer.


Deductible – The deductible is what you pay out-of-pocket when you file a claim. Once you pay the deductible, which is a set amount of money, your insurance will kick in to help. Usually, a higher deductible means the homeowner pays lower monthly premiums but has a higher out-of-pocket responsibility in the event of a claim.


Actual cash value – Value of property before it was destroyed or damaged, minus depreciation. For example, if a 5-year-old television was destroyed, the insurance would pay an amount equal to the depreciated value of the old television.


Replacement cost coverage – Coverage that pays to replace damaged or destroyed belongings with new items. For the situation above, replacement cost coverage would pay the cost of buying a new TV to replace the old one.


Additional living expenses – An insurance policy provision that pays for extra living expenses a policyholder faces while a home is undergoing reconstruction following a fire, storm or other covered peril. Covered expenses may include costs for moving, rent, hotel accommodations, restaurant meals, and laundry expenses.


Endorsement – A document added to an insurance policy to add or restrict coverage. An endorsement can be added to a home insurance policy to increase coverage for other structures, valuables, personal liability or a variety of other needs.


Liability coverage – Insurance coverage that pays for damage or injuries a policyholder accidentally causes to others.


Home inventory – A record of personal possessions for home, condo or renters insurance purposes.


Talk to your insurer to better understand your home insurance coverage options and policy. At Falsken & Associates Insurance Agency, we help homeowners find the insurance coverage. Contact us today to get started on your tailored policy.