Homeowners’ Insurance Policy: Terminology You Should Know
Insurance can be confusing, but you can always turn to your insurance agent for help figuring out which coverage options you need. Certain life events, such as buying a house, call for a visit to your insurance agent . He or she can also help clarify the confusing insurance terminology you’ll find on your policy.
Actual Cash Value
Actual cash value (ACV) is the dollar amount it will take to replace or repair damaged property. This term subtracts value lost through depreciation. In other words, it refers to restoring the property to its pre-damage condition, rather than its new condition.
This term may also be called the replacement value. In contrast to ACV, the replacement cost refers to the dollar amount it will take to replace damaged property with new property . The replacement cost does not figure in depreciation.
Additional Living Expenses
Your homeowners’ insurance might include coverage for additional living expenses. This means you can be reimbursed for expenses accrued to maintain a standard of living comparable to your lifestyle before the damage. In other words, if your home is unlivable after a fire, you can be reimbursed for your hotel costs. Total benefit limitations may apply.
All Risks Coverage
All risks coverage is also sometimes called comprehensive or open perils coverage. It means you’ll have coverage from all possible types and causes of damage, except for those specifically stated as exclusions. This type of coverage costs more, but offers greater peace of mind.
Named Perils Coverage
In contrast to all risks coverage, named perils coverage only covers types and causes of damage that are specifically stated in the policy. It costs less than all risks coverage because it offers less protection. Some examples of commonly named perils are damages caused by fire, lightning, hail, smoke, and riots.
State Farm Insurance - Debbie Aragon Insurance is an award-winning insurance agency that is committed to helping customers find the right coverage at the right price. You can call their office at (970) 879-1756. They are conveniently located on Oak Street in Steamboat Springs, CO.