Welcome to our Florida home insurance glossary for Bradenton, Sarasota, and all Florida homeowners. Below you will find definitions to home insurance terms to help you understand your policy.
Don’t forget to check out our Florida auto insurance glossary.
Florida Home Insurance Glossary of Terms
Actual Cash Value (ACV):
The amount your home or belongings are worth, considering depreciation. For example, if your roof is 10 years old, ACV pays the cost of a new roof minus 10 years of wear and tear.
Additional Living Expenses (ALE):
Covers the cost of temporary housing, food, and other expenses if your home becomes uninhabitable due to a covered loss. This is particularly important in Florida during hurricane season.
Artifically Generated Electrical Current
This refers to a sudden and accidental electrical surge or spike caused by non-natural sources, such as power grid issues, short circuits, transformer malfunctions, or the operation of large appliances. Unlike lightning strikes, these surges originate from man-made or artificial sources within or outside the home’s electrical system.
Catastrophic Ground Cover Collapse:
A Florida-specific coverage for damage caused by a sudden collapse of the ground beneath your home. Unlike sinkhole coverage, this applies only if the property is uninhabitable.
Deductible:
The amount you agree to pay out of pocket before your insurance kicks in. Florida policies often have separate deductibles for hurricane-related claims, expressed as a percentage of your home’s insured value. Learn more about how hurricane deductibles work in Florida.
Depreciation:
The reduction in the value of an asset over time due to wear and tear or obsolescence. ACV policies subtract depreciation from the payout amount.
Dwelling Coverage:
Covers the structure of your home, including walls, roof, and foundation, against covered perils such as hurricanes, fire, or theft.
Endorsement:
An add-on to your policy that provides extra coverage or modifies your existing coverage. Examples include adding flood insurance or increasing coverage for high-value items.
Exclusion:
Specific perils or damages not covered by your insurance policy, such as flooding or damage caused by poor maintenance.
Flood Insurance:
A separate policy or endorsement covering water damage caused by external flooding. Standard home insurance policies do not cover flood damage, which is critical for Florida homeowners in flood-prone areas.
Hurricane Deductible:
A deductible that applies only to damage caused by named storms. It’s typically a percentage of your home’s insured value, ranging from 1% to 5% or more.
Loss Assessment Coverage:
Protects condo owners against costs assessed by their homeowners’ association (HOA) for shared property damage due to a covered peril.
Loss of Use:
Another term for Additional Living Expenses (ALE), covering temporary housing and other costs while your home is being repaired.
Ordinance or Law Coverage:
Covers the cost of upgrading your home to meet current building codes after a covered loss. In Florida, this is particularly important due to evolving hurricane-resistant construction standards.
Other Structures Coverage:
Covers detached structures on your property, such as garages, sheds, or fences, against covered perils.
Personal Liability Coverage:
Protects you if someone is injured on your property and you are found legally responsible. It also covers legal fees and settlements.
Personal Property Coverage:
Covers your belongings, such as furniture, electronics, and clothing, against perils like fire, theft, or hurricanes. It can be based on ACV or Replacement Cost.
Power Surge:
A sudden and brief spike in electrical voltage that exceeds the standard flow of electricity in your home’s electrical system. Power surges can occur due to lightning strikes, issues with the electrical grid, faulty wiring, or large appliances cycling on and off.
Replacement Cost Value (RCV):
Covers the cost to replace damaged or destroyed property without deducting for depreciation. This ensures you can rebuild or replace items at today’s prices.
Scheduled Personal Property:
Additional coverage for high-value items such as jewelry, artwork, or antiques that may exceed the limits of your standard personal property coverage.
Sinkhole Coverage:
Optional coverage for damage caused by sinkholes, a risk unique to Florida. It often requires an additional premium and comes with specific deductibles.
Windstorm Coverage:
Covers damage caused by high winds, a critical component of Florida home insurance due to the prevalence of hurricanes. This coverage may have a separate windstorm deductible.
Named Perils Policy:
Covers only the specific risks listed in the policy, such as fire, theft, or windstorm damage. Common for more limited or basic policies.
Open Perils Policy:
Covers all risks except those specifically excluded in the policy. Typically provides broader protection than named perils policies.
Loss Payee:
A third party (such as a mortgage lender) listed on your policy who receives payment for a claim involving their financial interest in your property.
Insurable Interest:
The financial stake you have in the property insured. For example, you need to have ownership or a financial responsibility for the property to purchase insurance.
Policy Limit:
The maximum amount your insurance will pay for a covered loss. This applies separately to dwelling, personal property, and liability coverages.
Umbrella Insurance:
Additional liability coverage that provides extra protection beyond the limits of your home and auto insurance policies. It’s especially valuable for high-net-worth individuals.
Replacement Cost Estimator:
A tool used by insurers to determine the cost to rebuild your home from the ground up. This is the basis for setting your dwelling coverage amount.
Water Backup Coverage:
An optional endorsement that covers damage caused by sewer or drain backups, which are not covered under standard policies.
Scheduled Hurricane Season:
Refers to Florida’s official hurricane season (June 1 to November 30), during which additional precautions and specific rules for claims may apply.