Defining Key Terms Contained in Florida Homeowners Insurance Policies

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

Our experienced Miami insurance coverage law firm has previously addressed different types of homeowners policies.  The language, provisions and exclusions of a policy can have a dramatic impact on the rights and recovery of policyholders.  Although homeowners policies can be difficult to understand without insight from an insurance professional, there is some basic terminology that every policyholder should know.  While policyholders should seek legal advice if they have questions because there is a vast amount of litigation over subtle distinctions in policy terminology, this basic information provides a good starting point.

  • Endorsement: This is a form that is designed to extend or narrow the scope of coverage of a homeowners policy.  This type of provision also is referred to as a rider.  
  • Actual Cash Value (ACV): This term refers to the cost to replace property that is damaged or destroyed at the point in time a peril causes loss with the amount adjusted for depreciation.  Since a significant adjustment for depreciation can impact your ability to rebuild, replace or repair your property, you should make sure you understand whether your policy provides only ACV coverage.
  • Exclusion: While policyholders should read their entire policy and try to understand the terms, the exclusions section of the policy merits hypervigilance.  The provisions in this section of the policy will enumerate the types of perils and losses that are not covered under the policy.
  • Replacement Cost: This is the amount necessary to repair or replace an item that is destroyed or damaged.
  • Depreciation: A downward adjustment in the value of an item based on normal wear and tear and/or age.
  • Coinsurance: A provision in a policy that mandates that the insured carry a minimum specified percentage of the value of the property insured to qualify for full payment of the amount of loss.
  • Policy Limit: The maximum payout under a policy for specific types of damage or an aggregate amount of the entire claim.
  • Deductible: The amount of a loss a policyholder must cover personally before coverage under the policy begins paying for losses.
  • Replacement Value: The value of property in terms of replacement or repair without any deduction for depreciation.  This form of coverage offers more complete compensation than an ACV policy.
  • Accident: An incident that causes a policyholder to endure a loss which is beyond the control of the insured and unanticipated.
  • Peril: Events or forces that can cause loss.  Insurance claims are usually based on damage resulting from a covered peril.
  • Liability Coverage: While property damage coverage is intended to reimburse the policyholder for damage to his or her own property, liability insurance covers damage to personal property or bodily injury incurred by someone other than the property owner.

This list certainly does not include every policy term that a homeowner should know, but it provides a simple straightforward definition of some of the most important terms.  Homeowners policies also include a “Definitions” section which can provide more precise definitions depending on the specific policy.  If the language defining terms in the policy is unclear, you should ask your insurance agent or seek legal advice.

If you have questions about Florida property insurance claims, you are welcome to contact my Miami insurance claims dispute law firm.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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