Reference
Property insurance terms, in plain language.
Find a definition, then use the question and related guide to review an actual proposal. A term’s precise meaning comes from the applicable policy and rules.
By Investor Friendly Insurance Agent · Editorial source review: October 25, 2026
Find a term
These definitions introduce the topic. The review questions are prompts to take to the licensed partner; they do not establish eligibility or interpret a particular policy.
Actual Cash Value (ACV)
A depreciated valuation basis; the contract and applicable rules determine the method.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Additional Insured
A party given insured status under the applicable provision or endorsement. Check the activity, duration and restrictions.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Additional living expenses (ALE)
Reimbursement for specified extra living costs when a covered event makes a residence uninhabitable. This resident benefit is different from an owner’s lost rent.
Ask: Which provision addresses the owner’s income rather than a resident’s temporary housing?
Source context: Texas Department of Insurance
Aggregate limit
A cap that may apply across multiple covered losses during a stated period or project. Read the contract to identify what shares the cap.
Ask: Could another location’s loss reduce the amount available for this property?
Source context: NAIC
Binder
Temporary insurance contract pending the issued policy. A quote or inquiry alone is not a binder.
Ask: Who issued it, which property and dates does it describe, and what conditions remain?
Source context: North Dakota Insurance Department
Builders Risk
Construction-property insurance with defined property, interests, causes and termination conditions.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Business income / fair rental value
Income-related protection described by the actual form. The covered event, calculation, expenses and restoration terms matter; the two labels need not mean identical protection.
Ask: What event triggers payment and which continuing expenses, limits and periods apply?
Source context: NAIC
Cancellation
Ending an insurance policy before its scheduled expiration. The reason, process and any applicable notice requirements need a separate review.
Ask: What date ends this coverage, and is replacement protection confirmed before that date?
Source context: North Dakota Insurance Department
Certificate of insurance (COI)
A summary of selected insurance details at a point in time. It does not change the underlying policy or itself create additional-insured protection.
Ask: Do the entity, coverage dates and actual endorsements meet the documented project requirements?
Source context: Travelers
Coinsurance
A clause requiring the policyholder to carry insurance equal to a percentage of property value; a shortfall can reduce payment under the applicable formula.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Conditions
Policy provisions describing responsibilities and requirements for the insured and insurer.
Ask: Which reporting, protection, inspection or replacement duties apply to this property and loss?
Source context: North Dakota Insurance Department
Declarations
Policy information identifying such items as insured parties, property, dates, limits, premium and listed endorsements. Read it with the forms and endorsements.
Ask: Does the building, ownership entity and occupancy match the actual arrangement?
Source context: North Dakota Insurance Department
Deductible
The amount the policyholder must pay out-of-pocket applied to a covered loss under the policy; any premium difference must be confirmed.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Dwelling Coverage
The coverage part addressing defined building property, subject to its causes, limits and exclusions.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Endorsement
A modification or addition to an insurance policy that expands or restricts coverage; also called a rider.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Exclusion
Specific conditions, perils, or types of damage not covered by an insurance policy.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Named insured
The person or entity identified as an insured in the contract. This is distinct from another party’s additional-insured status.
Ask: Does the named entity match the ownership and activities presented for insurance?
Source context: NAIC
Named-peril coverage
Coverage for the causes of loss specified in the policy, subject to its conditions and exclusions.
Ask: Are the relevant building and contents causes actually listed, and what endorsements change them?
Source context: NAIC
NFIP
National Flood Insurance Program, administered by FEMA. Verify the applicable form, building class and selected coverages.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Nonrenewal
An insurer’s decision not to continue the policy at the end of its term. This differs from cancellation during the term.
Ask: What expiration date and replacement arrangements need attention, and which current state resources apply?
Source context: North Dakota Insurance Department
Open-peril coverage
A covered-cause approach often called special or all-risk coverage, still subject to exclusions, conditions and limits. The label does not mean every loss is insured.
Ask: Which causes are excluded, and are contents treated differently from the building?
Source context: NAIC
Ordinance or law coverage
Protection addressing specified code-related loss or rebuilding costs when included. The actual covered costs, triggers and limits require the form or endorsement.
Ask: Does it address demolition, undamaged portions and increased construction costs, on what terms?
Source context: Progressive
Percentage deductible
A deductible calculated from a contractual dollar basis multiplied by a percentage. The basis may differ from the amount of the loss.
Ask: Which scheduled amount is the basis, and how many dollars would the owner fund?
Source context: Texas Department of Insurance
Peril
A cause of loss. Whether it is covered depends on the policy and exclusions.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Policy Limit
A contractual cap. Check its per-item, location, occurrence or aggregate basis and any smaller sublimits.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Replacement Cost
A valuation basis without depreciation deduction, subject to limits and repair/replacement conditions.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Sublimit
A smaller cap within a policy’s broader limit for specified property, expenses or causes of loss.
Ask: Does a smaller cap control the item or expense being compared?
Source context: NAIC
Subrogation
A right to seek recovery from a responsible third party after a covered payment, subject to applicable terms and law.
Ask: Which definition and conditions appear in the actual form proposed for the disclosed property and use?
Source context: NAIC
Surplus lines
Specialized insurance placed through the applicable surplus-lines process with a nonadmitted insurer. Eligibility, protections and required disclosures depend on the jurisdiction.
Ask: Which insurer category and state rules apply to this proposal, and where are the disclosures?
Source context: NAIC
Waiting period
A stated interval before specified protection or payment can apply. Distinguish a policy’s effective-date wait from an income provision’s time deductible.
Ask: What event starts the clock, what exceptions apply, and what remains uninsured during the interval?
Source context: NAIC
Water backup and flood
Different water-loss questions that need the actual policy definitions. An endorsement for backup does not establish coverage for every flood, plumbing failure or water event.
Ask: How are the observed water pathway, cause, exclusions and any separate proposal addressed?
Source context: FEMA / NFIP
Sources & scope
- NAIC: Business interruption and businessowner policies
Income coverage concepts. The actual trigger, calculation and restoration terms govern a rental or business form.
- Progressive: Ordinance or law coverage
Carrier residential explanation; actual commercial forms, code requirements and limits require separate review.
- NAIC: Glossary of insurance terms
General terminology. Definitions and responsibilities in a particular contract can differ.
- North Dakota Insurance Department: Homeowners insurance glossary
Consumer terminology for documents, policy periods and duties. State-specific deadlines and guaranty rules are not generalized here.
- Texas Department of Insurance: Home insurance glossary
Residential terminology. No Texas notice period, benefit percentage or insurer availability is presented as a national rule.
- Travelers: What is a certificate of insurance?
Certificate and underlying-policy distinction. Not a promise that a contractor or owner has the required terms.
- FEMA / NFIP: Buying a flood insurance policy and coverage questions
NFIP building, contents and excluded-expense context. Use the applicable form; other water and private-policy terms require separate review.
Sources checked October 25, 2026. State consumer terminology and carrier examples do not establish national requirements or the terms offered for a rental or commercial property.