The Homeowners Insurance Glossary

A – C

Actual cash value (ACV)

A claim settlement that subtracts depreciation: replacement cost minus wear, age, and use. A ten-year-old roof settled at ACV pays you for a ten-year-old roof, not a new one. Compare RCV vs ACV.

Additional living expenses (ALE)

The extra cost of living elsewhere while your home is uninhabitable after a covered loss — rent, meals above normal, pet boarding. Paid under Coverage D, subject to its dollar or time limit. Keep receipts.

Admitted carrier

An insurer licensed by the state, with rates filed and policyholders protected by the state guarantee fund if the carrier fails. The opposite is non-admitted (E&S) — neither is automatically better; they serve different risks.

Appetite

What a carrier currently wants to insure. Appetite shifts with wildfire modeling, reinsurance costs, and rate adequacy — a home declined last year may be welcome this year. Shopping appetite is the core of a broker's job.

Binder

Temporary proof that coverage is in force before the full policy issues — what your escrow officer needs to close. Indications on this site are not binders; only a broker placing coverage with a carrier can bind.

Brush zone

Shorthand for parcels near flammable vegetation. Carriers score brush exposure parcel by parcel — distance to fuel, slope, access — not just by ZIP code. See wildfire insurance in California.

CLUE report

The Comprehensive Loss Underwriting Exchange — the shared claim-history database carriers check when quoting. Claims typically stay visible for 5–7 years, which is why claim discipline matters. See when to file.

Coverage A — Dwelling

Pays to rebuild the house itself. Set from rebuild cost, not market value. The anchor number the rest of the policy scales from. Deep dive: Coverage A.

Coverage B — Other structures

Detached garages, fences, sheds, ADUs — typically 10% of Coverage A by default, adjustable when your detached structures are worth more. See Coverage B.

Coverage C — Personal property

Your belongings, worldwide, usually 50–70% of Coverage A. On an HO-3 it's named-perils; sub-limits apply to jewelry and other categories. See Coverage C.

Coverage D — Loss of use

ALE plus fair rental value, typically 20–30% of Coverage A or a time limit. The coverage California wildfire families lean on hardest. See Coverage D.

Coverage E — Personal liability

Defends and pays when you're legally responsible for injury or property damage — options commonly $100k/$300k/$500k. See Coverage E.

Coverage F — Medical payments

No-fault payment of a guest's small medical bills ($1k–$5k), designed to resolve minor injuries before they become liability claims. See Coverage F.

D – F

Declarations page (dec page)

The policy's front page: named insured, address, coverage limits A–F, deductibles, endorsements, premium. If you read one page of your policy, read this one — it's where mistakes hide.

Deductible

Your share of each claim, paid before the carrier's money starts. California policies commonly offer $1,000–$10,000 flat deductibles, and some carriers use percentage deductibles for wind or wildfire. Strategy: choosing a deductible.

Defensible space

The managed buffer between your home and wildland fuel — cleared, thinned, and maintained in zones working outward from the structure. A core input to wildfire underwriting and mitigation credits.

DIC (difference in conditions)

A companion policy that wraps around the California FAIR Plan, adding what FAIR omits: liability, water damage, theft, loss of use. The two together approximate an HO-3. See FAIR + DIC.

DP-3 (dwelling fire, special form)

The policy form for non-owner-occupied homes — rentals and investment properties. Open-perils dwelling, fair rental value, optional premises liability, no contents by default. See the landlord guide.

Dwelling fire policy

The policy family DP-1/DP-2/DP-3 belong to — property forms for dwellings that don't qualify for (or don't need) a full homeowners package: rentals, vacants, some seasonal homes.

E&S (excess & surplus lines)

The non-admitted market: carriers that price and word policies more freely, insuring homes the standard market declines. Placed through surplus-lines brokers. See the market tiers.

Endorsement

A policy amendment that adds, removes, or modifies coverage — water backup, scheduled jewelry, extended replacement cost. Endorsements are where a good policy gets tailored to your actual house.

Escrow / impound account

The lender-managed account that pays your premium (and property taxes) from your monthly payment. See how escrow and insurance interact.

Exclusion

A peril or situation the policy expressly does not cover. The big two on every homeowners form: earthquake and flood — both insurable separately. See what an HO-3 covers and excludes.

Extended replacement cost

An endorsement adding a cushion — commonly 25–50% — above Coverage A if rebuilding costs more than the limit, which is exactly what happens after regional fires. See extended RC.

FAIR Plan

California's insurer of last resort for fire lines — a syndicated pool, not a state agency. Covers fire (including wildfire) and a short peril list; pairs with a DIC policy. See the FAIR Plan guide.

Fire-resistive construction

Construction classes built from materials that resist ignition — masonry, concrete, protected steel. Most California homes are frame or stucco-over-frame; construction class is an application question, not a judgment.

Force-placed insurance

Coverage your lender buys — at your expense — when your policy lapses. It protects the lender's interest only, usually costs more, and covers less. Avoid by never letting coverage lapse. See lender requirements.

G – N

Hard market

A market cycle where carriers tighten underwriting, raise rates, and shrink appetite — California homeowners has been the textbook case. The counterpart, a soft market, is when carriers compete for growth. See the CA market explained.

Hazard insurance

Lender-speak for the property portion of your homeowners policy. When a loan officer asks for "hazard insurance," they mean your HO-3's dwelling coverage naming them as mortgagee.

HO-3 (special form)

The standard owner-occupied homeowners policy: open perils on the dwelling, named perils on contents. What this site is named for. See what an HO-3 is.

HO-4 (renters)

The tenant's policy: personal property and liability, no dwelling coverage — the landlord insures the building on a DP-3.

HO-5 (comprehensive form)

Open perils on dwelling and contents, typically with replacement-cost contents — broader than HO-3, usually 10–20% more premium. Our sister site BestHO5.com specializes in it. Compare: HO-3 vs HO-5.

HO-6 (condo)

The condo form: walls-in coverage meshing with the HOA's master policy, plus loss assessment coverage. When a townhouse takes HO-3 vs HO-6 depends on what you own. See HO-3 vs HO-6.

Home hardening

Retrofitting a home to resist ember ignition — Class A roof, ember-resistant vents, enclosed eaves, cleared Zone 0. Increasingly rewarded by carriers. See home hardening.

Inspection

The carrier's look at your home after binding — exterior at minimum, sometimes interior. Flags roof age, brush, panels, pools, dogs. See what inspections look for.

Loss of use

The umbrella term for Coverage D: additional living expenses plus fair rental value. See Coverage D.

Loss run

A carrier-issued history of your claims — the commercial cousin of a CLUE report. Brokers request loss runs when remarketing a home with prior claims so the story is told accurately.

Named insured

The person(s) listed on the dec page holding the policy's rights and duties. Spouses are typically both named; a trust or LLC changes the conversation — tell your broker.

Named perils

Coverage that applies only to causes of loss specifically listed (fire, theft, wind, and so on — roughly sixteen on an HO-3's contents). If it's not on the list, it's not covered. Opposite: open perils.

Non-admitted

See E&S: carriers not licensed under the state's rate-filing system, free to price risk individually, not backed by the guarantee fund. Used when admitted carriers decline.

Non-renewal

The carrier's decision not to offer another term when your policy expires — with advance written notice stating the reason. It is not a cancellation and it is fixable. See the playbook.

O – R

Open perils

Coverage for any cause of loss not specifically excluded — the burden is on the carrier to point to an exclusion. How an HO-3 treats your dwelling, and how an HO-5 treats everything. See open vs named perils.

Ordinance or law coverage

Pays the extra cost of rebuilding to current building codes — sprinklers, seismic ties, energy standards your original house predates. Near-essential on older California homes. See older homes.

Peril

A cause of loss: fire, wind, theft, water discharge. Policies grant coverage per peril (named) or by exclusion (open). Wildfire is a fire peril — covered on every HO-3.

Premium

The price of the policy for the term. Driven by rebuild cost, location and brush score, roof and systems age, claims history, deductible, and carrier choice — the eight levers on the cost page.

Protection class

A fire-protection score for your address based on fire department proximity and water supply. Rural and hillside homes with distant hydrants score worse and pay for it — one reason two towns price differently.

Rebuild cost

What it costs to reconstruct your home — labor, materials, debris removal, design fees — as distinct from market value or your purchase price. The number Coverage A must match. See how much dwelling coverage.

Remarketing

Re-shopping your risk across carriers at renewal — the discipline that captures the 20–40% pricing spread between carriers for identical homes. An independent broker does this without you re-entering your life story.

Replacement cost (RCV)

Settlement at today's cost to replace, without depreciation. The standard for dwellings; an endorsement worth having for contents. See RCV vs ACV.

S – Z

Scheduled personal property

Items listed individually on the policy — jewelry, art, instruments — at agreed values, typically with no deductible and broader perils. The fix for sub-limits. See scheduling items.

Special form

Policy jargon for the open-perils structure the HO-3 and DP-3 use on dwellings. "Special" = broadest of the three classic forms (basic, broad, special).

Sub-limit

A cap inside a coverage — e.g., theft of jewelry under Coverage C carries a small per-category limit regardless of your total contents coverage. Sub-limits are why scheduling exists.

Surplus lines

The regulatory channel for placing coverage with non-admitted carriers, used when admitted markets decline a risk. See the market tiers.

Umbrella policy

Personal liability coverage of $1M+ stacking above your homeowners and auto liability, for a few hundred dollars a year. Requires minimum underlying limits. See umbrella insurance.

Underwriting

The carrier's evaluation of your risk — the application, inspection, CLUE pull, and wildfire scoring that decide yes/no and at what price. Every question our wizard asks exists because an underwriter will ask it.

Vacancy

A home without occupants or contents for an extended period. Vacancy changes coverage materially — many policies restrict losses in vacant homes. See vacant home insurance.

Water backup coverage

An endorsement covering water that backs up through sewers, drains, or sump overflow — excluded by default on most policies and inexpensive to add. Not the same thing as flood.

Wildfire score

A model-generated risk score for your specific parcel — fuel, slope, ember exposure, access. Different carriers use different models, which is why one declines and another quotes. See wildfire insurance.

WUI (wildland-urban interface)

The zone where homes meet wildland vegetation — the geography of California's wildfire problem and the focus of mitigation and discount frameworks.