- Actual cash value (ACV)
- A loss-settlement measure that commonly accounts for depreciation. The policy and applicable law determine how it is calculated. An ACV roof provision can leave a larger share of a replacement cost to the homeowner than expected.
- Admitted or authorized insurer
- An insurer authorized to transact the relevant insurance business in Alabama. This status differs from surplus-lines eligibility. Authorization does not mean every property or loss is covered.
- Alabama Insurance Underwriting Association (AIUA)
- A residual property insurance mechanism often called the beach pool. It has specific coastal eligibility rules, available coverages and conditions. It should not be assumed to provide the same package of protection as a homeowners policy.
- Binder
- Evidence of temporary insurance coverage subject to its terms and authority. A quote, application or payment request is not automatically a binder. Obtain confirmation of when coverage takes effect.
- Cancellation
- Termination of a policy before its scheduled expiration. The reason, notice, timing and refund provisions require review of the applicable requirements and contract.
- Coinsurance
- A policy provision that may reduce payment for a covered property loss when the amount insured falls below a specified proportion of the property's value. It is not simply another name for a deductible. Ask whether the provision applies and how the required amount is calculated.
- Declarations page
- A summary identifying items such as the named insured, property, policy period, coverage limits, deductibles and forms. It is a useful starting point but does not contain every condition or exclusion.
- Deductible
- The part of a covered loss assigned to the insured under the policy. Different causes of loss may have different deductibles. The form determines how each is applied.
- Diligent search or diligent effort
- A placement-related effort to seek coverage in the authorized market where required. Alabama has specific requirements and exceptions. An exception to the search requirement does not automatically remove other placement duties or disclosures.
- Dwelling limit
- The stated limit for covered damage to the insured dwelling, subject to the policy and endorsements. It should be evaluated against rebuilding needs rather than assumed to equal market value or the outstanding mortgage.
- Endorsement
- A document that changes a policy. An endorsement can add, remove or restrict coverage, so its title alone is not enough to assess its effect.
- Exclusion
- Wording that removes certain causes of loss, property, activities or circumstances from coverage. Other provisions may interact with the exclusion. Read it in the context of the full contract.
- Flood
- A separately defined cause of loss involving inundation or other specified water conditions. Standard homeowners policies generally exclude flood. Storm surge and wind-driven damage should not be treated as interchangeable insurance terms.
- FORTIFIED
- A building-resilience program of the Insurance Institute for Business & Home Safety. A qualifying designation requires program-specific verification. A newer roof is not automatically a FORTIFIED roof, and a designation does not guarantee eligibility or a discount with every insurer.
- Guaranty association
- A statutory mechanism that may provide specified protection when a covered member insurer becomes insolvent, subject to eligibility and limits. Alabama surplus-lines insurance is not protected by the Alabama Insurance Guaranty Association.
- Loss assessment
- An assessment charged to a condominium or homeowners-association member that may be covered only within the terms of a policy or endorsement. Ordinary dues, maintenance and every master-policy deductible are not automatically covered.
- Loss of use or additional living expense
- Coverage that may pay certain increased living costs after a covered loss makes a home uninhabitable. Limits, duration, covered causes and documentation requirements matter. Rental-property forms may instead address loss of rents.
- Minimum earned premium
- An amount or percentage of premium the insurer retains under the applicable terms even if coverage ends early. It can materially affect a cancellation refund. Ask for a written explanation before binding.
- Named-storm or hurricane deductible
- A special deductible triggered by the conditions defined in the policy. When expressed as a percentage, the relevant base may be the dwelling limit rather than the amount of the claim. Verify both the trigger and calculation.
- Nonrenewal
- A decision not to offer another policy term when the current term ends. It differs from midterm cancellation. A notice should prompt review of the deadline, reason and replacement coverage options.
- Replacement cost
- A loss-settlement approach based on repair or replacement without the same depreciation deduction used in ACV settlement, subject to the contract. Limits, replacement requirements, payment stages and endorsements can still affect the amount paid.
- Roof schedule
- A provision that may limit roof-loss payment by age, material or another schedule. Do not assume it has the same effect as ordinary replacement-cost coverage or ACV coverage. Review the actual table and endorsement.
- Surplus lines or nonadmitted insurance
- Insurance placed with a nonadmitted insurer through the applicable surplus-lines framework. This market can address risks that are difficult to place, but the policy terms and regulatory protections differ from those of admitted insurance.
- Wind and hail
- Causes of loss that may be included, excluded or insured separately. A property policy that covers fire does not necessarily cover wind or hail. Flood and storm surge require a separate coverage analysis.
Put the terms to work
Use the quote-comparison guide to turn these definitions into questions about your proposal. For limitations that deserve closer attention, see coverage provisions and exclusions.