Understanding Your Home Insurance Policy: Common Terms and Definitions

Home insurance policies can be complex and confusing, filled with technical terms and legal jargon. It’s important to understand the terms and definitions in your policy, so you know what you’re covered for and what you’re not. Here are some common terms and definitions to help you better understand your home insurance policy:

Dwelling coverage: 

This refers to the portion of your policy that covers the structure of your home and any attached structures like a garage or porch.

Personal property coverage: 

This protects your personal belongings, such as furniture, electronics, and clothing.

Liability coverage: 

This provides protection if someone is injured on your property or if you or a family member causes damage to someone else’s property.


This is the portion you pay out of pocket before your policy kicks in.

Actual cash value: 

This is the value of your property, taking into account depreciation.

Replacement cost: 

This is the cost to replace your property at today’s market value.


This document adds additional coverage to your policy beyond what is included in the standard coverage.


This is a condition or circumstance not covered by your policy.


This refers to specific risks covered by your policy, such as fire, theft, or water damage.


This is the amount you pay for your insurance policy, usually monthly or yearly.

Understanding these common terms and definitions can help you make informed decisions about your home insurance policy. Make sure to read your policy thoroughly and ask your insurance provider any questions you may have.