A
Actual Cash Value Coverage (ACV)
In the event of a covered loss, claims payouts are settled with a deduction for non-recoverable depreciation and the selected deductible.
Additional Insured
Anyone afforded coverage under a Premises Liability policy who is not the policyholder but has authority to make a claim on the policy or has an insurable interest in the property. Additional Insureds may be listed on claim payments if they are also a Loss Payee and do receive notice if coverage lapses. This may be a business partner, lender, or a property manager.
Additional Interest
Anyone afforded coverage under a Liability policy who is not the policyholder. Additional Interests are notified when coverage lapses but may not be notified when coverage is bound. They receive no financial payout but may garner legal protection under the policy in the event of a lawsuit in which they are named. This may be a general contractor, a prior owner in a “Subject To” transaction, or a landlord on a tenant’s renter’s policy.
Agreed Value Policy
An insurance contract for which the value of the property coverage is agreed upon when the policy is purchased. This is the amount that is paid out in the event of a total loss, regardless of the actual amount of the loss.
Aggregate
The maximum amount an insurer will pay out over a set period of time, typically the span of the policy.
Apartment
In the NREIG program, an apartment building is a residential structure with five (5) or more units in one building. Typically, these have a common entrance and hallway, and sit on a single lot or parcel of land under the same ownership. The largest apartment NREIG can insure is 20 units.
B
Typically, the cheapest coverage form. Basic is a “Named Peril” policy that requires perils to be listed by name on the declarations page for the loss to be covered. Insureds carry the burden of proving the loss was caused by a covered peril.
A property insurance policy for a building or insured area that is currently being constructed. This policy is not insurance for the work being done, that would require the general contractor to have a General Contractors Liability policy.
Burden of Proof
If a party carries the burden of proof, they must provide evidence to establish that they are correct. The other party is presumed to be correct and carries no such burden.
C
Claim
A formal submission made to an insurance company requesting coverage or compensation for a covered loss or policy event.
A property insurance provision stating the amount of coverage that must be maintained at the property for the insured to collect the full amount of a loss. The amount of coverage required is written as a percentage of the total value of the property at the time of loss. Common coinsurance values are 80%, 90%, or 100%. If the property is underinsured according to the policy’s coinsurance provision, a claim payout may be reduced.
A building or complex of buildings containing individually owned apartments or houses along with the land upon which they sit. In the NREIG program, coverage for a Condo does not include coverage for the exterior of the home (considered “walls-in” coverage), which would be covered by the Home Owners Association.
D
Depreciation
The estimated reduction in value based on how much useful life is determined to be left in the damaged property. Depreciation is calculated by an adjuster at the time of loss, factoring in criteria such as age, condition, and useful life expectancy of the damaged property.
Deductible
A specified amount of money that the insured person must pay before their insurance policy starts paying for covered expenses.
*This amount is taken from claims settlements before the payout is sent to the client.
E
Excess Liability
A liability policy that provides an increased limit over just one specific line of liability coverage. In the case of a landlord, that is likely your Premises Liability. Excess Liability has similarities to but is not the same as an Umbrella policy.
F
Flood
A) A temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties (at least one of which is the insured property) occurring from:
- Overflow of inland or tidal waters
- Unusual and rapid accumulation or runoff of surface waters from any source
- Mudflow
- Rising water or an intrusion due to heavy rains
B) Collapse or subsidence of land along the shore of a lake or similar body of water resulting from erosion or undermining caused by waves or currents of water exceeding the cyclical levels that result in a flood.
I
Insurance to Value (ITV)
In the NREIG program, ITV is the amount of property coverage divided by the square footage. Usually expressed as a coverage amount per square foot of the property, with carriers having a minimum requirement.
Invested Capital
Calculated as the actual purchase price, minus land value, plus verifiable cost of improvements completed at the time of loss.
L
Loss Payee
The loss payee is a third-party listed on that policy that isn’t notified of coverage being in effect but would be a beneficiary of claim payments.
LOR helps a landlord recover lost rental income in case of a covered loss which renders the home uninhabitable and requires tenants to be temporarily displaced while repairs are being made. LOR coverage is limited to the necessary time needed to restore the home to a habitable condition, not to exceed 12 months (depending on the amount of coverage purchased).
Loss Ratio
An insurers ratio of covered losses incurred as a percentage of premiums earned. This represents an insurance company’s amount of premium taken in that was then paid back out in claims.
M
Manufactured Home
Homes that were factory built (or prefabricated), frame construction, delivered via truck, and prepared on site. There is no permanent foundation or basement. Generally, manufactured homes are like mobile homes, but built after June 15, 1976. They stay in the same place but can be moved or transported to a new location. In the NREIG program, a manufactured home is insured the same way as a mobile home.
Medical Payments
A general liability coverage that reimburses others, without regard to the insured’s liability or negligence, for minor medical expenses incurred as a result of bodily injury on the insured premises. Typically, it is a smaller sum payout to help cover medical costs and avoid further litigation.
Mobile Home
Homes that at one point had wheels but do not currently have wheels and are on permanent foundation. Generally, mobile homes are considered the same as manufactured homes but built before June 15, 1976. They stay in the same place but can be moved or transported to a new location.
Modular Home
Modular homes are factory built, usually delivered in two or more pieces, and installed on-site, usually on a foundation (could have a crawlspace or basement). They usually look more like a traditionally built home than mobile or manufactured homes. In the NREIG program, modular homes are insured as a single-family home.
Mortgagee
The party that lends money to a borrower. Generally, the mortgagee is also listed as a loss payee because of their interest in the property. Those listed as mortgagee are listed on a claim payout check and will be notified if the borrower’s coverage is in jeopardy of lapsing.
Multi-Family Dwelling
In the NREIG Program, a multi-family dwelling is a two to four (2-4) unit residential dwelling that is on a single lot or parcel of land under the same ownership.
N
Any Storm, Cyclone, Typhoon, Atmospheric Disturbance, Depression, Hurricane, Tropical Storm or other Weather Phenomena designated by the US National Hurricane Center and where a name has been applied.
Negligence
The failure to exercise reasonable consideration or action resulting in loss or damage to oneself or others.
This designation is given to properties for which there is an existing loan that the borrower has not made payments on for at least 90 days. Sometimes investors can purchase non-performing notes from the existing lender for 10-50% of their actual value with the intention of foreclosing on the property to flip or reworking the terms to turn it into a performing note.
O
Occupancy Status
This designation classifies dwellings according to whether they are occupied, vacant, under renovation, or new construction. The NREIG Program uses the client’s intent for the property within 60 days to determine the occupancy status.
Owner-Occupied
A property in which the person who owns it is also occupying it.
*NREIG will not insure owner-occupied properties.
P
Per Location Deductible
If the insured has a per location deductible, the deductible will be applied to each location affected in the event of a loss. This is the only deductible type offered in the NREIG program.
Per Occurrence Deductible
If the insured has a per occurrence deductible, the deductible will only apply once if more than one home within a given account is damaged in the same covered loss event.
Peril
An unexpected event that causes damage/loss to a property or injury to a third party; cause of loss.
R
Replacement Cost (RC) Coverage
In the event of a covered loss, claims payouts are settled with a deduction for reimbursable depreciation and the selected deductible.
Rowhome
A multi-story home which is attached in a row to similar homes with shared walls. Typically, the insured is responsible for the interior and exterior of the structure (versus a condo where the insured is responsible for only the interior of the structure). In this case, the HOA does not cover the exterior of the structure. A rowhome is similar to a townhome but tends to be uniformly laid out stretching full blocks and streets, while townhomes can differ in height, stories, and width, and are usually in smaller groupings. In the NREIG Program, rowhomes are insured as single-family homes.
S
Sewer Backup
Water that backs up or overflows from a sewer, drain, or sump into the home causing damage to the property. This is often excluded from property policies but can be obtained at NREIG with the Tenant Protector Plan.
Single-Family Dwelling
A single free-standing residential dwelling that typically sits on a single lot or parcel of land and includes a yard.
The most comprehensive coverage form. Special Form is considered “All-Risk” coverage, meaning unless there are specific exclusions listed within insurance policy, coverage is afforded in the event of a loss. The insurer carries the burden of proof.
Subrogation
A situation where an insurer, on behalf of the insured, has the legal right to bring a liability suit against the third party that caused losses to the insured. The insurer maintains the right to seek reimbursement for losses incurred at the fault of a third party.
T
The unlawful removal of property.
Townhome
A multi-story home in a modern housing development which is attached to one or more similar homes by shared walls. Typically, the insured is responsible for the interior and exterior of the structure (versus a condo where the insured is responsible for only the interior of the structure). In this case, the HOA does not cover the exterior of the structure. A townhome is similar to a rowhome, but while rowhomes tend to be uniformly laid out stretching full blocks and streets, townhomes can differ in height, stories, and width, and usually in smaller groupings. In the NREIG Program, townhomes are insured as single-family homes.
U
Underinsured
The amount of property coverage in place is not sufficient to rebuild the property in the event of a total loss, leaving the insured exposed to potential out of pocket costs. This can be especially detrimental if the policy has a coinsurance clause.
Additional liability insurance coverage that goes above and beyond the limits of your basic liability insurance, providing an additional layer of coverage to the policyholder. An Umbrella differs from an Excess policy in that it can increase limits over multiple lines of liability coverage such as business and commercial auto.
V
Valued Policy Law
State legislation which specifies that the insured shall receive the face amount of the policy in the event of a total loss to a dwelling rather than the actual cash value regardless of the principle of indemnity.
Vandalism and Malicious Mischief
The willful and malicious damage to or destruction of insured property., without theft. In the case of a burglary, any damage to the property caused by the break-in could be covered by Vandalism and Malicious Mischief, but the insured would need to have theft coverage to cover anything stolen after the break-in.
W
Water Damage is sudden and accidental damage to property done by discharge or overflow of water from an internal source inside the home such as a burst pipe. It can also cover damage from rain entering the home through an opening caused by a storm (such as a broken window or hole in the roof during a windstorm). This does not cover Water Damage resulting from an insured’s negligence or failure to properly maintain the home.