Home Insurance Glossary

Abandonment Clause.

A clause in fire insurance policies and other property forms that prohibits the insured from abandoning partially damaged property to the insurer in order to claim a total loss. (PR)

Account Premium Modification Plan.

A rating plan for Fire, Property Damage and Time Element coverages. The maximum credit or surcharge is 25%, and it is available to risks which develop a three-year premium of at least $5,000. (PR)

Accounts Receivable Insurance.

Insurance against the loss that occurs when an insured is unable to collect outstanding accounts because of damage to or destruction of the accounts receivable records by a peril covered in the policy. (PR)

Additional Living Expense Insurance.

A contract to reimburse the insured for increased living costs when loss of his property forces him to maintain temporary residence elsewhere. Examples of these types of expenses are the cost for a hotel or motel, the extra cost for restaurant meals, and the cost of using a laundromat. The term Extra Expense Insurance is defined with regard to additional expenses incurred by businesses. See also Loss of Use. (PR)

After Charge.

A charge sometimes included in fire rates for commercial buildings. It is usually added for conditions which can be corrected by the insured, such as failure to have the proper types of fire extinguishers. (PR)

Agent, Recording.

See Recording Agent. (PR)

Agreed Amount Clause.

Under this clause, the insured and the insurer agree that the amount of insurance carried will automatically satisfy the coinsurance clause. The effect is to eliminate the necessity of determining whether or not the amount carried is equal to the stated percentage of the actual cash value indicated in the coinsurance clause. (PR)

Allied Lines.

Various insurance coverages for additional types of losses, and against loss by additional perils, which are closely associated with and usually sold with fire insurance. Examples include coverage against loss by perils other than fire, coverage for sprinkler leakage damage, and business interruption coverage. The fire insurance field consists of coverages for "fire and allied lines." (PR)

Amount Subject.

The maximum amount which underwriters estimate can possibly be lost under the most unfavorable circumstances in any given loss, such as a fire or tornado. Contrast with Probable Maximum Loss. (PR)

Analytic System.

See Dean Schedule. (PR)

Appurtenant Structures.

Buildings on the same premises as the main building insured under a Property Insurance policy. Most Dwelling Property Insurance policies cover appurtenant structures under most circumstances. (PR)

Arbitration Clause.

The provision in a Property Insurance contract which states that if the insurer and insured cannot agree on an appropriate claim settlement, each will appoint an appraiser, and these will select a neutral umpire. A decision by any two of the three prescribes a settlement and binds both parties to it. (PR)

Automatic Increase In Insurance Endorsement.

See Inflation Guard Endorsement. (PR)

Automatic Reinstatement Clause.

A stipulation in a Property Insurance policy which states that after a partial loss covered by the policy has been paid, the original limit of the policy will be automatically reinstated. Same as Loss Clause. (PR)

Average Clause.

A clause providing that similar items in one location or several locations which are insured by a policy shall be covered in the proportion that the value of each bears to the value of all. Previously known as the "Pro Rata Distribution Clause" and the "Average Distribution Clause." See also Pro Rata Distribution Clause. (PR)

Average Rate.

A rate for a policy established by multiplying the rate for each location by the value at that location and dividing the sum of the results by the total value. (PR)

HPR.

See Highly Protected Risk. (PR)

Hail Insurance.

Insurance against loss of crops caused by hail. (PR)

Highly Protected Risk (HPR).

Refers to Property risks which meet the standards required for lower rates. Risks of this type are usually protected by sprinklers and have better-than-average construction and occupancy. The term is most often used in connection with the factory mutuals, Factory Insurance Association, and the improved risk mutuals. (PR)

Homeowners Policy.

A Property and Liability Insurance contract that provides insurance against any of the Property and Liability perils to which a homeowner or renter is exposed. (PR,LA)

Honesty Clause.

See Full Reporting Clause. (PR)

Hostile Fire.

See Fire. (PR)

Household Personal Property.

The term given to household goods, furniture and personal belongings of residents of a farm dwelling. The Farm Property Coverage Form uses the term "household" to distinguish it from the separate coverage for "farm" property. Contrast with Farm Personal Property. (PR)