Deciphering home insurance quotes can feel like trying to learn a new language! From actual cash value, deductibles, and deprecation to exclusions and endorsements, knowing the meanings of key home insurance terms will put you a step ahead.

Here are three of the most important home insurance terms to know:

Actual cash value (ACV): The value of your home and property minus depreciation. This is the lowest level of home insurance coverage.

Named perils: The perils, or causes of damage, listed as covered under your policy. Common named perils include fire, lightning, volcanic eruptions, explosions, vandalism, theft, windstorms and hail, damage caused by aircraft or vehicles, and certain types of water overflow inside the home.

Replacement cost: The amount it costs to replace your house and belonging, without subtracting depreciation.

Ready to learn the other essential insurance terms all homeowners need to know? Let’s take a look.

A glossary of key home insurance terms

Actual cash value (ACV)

If you want to save money by opting for the lowest level of coverage, you’ll buy an actual cash value (ACV) home insurance policy. This covers the current value of your house and property—i.e., the original purchase price minus depreciation.

Additional coverages

Additional home insurance coverages include extra contents coverage, scheduled personal property coverage for high-value items, flood insurance, and earthquake insurance. These coverages can pad out your home’s protection on top of what’s offered by your basic insurance policy.

Additional living expenses

If you’ve filed a home insurance claim due to significant damage to your home (think a fire or extensive water damage), you may need to move out temporarily. Additional living expenses (ALE) coverage, also known as loss of use coverage, can pay for hotel rooms, rental expenses, and even take-out fees if you’re unable to use all or part of your house for an extended period.

Attractive nuisance

This legal term applies to certain things you may have on your property, such as swimming pools or trampolines, that are likely to both attract people, especially children, and cause injury. If you have any attractive nuisances on your property, your insurance premium could be raised to reflect the higher liability risk.

Catastrophe

Catastrophe insurance refers to additional riders that protect your home from severe events not usually covered by standard homeowners insurance. Flood, earthquakes, mudslides, and terrorism are among the catastrophes that require additional insurance.

Claim

Homeowners insurance is powerful—but it won’t pay out automatically when your home is damaged! To get help paying for repairs and other expenses, you’ll need to file a claim with your insurance company.

Condominium owners insurance

Condominium owners' insurance, also known as an HO-6 home insurance policy, covers what your condo’s master policy doesn’t. Typically, that means personal property, liability, and additional living expenses (ALE) coverage, but it may also include coverage for your unit’s interior.

Depreciation

Your home and its contents, from your clothes and furniture to your television and appliances, lose their value over time. This value, known as depreciation, is subtracted from the original value of the property to determine the actual cash value.

Exclusion

No home insurance policy—even the most comprehensive—will cover every single type of damage to your house and its contents. Typical exclusions include floods, earthquakes, termites and other infestations, mold, neglect, power surges, nuclear hazards, war, and government action. It’s important to read your policy carefully to see what’s excluded.

Endorsement

Endorsement is just a fancy word for optional add-ons for a home insurance policy. Common endorsements include scheduled personal property coverage for high-value belonging, identity theft coverage, home business coverage, and sinkhole coverage.

Floater

Floater insurance is additional coverage that can cover individual easily-moved items in your home. Sporting equipment, collectibles, and firearms are among the possession you might cover with a floater.

Liability insurance

Personality liability insurance, also known as Coverage E on a homeowners policy, can cover legal and medical expenses if you’re found liable for an injury on your property. It won’t cover intentional injuries, such as if you and your neighbor Jim get in a fight while you’re watching the big game. But if Jim’s husband slips on the stairs on the way out, your legal expenses could be covered if he decides to sue you.

Market value

Market value refers to the amount buyers are willing to pay for your home. It’s often used interchangeably with replacement cost, but the two aren’t synonymous—and insuring your home for its market value could lead to being either over- or underinsured.

Non-covered peril

Your home insurance policy will list certain events, or perils, that are covered—think fire, vandalism, and hail. However, there are some non-covered perils for any home insurance policy, and they’ll be listed as well.

Ordinance or law exclusion

If the loss or damage to your home was caused by an ordinance or law, you may have trouble getting coverage for your expenses. If you need to rebuild all or part of your home to comply with building codes, your insurance policy may not help.

Package policy

Homeowners insurance is what’s called a package policy, meaning that it includes both coverage for property damage and liability coverage for legal responsibility. There are four essential “packages” in any home insurance policy: structures coverage (main dwelling and others), personal property coverage, additional living expenses (ALE), and personal liability.

Peril

A peril is an event that could cause damage to your home. Common covered perils include fire, smoke, volcanoes, riots, and hail. Common non-covered perils include floods and earthquakes.

Personal property

Your personal property is the contents of your home—i.e., your stuff. Clothing, furniture, and electronics are all part of your personal property. But most homeowners insurance policies have certain limits on the value of items that can be included in this coverage, so you may need additional coverage for high-value possessions like jewelry, collectibles, or art.

Premium

Your homeowners insurance premium is the amount of money you pay each year to maintain the policy. The average annual premium for home insurance in the US is $1,312, but your actual premium could be much higher (or much lower!). In

Oklahoma

, for instance, the average homeowners insurance premium is $3,519; in

Hawaii

, it’s just $359 per year.

Real property

Real property is another term for real estate. It refers to the land your house is on along with the house itself and any other structures (think fences, sheds, and outhouses) on it—in contrast to personal property, which refers to the belongings inside those structures. In general, Coverage A (main dwelling) and Coverage B (other structures) are the parts of your homeowners policy that deal with real estate, while Coverage C applies to personal property.

Replacement value

In contrast to ACV coverage, replacement cost value (RCV) coverage will cover the full value of your home and belongings without subtracting for depreciation. However, it won’t necessarily account for market fluctuations—for that, you’ll need to upgrade to extended/guaranteed replacement cost coverage.

How to find simple home insurance quotes

At Jerry, we’re not about complicated terminology or confusing quotes. Our goal is to keep the process of shopping for home insurance as simple and straightforward as possible—and with the app, it takes just 45 seconds! You can review quotes in the app and work with a team of agents by text or phone to sign up for the policy that fits your budget.