The home-insurance glossary
The terms that turn up in a non-renewal letter, a lender's checklist, or a hard-market quote, explained plainly, with sources, and dated. Each entry answers "what is this" in the first sentence; the full page goes into why it matters, how it works, and who it affects, by state where it varies.
verified 2026-05-2014 terms.
- FAIR Plan
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A FAIR Plan (Fair Access to Insurance Requirements) is a state-chartered insurance pool that sells basic property coverage to homeowners who cannot buy a policy in the regular ('admitted') market. Every admitted property insurer in the state is required to share its losses; no taxpayer money backs it.
- Difference in conditions policy (DIC)
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A difference in conditions (DIC) policy is a companion policy bought alongside a bare-bones FAIR Plan policy to add back what the FAIR Plan excludes: personal liability, theft, water damage, food spoilage, and the like. Together the two roughly match a normal homeowners policy. A meaningful share of FAIR Plan buyers pair theirs with a DIC.
- Named-peril vs open-peril coverage
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A named-peril policy covers a loss only if its cause is on the policy's list (fire, lightning, windstorm, and so on); an open-peril (also called 'all-risk') policy covers any cause of loss except the ones it specifically excludes. The burden of proof flips: under named-peril you must show the cause is covered. Most FAIR Plan base policies are named-peril.
- Insurance non-renewal notice
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A non-renewal notice tells you your insurer will not renew your homeowners policy when the current term ends. It is not a mid-term cancellation: your coverage runs to the expiration date. Most states require 30 to 60 days' written notice, and a few (California after a declared wildfire, for example) bar non-renewals in disaster areas for a year.
- Force-placed (lender-placed) insurance
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Force-placed insurance (also called lender-placed or creditor-placed insurance) is a policy your mortgage servicer buys on your home, at your expense, when it has no proof you carry your own. It protects the lender's interest, not yours: it is far more expensive than a normal policy, often covers only the structure, and includes no personal-property or liability coverage.
- Admitted vs surplus-lines insurance
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An admitted carrier is licensed by the state insurance department and pays into the state guaranty fund, which steps in if the carrier becomes insolvent. A surplus-lines or excess-and-surplus (E&S) carrier is not state-licensed there: it writes risks the admitted market refuses, with rates and policy forms that the state does not pre-approve, and is not backed by the guaranty fund.
- Replacement cost vs actual cash value
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A homeowners policy pays a loss on one of two bases. Replacement cost pays what it would cost today to rebuild or replace the damaged property, with no depreciation deducted. Actual cash value (ACV) pays the replacement cost minus depreciation for age and wear. The same fire claim can settle for very different dollars depending on which basis the contract uses.
- Insurance binder
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An insurance binder is a short, temporary contract a carrier issues as proof of coverage while the underwriter prepares the full policy. It runs for a defined window (typically 30 to 90 days), names the same insured, dwelling, and coverages as the pending policy, and gives lenders what they need to close on a home. Once the full policy issues, the binder is replaced.
- CLUE report (Comprehensive Loss Underwriting Exchange)
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A CLUE report (Comprehensive Loss Underwriting Exchange) is a seven-year claims history LexisNexis Risk Solutions keeps on a person and on a property. More than 90% of homeowners insurers feed it, and most pull it before quoting a new policy. A past claim, even one tied to the prior owner, can change the rate.
- Loss of use coverage (Coverage D)
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Loss of use (Coverage D on a homeowners policy) pays the extra cost of living elsewhere when a covered peril makes your home uninhabitable: hotel or rental, restaurant meals over your usual food bill, pet boarding, extra commute. Standard limits run 20 to 30 percent of dwelling coverage, and most policies cap the months.
- Wind hail percentage deductible
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A wind/hail percentage deductible is the share of a wind, hail, or hurricane claim you pay before the policy pays. The percent is taken from your dwelling Coverage A, not from the loss. So 2 percent on a $400,000 home is $8,000 out of pocket on every covered storm claim.
- Lapse in homeowners insurance
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A lapse in homeowners insurance is any period when a mortgaged home is not covered by a policy on file with the lender. It starts with a missed payment past the grace period, a non-renewal that runs out, or a cancellation. The mortgage servicer then sends a 45-day notice and force-places coverage.
- Inflation guard endorsement
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An inflation-guard endorsement is a clause that automatically raises the dwelling limit (Coverage A) on a homeowners policy by a set annual percentage at each renewal, so the limit roughly tracks construction-cost inflation. It is built into most modern HO-3 forms, but the percentage and whether it is opt-in vary by carrier and state.
- Wind mitigation credit
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A wind mitigation credit is a premium discount a homeowners insurer must apply when a licensed inspector verifies that a home has hurricane-resistant features: hip roof shape, hurricane straps at the roof-to-wall connection, secondary water resistance under the deck, impact-rated windows or shutters, and braced gable ends. In Florida the discounts are statutory.
The inspections insurers ask for
Carriers in fire- and hurricane-exposed states require pre-cover paperwork that many homeowners see for the first time when they get a non-renewal notice. Each entry explains what the inspection actually is, who can perform one, what it costs, and which carriers want it.
- Four-point inspection
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A four-point inspection is a short report a licensed inspector writes on a home's four core systems: roof, electrical, plumbing, and HVAC. Florida insurers (and Citizens, the FAIR Plan) require one for homes that are 25 or 30+ years old before they will write or renew a policy. The form tells the carrier whether each system is at end of life.
- Wind-mitigation inspection
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A wind-mitigation inspection (Florida form OIR-B1-1802) documents the construction features that reduce hurricane damage on a coastal home: roof shape, deck attachment, secondary water resistance, opening protection. Florida law requires carriers to give premium discounts based on the verified features; the same inspection format is used informally on parts of the Alabama and South Carolina coast.
- Roof certification
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A roof certification is a short inspection report stating a roof's age, material, condition, and remaining useful life. Insurers use it to decide whether to write a policy, whether to renew, and whether a future claim settles on a replacement-cost or actual-cash-value basis. Common in Florida, the Gulf Coast, California wildfire zones, and increasingly anywhere a roof is over 15 years old.
- Defensible-space inspection
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A defensible-space inspection checks that a California home in or near a high-fire-risk area has cleared the 100 feet of vegetation around it that state law (Public Resources Code §4291) requires and that most carriers now demand. Cal Fire and many local fire agencies inspect for free; some insurers commission their own inspection before binding or renewing a policy.
Why premiums rise and claims get denied
The forces behind the hard market, explained with dated, sourced figures: how insurers now score your home, and what the headline "nearly half of claims, no payout" number actually means.
- Home-insurance risk score
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A home-insurance risk score is a number an insurer assigns your property from data and models, not just your own claims, to predict future losses. Carriers build it from aerial and drone imagery, catastrophe models, and roof age, and it can raise your premium even with no claim filed.
- Home-insurance claim denials
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A claim denial is an insurer's decision not to pay a filed home-insurance claim. A 2026 analysis of the five biggest insurers found nearly half of resolved claims ended in no payout, but that figure includes losses below the deductible and withdrawn claims, so 'no payout' is not the same as 'denied.'
Every definition here is written for a homeowner, not an underwriter: plain words first, the formal term named once. Where a figure appears (a notice period, a coverage cap, a count of policies in force), it carries a named source and the date we last checked it; we don't quote premiums and we don't predict. Spotted something out of date or wrong? Tell us. For the facts on a specific state, start at the state directory; if you've just had a policy non-renewed, the non-renewal walkthrough is the place to begin.