For purposes of this discussion, the following will be based upon the most common of HomeOwner's policies . . . the Standard Bureau Form "H/O III" or the "special form" equivalent there of. As a preface to this discussion, you will need to understand a few terms (and abbreviations) that will be used herein.

All Physical Loss (APL):
Property covered on an APL basis means that property is covered against damage from Any-and-All perils EXCEPT those perils that are SPECIFICALLY EXCLUDED by the policy (act of war, flood, public domain, wear and tear, drain backup, earth movement, nuclear hazard, etc.).

Named Peril (NP):
Property covered on an NP basis means that property is covered against damage ONLY if the damage is the result of a specifically named peril (wind, rain, fire, vandalism, falling objects, etc.).

Actual Cash Value (ACV):
The maximum potential payment the Insurance Company will make for damage to covered property is based upon the ACV (or depreciated value) of the property at the time of loss. Example:  Two years ago you paid $500.00 for an item. That item had a reasonable life expectancy of ten years. You have already received two years (or 20%) use of that item when it was damaged. That item (or a comparable equivalent if that item is now out of production) currently sells for $500.00 new. Based upon ACV Coverage, the most you would collect is $400.00 ($500.00 less 20% depreciation).

Replacement Cost Value (RCV):
The maximum potential payment the Insurance Company will make for damage to covered property is based upon the current cost to replace the property with NEW comparable property (no depreciation). Example:  Two years ago you paid $500.00 for an item. That item currently sells for $500.00. Based upon RCV coverage, the most you would collect is $500.00 (no depreciation).

Declarations Page (Dec Sheet):
This is the single page form that is attached to the actual policy on which appears policyholder information such as insured name and address, mortgage company name, address and loan number, policy number, inception and expiration dates, coverages, premium charges, endorsement forms, etc.

Endorsement:
A separate written form attached to the basic policy that changes some of the terms, conditions, limitations or exclusions that appear in the basic policy contract.

 

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