Insurance Policy Glossary

Terms you should know when seeking a flood insurance policy:

Actual Cash Value (ACV) - Cost of replacing damaged or destroyed property at the time of the loss with comparable new property minus the property’s depreciation.

Replacement Cost Value (RCV) – The dollar amount necessary, up to the maximum dollar amount shown on a policy’s declaration page, to replace damaged real or personal property without reducing for depreciation.

Additional Living Expenses – Additional coverage under an insurance policy that pays for the additional costs of living incurred by the insured should he or she be temporarily displaced from their residence. This coverage is usually about 10 to 20 percent of the insurance that covers the dwelling.

Flood Plain- Any land that is susceptible to being overcome by flood waters from any source. Flood Elevation –The elevation to which floodwater is anticipated to rise during a flood.

Risk – Risk is the state in which each alternative leads to one of a set of specific outcomes. Each outcome occurs with a probability that is known to the decision maker.

Exclusions - Exclusions are activities or events that are not covered by a flood insurance policy. Common exclusions from plans include flood damage to property or objects outside of the insured structure.

Limits – Limits are restrictive conditions, such as the amount of coverage and the activities covered, that are placed on an insurance contract and that affect a participant’s coverage. The contract may exclude certain benefits or services or limit the extent or conditions under which services are provided.

Liability – Liabilities are the obligations and responsibilities of a party subject to the evaluation, interpretation, and enforcement in a court of law.

Zone - A geographical area on a Flood Hazard Boundary Map, or a Flood Insurance Rate Map, that established the severity/type of flooding in the area.

Premium - The cost of insurance protection against a specified risk for a specified period of time.

Rider (Endorsement) – A form attached to an insurance policy that modifies the policy’s coverage, terms, or conditions.