Decoding the Fine Print

When your buyers start shopping for home insurance, they’re bombarded with words like peril, deductible, and comprehensive. It’s enough to make their heads spin, but understanding these words can help them make smarter decisions and avoid surprises later. 

Here’s a quick cheat sheet to make those terms easier to understand.

"Peril"

A peril is a hazard that could harm your home, such as fire, theft, wind, or water damage. 

Think, “What could go wrong?” That’s a peril.

Money Matters

"Deductible"

A deductible is the amount a homeowner pays out of pocket when they make a claim.

Example: You’ve got a $1,000 deductible and $5,000 in damage from a covered peril. You pay $1,000, your insurance pays $4,000.

"Replacement Cost"

This is the cost of replacing the damaged item with a new one.

Example: Your kitchen catches on fire, and the rebuild cost is $50,000. You get $50,000 (minus your deductible) to rebuild it.

"Actual Cash Value" (ACV)

This means your insurance company pays you what your item is worth today, not what it would cost to buy brand new.

Example: Same kitchen fire. The rebuild cost is $50,000, but your insurer factors in depreciation (age and wear and tear) and says it’s worth $30,000 today. You’d get $30,000 (minus your deductible) and would need to cover the remaining $20,000 yourself.

"Guaranteed Replacement Cost"

This is the VIP of coverages. It means your insurer will repay whatever it costs to rebuild your home after an incident, even if it costs more than your policy limit.

Peace of mind. Guaranteed. 

"Sewer Back Up" (SBU)

This covers damage when water sewage backs up through your drains, toilets, or sump pump. SBU isn't included in basic policies. It's an optional add-on. 

"Overland Water" (OLW)

This covers water that flows over the ground and sneaks into your home through doors or windows. Think of heavy rain, melting snow, or nearby river flooding. 

Again, it’s an optional add-on, and Saltwater is NOT covered. FYI: You need SBU coverage first to get OLW coverage.

"Concurrent Causation Clause"

The name sounds intimidating, but here’s what it means: If two things cause damage at the same time you will be limited to the lower of the two coverages, or if you opted to have one coverage, but declined the other, your claim may be declined. 

Example: Water comes into your home through your drain (SBU) and your window (OLW). You’ve got $100K in SBU and $50K in OLW. If it is determined that both SBU and OLW happened at the same time you would be limited to the $50,000 in coverage.

Bottom Line

Insurance doesn't have to sound like a foreign language. If you or your clients ever feel confused about their policy, coverage or quote, send them our way. We'll translate the fine print into plain English. No jargon. No confusion. Just clear, honest answers. Because when it comes to protecting what matters more, clarity is everything.

Need help understanding coverage? Let’s talk. Our local brokers will decode the fine print and help you find the right policies. 

Give us a call at 1-888-295-7474 or email us at hello@steersinsurance.com