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Confused in the Home
Insurance jargon? Our glossary will help you in understanding
the basic insurance related terms. Browse through the glossary
or search for a term through the menu to resolve any doubts.
Glossary of Home Insurance terms
A
Acceleration clause
A provision in a mortgage that gives
the lender the right to demand payment of the entire principal
balance if a monthly payment is missed.
Acceptance
An offeree's consent to enter into a contract and be bound
by the terms of the offer.
Actual Cash Value (ACV)
Unless otherwise defined in the policy, actual cash value
in India means fair market value. The fair market value
of an item is the dollar amount that a knowledgeable buyer
is willing to pay and a knowledgeable seller is willing
to accept.
Actuary
An actuary is an expert in statistical insurance information.
Actuaries are responsible for reviewing and evaluating the
potential for future claims costs and using this information
to determine rates and rating methods.
Additional principal payment
A payment by a borrower of more than the scheduled principal
amount due in order to reduce the remaining balance on the
loan.
Adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust its interest
rate periodically on the basis of changes in a specified
index.
Adjusted basis
The original cost of a property plus the value of any capital
expenditures for improvements to the property minus any
depreciation taken.
Adjustment date
The date on which the interest rate changes for an adjustable-rate
mortgage (ARM).
Adjustment period
The period that elapses between the adjustment dates for
an adjustable-rate mortgage (ARM).
Admitted Company
An admitted company is a company that has been authorized
by a particular state/country to sell insurance in that
state/country.
Administrator
A person appointed by a probate court to administer the
estate of a person who died intestate.
Agent
A licensed person or organization authorized to sell and
service insurance policies for a particular insurance company.
Allocated Loss Adjustment Expenses (ALAE)
ALAE are loss adjustment expenses that can be attributed
to a specific claim.
Amenity
A feature of real property that enhances its attractiveness
and increases the occupant's or user's satisfaction although
the feature is not essential to the property's use. Natural
amenities include a pleasant or desirable location near
water, scenic views of the surrounding area, etc. Human-made
amenities include swimming pools, tennis courts, community
buildings, and other recreational facilities.
Amortization
The gradual repayment of a mortgage loan by installments.
Amortization term
The amount of time required to amortize the mortgage loan.
The amortization term is expressed as a number of months.
For example, for a 30-year fixed-rate mortgage, the amortization
term is 360 months.
Amortize
To repay a mortgage with regular payments that cover both
principal and interest.
Annual percentage rate (APR)
The cost of a mortgage stated as a yearly rate; includes
such items as interest, mortgage insurance, and loan origination
fee (points).
Annuity
An amount paid yearly or at other regular intervals, often
on a guaranteed dollar basis.
Application
A form used to apply for a mortgage loan and to record pertinent
information concerning a prospective mortgagor and the proposed
security.
Assessed value
The valuation placed on property by a public tax assessor
for purposes of taxation.
Assessment
The process of placing a value on property for the strict
purpose of taxation. May also refer to a levy against property
for a special purpose, such as a sewer assessment.
Asset
Anything of monetary value that is owned by a person. Assets
include real property, personal property, and enforceable
claims against others (including bank accounts, stocks,
mutual funds, and so on).
Assignment
The transfer of a mortgage from one person to another.
Assumable mortgage
A mortgage that can be taken over ("assumed")
by the buyer when a home is sold.
Assumption
The transfer of the seller's existing mortgage to the buyer.
Assumption fee
The fee paid to a lender (usually by the purchaser of real
property) resulting from the assumption of an existing mortgage.
Attorney-in-fact
One who holds a power of attorney from another to execute
documents on behalf of the grantor of the power?
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