Insurance Glossary - Florida Version 2025

Name: Hamilton Fox Insurance
Address: 12651 S. Dixie Hwy Suite 209, Pinecrest, FL, 33156
Telephone: 800-263-1947

South Florida Insurance Glossary & Common Insurance Terms

100-Year Floodplain: An area in South Florida with a 1% annual chance of flooding, also called the base flood, as defined by FEMA. Properties here, often in Special Flood Hazard Areas (SFHAs), require flood insurance for mortgages, increasing premiums due to high flood risk.
Actual Cash Value (ACV): A valuation method for South Florida property insurance that accounts for depreciation, paying less than replacement cost for damaged items. Choosing ACV over replacement cost lowers premiums but results in smaller claim payouts due to reduced coverage.
Additional Insured: A person or entity added to a South Florida insurance policy to gain coverage, often for shared property interests, like a landlord or co-owner. Adding an additional insured may slightly increase premiums due to expanded coverage.
Adjuster: An insurance professional who investigates South Florida claims, assessing damage and determining payouts. Their evaluation can affect claim outcomes but doesn’t directly impact premiums, though frequent claims may raise future rates.
Admitted Carrier: An insurance company licensed and regulated by Florida, subject to the Florida Insurance Guaranty Association (FIGA) for insolvency protection. Using admitted carriers may stabilize premiums compared to non-admitted carriers, which often charge more for high-risk properties.
Animal Liability: An endorsement on South Florida homeowners policies covering bodily injury or property damage caused by pets, typically dogs, with limited exotic animal coverage. Adding this increases premiums slightly due to added risk but provides essential protection.
Assignment of Benefits (AOB): An agreement transferring a South Florida policy’s rights, like claim payments, to a third party (e.g., contractor). AOBs, if misused, can lead to inflated claims, potentially raising premiums industry-wide due to increased fraud risks.
Base Flood Elevation (BFE): The elevation of a flood with a 1% annual chance in South Florida, used to compare against a property’s lowest floor for flood insurance rating. Higher BFE compliance reduces flood insurance premiums, while non-compliance increases costs.
Binder: A temporary document proving active South Florida insurance coverage before the policy is issued, common in excess and surplus markets. Binders don’t directly affect premiums but ensure coverage continuity during underwriting.
Bodily Injury (BI): Coverage in South Florida homeowners policies for physical harm, sickness, or death caused to others, including medical and legal costs. Higher BI limits increase premiums but offer greater protection against lawsuits.
Bundle Discount: A premium reduction for combining South Florida home and auto insurance, though limited by market availability. Bundling typically lowers premiums by 5-20%, depending on the insurer, but is less common in Florida due to carrier restrictions.
Building Code (Windstorm Mitigation): Part of a South Florida wind mitigation report verifying if a home meets Florida Building Code (post-3/1/2002) or South Florida Building Code (post-9/1/1994). Compliance can reduce homeowners insurance premiums by up to 30% due to lower wind damage risk.
Catastrophic Ground Cover Collapse (CGCC): Geological activity in South Florida causing abrupt ground collapse, visible depression, structural damage, and property condemnation. Coverage for CGCC, often required in Florida, may slightly increase premiums due to regional sinkhole risks.
Certificate of Insurance: A document verifying an active South Florida insurance policy, detailing coverage, limits, and dates, often required for mortgages in flood-prone areas like SFHAs. It doesn’t affect premiums but ensures compliance with lender requirements.
Claim: A policyholder’s request for payment from a South Florida insurer for a covered loss, like fire or wind damage. Frequent claims can significantly increase future premiums due to perceived higher risk.
Coinsurance Clause: A policy requirement to insure a South Florida property for 80-100% of its replacement value. Underinsurance triggers claim penalties, and higher coverage requirements increase premiums but ensure full claim payouts.
Coverage A (Dwelling Insurance): Homeowners insurance covering repairs or rebuilding of a South Florida home’s structure for covered perils like fire, wind, or hail, up to the policy limit. Excludes floods. Higher limits increase premiums but ensure adequate protection.
Coverage B (Other Structures): Homeowners insurance for detached South Florida structures (e.g., sheds, fences) damaged by covered perils, excluding floods. Increasing Coverage B limits raises premiums slightly due to added property value.
Coverage C (Personal Property): Homeowners insurance covering personal items (e.g., furniture, electronics) in a South Florida home for perils like fire or theft, with limited high-value item coverage. Higher limits or scheduling valuable items increases premiums.
Coverage D (Loss of Use): Homeowners insurance covering extra living expenses (e.g., temporary housing) if a South Florida home is uninhabitable due to covered perils, excluding floods. Higher limits increase premiums but provide critical support during displacement.
Coverage E (Personal Liability): Homeowners insurance protecting against legal responsibility for bodily injury or property damage to others in South Florida, covering legal fees and damages up to the limit. Higher limits raise premiums but reduce personal financial risk.
Coverage F (Medical Payments): Homeowners insurance covering minor medical expenses for injuries to others on a South Florida property, regardless of fault, to avoid legal escalation. Higher limits slightly increase premiums.
Date of Issue: The day a South Florida insurer issues a policy, marking the start of the contract. It doesn’t directly affect premiums but confirms coverage initiation.
Declarations Page: The summary of a South Florida insurance policy, detailing coverage, limits, deductibles, and terms. It doesn’t impact premiums but is key for understanding policy scope.
Deductible: The amount a South Florida policyholder pays before insurance covers a claim, with separate deductibles for perils like wind or hurricanes. Higher deductibles lower premiums but increase out-of-pocket costs during claims.
Depreciation: The value loss of a South Florida home or belongings due to age or wear, affecting ACV payouts. Opting for ACV over replacement cost reduces premiums but lowers claim amounts.
DP1 Policy: Basic South Florida dwelling insurance for investment or rental properties, covering nine perils (e.g., fire, windstorm) with depreciation. Its limited coverage lowers premiums compared to comprehensive policies.
DP3 Policy: South Florida dwelling insurance for rental or investment properties, modifiable to resemble homeowners coverage. More comprehensive than DP1, it typically has higher premiums due to broader protection.
Dwelling: The main structure of a South Florida property, insured with a specific limit in homeowners or DP1/DP3 policies. Higher dwelling values increase premiums due to greater replacement costs.
Effective Date: The date a South Florida insurance policy becomes active, starting coverage. It doesn’t directly affect premiums but determines when protection begins.
Endorsement (Insurance Rider): A modification to a South Florida insurance policy, adjusting coverage, deductibles, or terms. Adding endorsements, like animal liability, typically increases premiums.
Excess and Surplus (E&S) Lines Insurance: Non-admitted South Florida insurance for high-risk properties, not protected by FIGA. E&S policies often have higher premiums due to increased risk and lack of state oversight.
Exclusion: A policy clause removing coverage for specific risks, like floods, in South Florida homeowners insurance. Exclusions lower premiums by reducing insurer liability but require separate coverage for excluded perils.
Fair Rental Value: Coverage in South Florida DP1/DP3 policies for lost rental income due to a covered claim, similar to Loss of Use. Including this coverage slightly increases premiums.
FEMA (Federal Emergency Management Agency): A U.S. agency managing South Florida flood insurance through the NFIP and mapping flood zones like SFHAs. FEMA policies impact premiums based on flood risk and property elevation.
Fire Insurance: South Florida homeowners or DP1/DP3 coverage for property damage from fire, included in most policies. Fire coverage is standard, so it doesn’t significantly alter premiums unless limits are adjusted.
Fire Policy: A South Florida homeowners policy excluding windstorm/hail, often paired with a wind-only policy in high-risk areas. Excluding wind lowers premiums but increases risk for uninsured perils.
Flood Insurance: A separate South Florida policy, often through FEMA’s NFIP, covering flood damage to homes and contents. Mandatory in SFHAs, it significantly increases total insurance costs due to high flood risk. Defined as rising of ground water outside the home (pooling rain or storm surge) that enters the home. This coverage is not to be confused with Water Damage Coverage, which is often included within your home insurance policy.
Flood Insurance Rate Maps (FIRMs): FEMA maps showing South Florida flood risk zones, including SFHAs, to set flood insurance requirements and rates. Higher-risk zones increase flood insurance premiums.
Florida Insurance Guaranty Association (FIGA): A nonprofit managing the Florida Insurance Guaranty Fund to pay claims for insolvent South Florida property and casualty insurers. No direct premium impact, but ensures claim protection.
Florida Insurance Guaranty Fund (FIGF): A Florida fund paying claims up to statutory limits for insolvent property and casualty insurers, excluding life or health insurance. No direct premium impact, but assessments may indirectly raise rates.
Florida Insurance Guaranty Fund (FIGF) Limits: Up to $300,000 per claim, plus $200,000 for South Florida homeowners’ structure/contents (max $500,000), or $200,000 per condo unit, with a $100 deductible. No direct premium impact, but limits claim recovery.
First Notice of Loss (FNOL): The initial report of a loss to a South Florida insurer, starting the claims process. No direct premium impact, but frequent FNOLs can increase future premiums.
Flood Zone A: A high-risk South Florida SFHA near lakes or ponds, requiring flood insurance for mortgages. Premiums are higher due to elevated flood risk.
Flood Zone AE: A high-risk South Florida SFHA near floodplains or rivers, requiring flood insurance for mortgages. Premiums are higher due to flood risk.
Flood Zone AH: A South Florida SFHA with a 1% chance of shallow flooding (1-3 feet), requiring flood insurance for mortgages. Premiums are moderate but still elevated.
Flood Zone AO: A high-risk South Florida SFHA near rivers with 1-3 feet flood risk, requiring flood insurance for mortgages. Premiums are higher due to flood risk.
Flood Zone B: A moderate-risk South Florida flood zone with a 0.2% annual flood chance, requiring flood insurance for mortgages. Premiums are lower than high-risk zones but still required.
Flood Zone C: A low-risk South Florida flood zone with less than 0.2% annual flood risk, requiring flood insurance for mortgages. Premiums are lower due to minimal risk.
Flood Zone V: A high-risk South Florida coastal flood zone with wave-driven flooding, requiring flood insurance for mortgages. Premiums are high due to severe flood risk.
Flood Zone VE: A high-risk South Florida coastal flood zone with storm wave and tidal surge risks, requiring flood insurance for mortgages. Premiums are high due to severe flood risk.
Flood Zone X: A low-to-moderate risk South Florida flood zone where flood insurance is not typically required for mortgages. Optional flood insurance has lower premiums.
Flood Zones: FEMA-designated South Florida areas labeled by flood risk, guiding insurance requirements and rates. Higher-risk zones increase flood insurance premiums.
Force-Placed Insurance: Insurance purchased by a South Florida lender if a homeowner’s policy lapses, covering the lender’s interest. It significantly increases costs, often with higher premiums than standard policies.
Fungi and Mold Insurance: South Florida homeowners coverage for mold or fungi damage from covered claims, often limited or optional. Adding this coverage increases premiums slightly.
Golf Cart Insurance: An endorsement for South Florida homeowners policies covering property damage, bodily injury, or golf cart damage. Adding this slightly increases premiums.
Grace Period: The time after a missed South Florida insurance payment before cancellation, typically 10-30 days. No direct premium impact, but avoiding lapses prevents costlier force-placed insurance.
Hazard Insurance: South Florida homeowners coverage for the home’s structure against perils like fire, hail, or lightning. Standard in policies, higher limits increase premiums.
HO1 Policy: South Florida named-perils insurance for owner-occupied homes, covering 10 perils for structure and contents. Limited coverage lowers premiums compared to broader policies.
HO2 Policy: South Florida homeowners insurance covering homes and property against 10 named perils. Broader than HO1, it has moderately higher premiums.
HO3 Policy: South Florida homeowners insurance covering homes and structures on an open-perils basis and personal property on a named-perils basis. Comprehensive coverage increases premiums but offers robust protection.
HO4 Policy: South Florida renters insurance covering personal property on a named-perils basis and personal liability. Affordable premiums reflect limited property coverage.
HO5 Policy: Comprehensive South Florida homeowners insurance covering homes, structures, and personal property on an open-perils basis. High premiums reflect extensive coverage.
HO6 Policy: South Florida condo insurance covering the unit’s interior, appliances, belongings, and personal liability. Premiums vary by coverage limits and condo value.
HO7 Policy: South Florida mobile/manufactured home insurance covering all perils except exclusions, with named-perils coverage for belongings. Premiums are moderate but vary by home type.
HO8 Policy: South Florida insurance for older homes with replacement costs exceeding market value, offering modified coverage. Lower premiums reflect limited coverage scope.
HOA Fees: Charges by South Florida homeowners associations to maintain common areas. No direct premium impact, but high fees may influence property affordability.
HOA Insurance: Commercial insurance for South Florida condo exteriors and common areas, requiring separate unit owner coverage. No direct premium impact for homeowners but affects condo budgeting.
Home Appraisal: An unbiased valuation of a South Florida property based on local comparables. Accurate appraisals ensure proper coverage, potentially increasing premiums for higher-valued homes.
Home Inspection: A visual check of a South Florida home’s systems to identify repairs. Favorable inspections can lower premiums by proving lower risk, while issues may raise rates.
Home Warranty: A contract covering repair costs for South Florida home systems or appliances. No direct premium impact but complements insurance by reducing out-of-pocket repair costs.
Homeowners Insurance: A policy protecting South Florida homes, contents, and liability from perils like fire, wind, or theft, excluding floods. Premiums vary by coverage limits, deductibles, and risk factors like location.
House & Property Insurance: South Florida homeowners coverage for homes, attached structures, and belongings against various perils. Comprehensive coverage increases premiums based on property value.
Hurricane Deductibles: A percentage-based deductible (1-5% of home value) for South Florida homeowners policies applied to hurricane damage. Higher hurricane deductibles lower premiums but increase claim costs.
Hurricane Screen Enclosure Insurance: Optional South Florida coverage for screened enclosures, not included in standard policies. Adding this slightly increases premiums.
Identity Fraud Expense: South Florida insurance add-on covering costs like legal fees or lost income due to identity theft. Adding this increases premiums slightly.
Insurable Interest: A financial stake in a South Florida property justifying insurance coverage. No direct premium impact but ensures legal coverage eligibility.
Insurance Agent: A professional connecting South Florida clients with insurers to purchase policies. No direct premium impact, but agents can secure discounts or optimal coverage.
Insurance Scoring: A process evaluating a South Florida applicant’s claim history and credit to adjust premiums. Poor scores can increase premiums, while good scores may lower them.
Insured: The person or entity with a financial interest in a South Florida property, entitled to claim proceeds. No direct premium impact but defines coverage beneficiary.
Insurer: A company providing South Florida insurance for losses like fire or theft in exchange for premiums. Choice of insurer affects premium rates based on their pricing and risk assessment.
Jewelry Appraisal: An official valuation of jewelry or watches for South Florida insurance coverage. Scheduling appraised items increases premiums but ensures full coverage.
Lapse: The period after a South Florida insurance policy expires or terminates before new coverage begins. Lapses can lead to force-placed insurance, raising costs.
Limit of Liability: The maximum amount a South Florida insurer pays for a covered loss or liability claim. Higher limits increase premiums but enhance protection.
Market Value: The price a South Florida home would sell for on the open market. No direct premium impact, but it influences coverage amounts and premiums.
Moral Hazard: Risks in South Florida insurance contracts from bad faith or excessive risk-taking. Can lead to higher premiums if insurers perceive increased risk.
Moratorium: A temporary halt on issuing or modifying South Florida insurance policies due to approaching storms. No direct premium impact but delays coverage changes.
Mortgage Clause: A South Florida insurance policy provision ensuring lenders receive claim payments for covered damages, especially in flood-prone areas. No direct premium impact but ensures lender protection.
Named Insured: The person or entity protected by a South Florida insurance policy. No direct premium impact but defines primary coverage holder.
National Flood Insurance Program (NFIP): A FEMA-managed program providing flood insurance for South Florida properties in high-risk zones. Premiums vary by flood zone and property elevation.
Negligence: Careless actions in South Florida causing harm, potentially covered by liability insurance. High negligence risk can increase liability premiums.
No Loss Statement: A signed letter stating no recent losses on a South Florida property. Can lower premiums by proving low risk to insurers.
Non-Renewal: An insurer’s decision to discontinue a South Florida policy at term’s end. May lead to higher premiums with a new insurer if risk profile changes.
Occurrence: An event causing damage or injury in South Florida, triggering a claim. Frequent occurrences can raise premiums due to higher risk.
Opening Protection Credit: A discount on South Florida homeowners insurance premiums for installing impact-resistant windows, doors, or shutters that protect openings from windstorm damage. Verified through a wind mitigation inspection, this credit can reduce premiums by 10-20% by lowering the risk of hurricane-related damage.
Ordinance/Law Coverage: South Florida insurance covering costs to rebuild a home to current building codes after a covered loss. Adding this increases premiums slightly.
Perils: Specific risks, like fire or theft, covered by South Florida insurance policies. Broader peril coverage increases premiums due to greater insurer liability.
Personal Reports: A 7-year loss history report used by South Florida insurers to assess property risk. Poor reports can increase premiums, while clean reports may lower them.
Policy: A legally binding South Florida insurance contract between the policyholder and insurer. Premiums depend on policy type, coverage, and risk factors.
Policy Term: The duration a South Florida insurance policy is active, typically one year. No direct premium impact but affects renewal pricing.
Policyholder: The person who purchases and can modify a South Florida insurance policy. No direct premium impact but defines who controls coverage.
Premium: The cost of a South Florida insurance policy, paid monthly or annually. Influenced by coverage limits, deductibles, property risk, and location.
Private Mortgage Insurance (PMI): Insurance required by South Florida lenders for homebuyers with less than 20% down payment, protecting the lender. PMI adds to monthly costs but doesn’t affect homeowners insurance premiums.
Proof of Insurance: Documentation verifying an active South Florida insurance policy, often required by lenders. No direct premium impact but ensures compliance.
Property and Casualty Insurance: South Florida insurance covering property losses and liability for injuries or damage to others. Premiums vary by coverage scope and risk.
Protection Class: A rating of a South Florida home’s fire risk based on local firefighting resources (e.g., Miami-Dade’s class 4). Higher classes (9-10) increase premiums due to limited fire protection.
Quote: An estimated cost of a South Florida insurance policy, subject to change after underwriting. Accurate quotes help secure lower premiums through competitive pricing.
Real Property: South Florida land and permanently attached structures, covered by homeowners insurance. Higher property values increase premiums due to greater replacement costs.
Reinsurance: Insurance purchased by South Florida insurers to transfer risk. Indirectly affects premiums, as high reinsurance costs can lead to rate increases.
Renewal: Continuing a South Florida insurance policy for another term. Premiums may increase at renewal based on claims history or market conditions.
Replacement Cost: The cost to rebuild or replace a South Florida property or item with similar materials. Choosing replacement cost over ACV increases premiums but ensures higher claim payouts.
Roof Deck Attachment (Wind Mitigation): Part of a South Florida wind mitigation report verifying plywood thickness, nail size, and spacing. Strong attachments can reduce premiums by up to 15% due to lower wind damage risk.
Roof Shape (Wind Mitigation): A section of a South Florida wind mitigation inspection report evaluating a home’s roof geometry for wind resistance, including hip, gable, flat, or other shapes (e.g., gambrel, mansard). A hip roof, where all sides slope downward and other roof types do not exceed 10% of the total roof line, qualifies for a premium-saving credit, reducing homeowners insurance premiums by 5-15% due to its superior hurricane resistance.
Scheduled Property: High-value South Florida items, like jewelry, insured for their appraised value. Scheduling items increases premiums but ensures full coverage.
Sinkhole Insurance: Coverage for damage from sinkholes, often an optional coverage that must be elected at time of binding. Adding this coverage increases premiums, however, the cost can be very affordable if the home is not in a sinkhole prone area. Eligibility is usually dependent on a sinkhole inspection performed at the expense of the policy holder.
Special Flood Hazard Area (SFHA): A high-risk South Florida flood zone with a 1%+ annual flood risk, requiring flood insurance for mortgages. High-risk SFHAs significantly increase flood insurance premiums.
Step-Down Deductible: A Frontline Insurance feature in South Florida reducing windstorm or all-perils deductibles by 20% annually, potentially reaching $0 after six claim-free years. Lowers out-of-pocket claim costs but doesn’t directly affect premiums.
Subrogation: The process where an insurer assumes another party’s legal rights to pursue a claim recovery, usually from the At-Fault party or their insurance company. This process is initiated at the discrection of the insurance company, who may chose not to Subrogate if deemed to be not worth the recorable amount.
Theft: A covered peril in South Florida homeowners policies for intentional property removal. High theft risk in an area may slightly increase premiums.
Underwriting: The process South Florida insurers use to evaluate risk and determine policy eligibility. Riskier profiles result in higher premiums or coverage denials.
Vandalism: Willful property damage, typically covered by homeowners insurance. High vandalism risk may slightly increase premiums.
Walls In Insurance: South Florida condo coverage for interiors, from exterior framing inward, often purchased by unit owners. This policy is usually coupled with the HOA's insurance policy covering the exterior structure of the building. Premiums vary by unit value and coverage limits.
Water Backup and Sump Overflow Coverage: Optional South Florida homeowners coverage for damage from sewer, drain, or sump pump backups. Coverage is usually limited and adding this increases premiums slightly.
Water Damage Coverage: An insurance policy provision found in your homeowners or DP policy that protects against financial lasses caused by specific types of water-related damage to a property or contents. This may include damage from burst pipes, leaking appliances, or water forced into the home from leaky roof or window. This coverage is not to be confused with Flood Coverage which almost always is written by a stand alone Flood policy.
Wind/Hail Deductible: The amount a South Florida policyholder pays for wind, hail, or tornado damage, usually written at 2%, 3%, 5% or 10% of the Coverage A Dwelling Limit. Example: A home insured for $500,000 Coverage A Dwelling Limit with a 2% Hurricane deductible has a $10,000 windstorm deductible. Higher wind deductibles lower premiums but increase claim costs.
Wind Mitigation: Steps to strengthen a South Florida home against wind damage, like reinforced roof decking, roof to wall connections, roof cover replacement, Secondary Water Barrier and Opening Protection. Can reduce homeowners insurance premiums by 10-80% or more through discounts.
Windstorm Insurance: A South Florida policy covering wind-related damage, often separate from homeowners insurance in high-risk areas. Adds to total insurance costs due to regional hurricane risk.
Windstorm Mitigation Inspection Report: A South Florida report verifying home features (e.g., roof, building code, seee Wind Mitigation above) and submitted to insurane companies so they can apply for premium discounts on the policy. Can lower homeowners insurance premiums by 10-80% or more.
Wind-Only Coverage: South Florida insurance covering only windstorm damage, common in coastal wind pool areas. A common practice in the South Florida area is to split a homeowners policy between two policies, the first is a traditional homeowners HO3 polcicy (excluding windstorm) and the second policy is a Wind-Only policy. When eligible (home located in the Wind Pool), this can reduce the overall cost of insuring your home.
Wind Pool: High-risk South Florida coastal areas (east of I-95 or US-1 in South Dade) prone to hurricane damage, often requiring wind-only policies. Increases total insurance costs due to separate policy requirements.

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Insurance Glossary - Florida Version 2025