Insurance Glossary: Terms Every Cheverly Homeowner Should Know
May 28, 2026
Insurance Terms Every Cheverly Homeowner Should Know
A plain-English guide for buyers who are new to homeowner's insurance -- and for owners who want to actually understand what they're paying for.
Terms are grouped by when you're most likely to run into them: when you're buying, once you own, and if something goes wrong. Use the jump bar to go straight to a letter, or read through a section before a policy review or closing.
Terms marked Cheverly have specific relevance to Cheverly's older homes or the local market.
When You're Buying
Terms you'll run into before and at closingWhat your property is worth today, after accounting for age and wear -- not what it would cost to replace it new. If your 15-year-old roof is destroyed, ACV pays what a 15-year-old roof is worth, not what a new roof costs.
ACV leaves you with a real gap after a loss. Always ask whether your policy pays ACV or replacement cost -- for roofs especially, the difference can be thousands of dollars.
A short-term document that confirms your insurance is active while the full policy is being set up. Your lender will ask for proof of insurance at or before closing -- a binder is what you give them.
Don't wait until closing week to shop for insurance. Some homes -- especially those with older systems -- take time to insure, and some insurers will turn down homes that others will cover.
The summary page at the front of your policy. It lists your coverage amounts, deductible, premium, policy dates, and who is insured. It's a one-page snapshot of what you have.
Pull this out at every renewal. If your coverage limit hasn't changed in several years, you're almost certainly underinsured given how much construction costs have gone up.
The amount you pay out of your own pocket before insurance kicks in. A $2,500 deductible means you cover the first $2,500 of any claim. Higher deductibles mean lower premiums -- but more cost to you when something happens.
If a loss is close to your deductible, it usually makes sense to pay it yourself. Filing too many small claims can raise your premium or get your policy dropped at renewal.
The part of your policy that covers the structure of your home -- the walls, roof, built-in appliances, and anything permanently attached. This is the main coverage, and the limit should reflect what it would cost to rebuild your home today.
This limit should be based on rebuild cost, not market value or what you paid. Many homeowners have dwelling coverage that hasn't kept up with rising construction costs.
An add-on to a standard policy that changes or expands your coverage. A sewer backup endorsement, a home business endorsement, and a scheduled jewelry rider are all examples of endorsements.
Most of the common gaps in a standard policy can be filled with an endorsement -- usually for a small extra cost. Ask your agent what add-ons are available and which ones make sense for your home.
An account held by your mortgage company that collects part of your monthly payment to pay your property taxes and homeowner's insurance when they come due. Your mortgage company pays those bills directly from this account.
If you switch insurers, tell your mortgage company right away so the new bill gets paid out of escrow -- not missed.
The standard homeowner's policy used for most single-family homes. It covers the structure of your home against almost everything except what's specifically listed as excluded. Your personal belongings are covered only against causes listed in the policy.
This is the policy most buyers get. Knowing what's not covered by an HO-3 -- flood, sewer backup, gradual damage -- is just as important as knowing what is.
A policy designed for older homes where rebuilding with the original materials and methods would cost far more than the home is worth. Instead of paying to fully restore the home, HO-8 policies pay the cost to repair using today's standard materials and methods.
Some Cheverly homes -- especially those with plaster walls, solid masonry, or historic trim -- may be written on an HO-8 instead of an HO-3. This means a major claim payout could be less than you expect.
Cheverly's pre-1960 all-brick construction can push rebuild costs high enough that some insurers use an HO-8 instead of standard replacement cost coverage. If you're buying an older Cheverly home, ask your insurer which type of policy they're writing -- and what it means if you have a total loss.
Covers you if someone gets hurt on your property or if you or a family member accidentally hurts someone or damages their property. It also pays your legal costs if you get sued.
Most policies start with a $100,000 limit -- often not enough for a serious injury. A limit of $300,000 to $500,000 is a better target. If you have a pool, a dog, or significant savings, consider an umbrella policy on top of that.
Pays for a hotel, meals, laundry, and other extra costs if your home is too damaged to live in after a covered loss. Coverage is usually 20--30% of your dwelling limit.
Big repairs on an older home can take months. Know your limit before you need it -- and make sure it's enough to cover a comparable place to live nearby, not just a budget motel.
Named perils only covers damage caused by things listed in your policy (fire, theft, windstorm, etc.). Open perils covers everything except what the policy specifically rules out -- a much broader type of protection. HO-3 policies use open perils for the structure and named perils for your belongings.
With named perils, if the cause of damage isn't on the list, you're not covered. With open perils, your insurer has to prove a specific exclusion applies. Open perils is stronger protection.
Covers your belongings -- furniture, clothing, electronics, appliances -- against covered losses. It's usually set at 50--70% of your dwelling limit. Standard policies cap certain categories: jewelry, cash, guns, art, and collectibles are often limited.
Most people underestimate how much their stuff is worth to replace. A simple home inventory -- even just photos of each room saved to cloud storage -- makes any claim much easier to handle.
What it costs to repair or replace damaged property with new materials of similar quality, without deducting for age or wear. The other option is actual cash value (ACV), which pays the worn-down value instead.
RCV is better coverage than ACV, especially for roofs, which lose value quickly. Always confirm whether your policy pays replacement cost or actual cash value -- for both the home and your belongings.
For Cheverly's brick homes, the replacement cost should include masonry labor and materials -- which cost more than wood frame construction. A generic estimate may come in too low. Ask your insurer specifically how they calculated your replacement cost and whether brick construction was factored in.
Understanding Your Policy
Terms that matter once you own and at your annual reviewA document that signs your claim rights over to a contractor. Once signed, the contractor deals with your insurer directly and collects the payment instead of you. You lose control of your own claim.
After storm damage, some contractors go door to door asking homeowners to sign an AOB. Once you sign, you give up control over the work, the quality, and the payout. Never sign one without fully understanding what you're giving away.
CLUE stands for Comprehensive Loss Underwriting Exchange. It's a database of insurance claims that most insurers use. Your CLUE report shows claims filed on a property -- and by you personally -- for the past seven years. Insurers use it to set your rate and decide whether to insure you.
As a buyer, you can ask for the CLUE report on a home you're considering -- it may show prior water damage, fire, or other claims the seller didn't mention. As a seller, the claims history follows the property.
In estate sale transactions -- which are common in Cheverly -- a CLUE report can surface old claims that even the estate executor may not know about. It's worth pulling early in the process.
A coinsurance clause requires you to insure your home for at least a set percentage of its rebuild cost -- often 80%. If you're underinsured when you file a claim, the insurer may only pay a portion of what you're owed. Guaranteed replacement cost coverage is different: it pays the full rebuild cost even if it turns out to be more than your policy limit.
Coinsurance penalties catch homeowners off guard. If your coverage hasn't kept up with rising construction costs, you may get a lot less than you expected on a partial loss.
Standard homeowner's policies don't cover flood damage -- meaning water that rises from the ground during a storm. That requires a separate flood policy. The National Flood Insurance Program (NFIP) is the main source of flood coverage; some private insurers offer it too.
Even homes outside flood zones can flood. Water in a basement from heavy rain or a backed-up storm drain is usually a flood claim, not a homeowner's claim. If you have a finished basement, flood insurance is worth looking into.
An add-on that lists specific high-value items -- jewelry, art, instruments, camera equipment, collectibles -- one by one and insures each at its full appraised value. Without this, those items are subject to the standard policy's dollar caps.
Standard policies typically cap jewelry coverage at $1,500 to $2,500. If your ring, watches, or other valuables are worth more than that, listing them separately fills that gap -- usually for a small extra cost.
An add-on that covers damage from water or sewage that backs up through a floor drain, toilet, or sink. This is not covered by a standard policy. It typically costs $50--$150 a year.
Sewer backup is one of the more common and expensive home insurance claims. The add-on is cheap compared to what a backup cleanup and repair actually costs.
Many Cheverly homes have the original cast iron drain lines and clay sewer pipes from decades ago. Tree roots and pipe decay make backup a real risk here -- not just a remote possibility. This add-on is a smart call for Cheverly homeowners.
The right of your insurer to go after the person or company responsible for your loss after they've paid your claim. If a neighbor's contractor damages your roof, your insurer pays you -- then pursues the contractor to recover that money.
Don't sign anything that releases another party from blame without checking with your insurer first. If you do, you may block your insurer from recovering its costs -- and they may use that as a reason to deny your claim.
A separate liability policy that kicks in when a claim goes above the limits of your homeowner's or auto insurance -- usually $1 million or more in extra coverage.
Umbrella policies are surprisingly affordable -- often $200 to $400 a year for $1 million in coverage. If you have a pool, a dog, a trampoline, or meaningful savings, an umbrella policy is worth taking seriously.
A rule in most homeowner's policies that cuts or eliminates coverage if the home sits empty for more than 30 to 60 days in a row. Having furniture in the home does not count as someone living there under most policy definitions.
This clause shows up in estate sales, relocations before the home sells, inherited properties, and long trips away -- all common situations in Cheverly. If your home will be empty past the threshold, call your insurer before you hit that mark.
Estate sales in Cheverly often mean a home sits empty for months while the estate is settled. The original policy may still be active on paper, but the vacancy clause may have already cut off real coverage. Anyone managing an empty estate property should call the insurer right away and ask specifically what is still covered.
If Something Goes Wrong
Terms you'll encounter when filing a claimThe person who reviews your claim and decides how much the insurer will pay. A staff adjuster works directly for the insurance company. An independent adjuster is hired by the insurer on a contract basis. A public adjuster works for you -- the homeowner -- and takes a percentage of your settlement as their fee.
On a large or complicated claim, a public adjuster may help you get a better payout -- but they typically take 10 to 15% of the settlement. For big losses, that may be worth it. For routine claims, it usually isn't.
The drop in value of something as it gets older and wears out. Under an ACV policy, the insurer subtracts depreciation from what they pay you. Under a replacement cost policy, they may hold back that depreciation at first and release it once you've actually made the repairs.
With a replacement cost policy, your first check is often less than the total settlement. You get the rest after the work is done and you submit documentation. Don't assume the first check is everything you're owed.
A signed statement you send to your insurer that describes the damage, lists what was lost or ruined, and states the dollar amount you're claiming. Most policies require you to submit this within a set timeframe after the loss -- often 60 days.
If you miss the deadline, the insurer may have grounds to deny or cut your claim. Document everything quickly and know when your deadline is.
A contractor who travels to areas hit by storms and knocks on doors looking for roofing and siding work, often offering to "handle everything with your insurance." Some are legitimate. Many do poor work, overbill insurers, or push homeowners to sign over their claim rights.
Never sign an Assignment of Benefits form handed to you by a contractor you didn't call. Always check their license, insurance, and references before signing any contract after a storm. Get your own repair estimates -- don't rely only on what the contractor says.
The Cheverly Insurance Guide covers what to tell your insurer, common coverage gaps, vacant home risks, and what to do when you need to file a claim -- with specific notes on Cheverly's older homes.
Insurance terms come up at almost every step of a real estate transaction -- at the inspection, at the offer table, and at closing. Knowing what they mean before you need them puts you in a stronger position. I'm not an insurance agent, but I can tell you what I've seen matter most in Cheverly transactions over 30 years.
Susan@SusanPruden.com · (301) 980-9409
A lifetime Maryland resident, Susan Pruden has the ideal foundation for selling and buying homes. After 8 years working in just about every facet of the mortgage industry, and several years with her own company specializing in marketing for real estate agents, Susan got her real estate license in 1994. Susan has earned several industry awards. The CENTURY 21 Quality Service Pinnacle Award is based on reviews from Susan's clients and is earned by a very small percentage of agents. She has earned that coveted recognition since 2012
Two others were awarded by the Prince George's Association of REALTORS®. The Distinguished Sales Associate of the Year Award is based on a mixture of community involvement, association involvement and real estate education and designations. The other, the Distinguished Service Award, is for "exceptional meritorious service."
Susan is involved in her local community. She was named Cheverly Volunteer of the Year in 2018, even having June 25th designated "Susan Pruden Day" in the Town of Cheverly. She is also a Commissioner on the Prince George's County Historic Preservation Commission and President of the Cheverly American Legion Auxiliary.
Susan Pruden has lived in Cheverly lived with her husband, Joseph, for almost 30 years.
