Resource Center

Resource Center

Welcome to the Resource Center

Insurance can be complicated at times, and terms and conditions of insurance are not easy to understand. By educating our policyholders about the basics of their First American Insurance policy, we will help you become an educated insurance consumer.

The Resource Center provides vital information to help policyholders and consumers understand options to select a policy, coverages, what is not covered such as earthquakes and floods, and information required to file a claim. To help you determine your homeowners, landlord, condo, renters, and umbrella needs, First American, our agents, and our brokers want you to use this knowledge as power when you tailor your policy to fit your needs.

Basic Types of Insurance Coverage

Homeowners Insurance (HO-3)

A homeowners insurance policy contains two sections. Section I provides property coverage, and are noted by Coverage A, B, C, and D on your policy declarations page. Section II provides liability coverage and is noted by Coverage E and F. Coverage on your policy includes the following six coverages:

Coverage A – Dwelling/Structure

Provides property coverage that protects your house and any attached structures if your property is damaged by a covered loss. Attached structures include a garage, a deck, or a front or back porch which may be covered by the dwelling portion of your policy.

Coverage B – Other Structures

Provides coverage for other structures on your property not attached to your dwelling or home. Items covered include a detached garage, guest house, patio, or a shed. Coverage B is 10% of the limit for coverage A. More coverage is available for an additional cost.

Coverage C – Personal Property

Provides coverage for your personal property and contents inside your home. Personal property coverage includes items owned by you and family members who live with you. This coverage also covers your personal property while traveling in the U.S. or abroad. Basic coverage C is 50% of the limit for coverage A, and you can purchase more coverage for an additional cost.

There are two types of settlement options for your personal property in the event of a loss. You will receive Actual Cash Value or Replacement cost. Actual Cash Value will replace or repair your property minus depreciation. Replacement Cost will provide the full value to replace your property without depreciation. Make sure you select the appropriate option (if available) when you purchase your insurance policy.

Coverage is limited for the following high value items:

  • Cameras
  • Coins
  • Fine Arts
  • Furs
  • Golf Equipment
  • Guns
  • Jewelry
  • Musical Instruments
  • Silverware, Goldware, and Pewterware
  • Watches

You can purchase more coverage for the items listed above and/or schedule these items separately by providing documentation including but not limited to an appraisal from a qualified and credentialed appraiser, picture of each item, and a copy of original purchase receipt.

Coverage D – Loss of Use

Provides an additional living expense in the event your home is damaged by a covered loss and damage makes your home unlivable. This coverage pays for the reasonable increase in expenses to maintain your standard of living for a certain amount of time. These expenses include but are not limited to housing, food, and storage for personal property in your home while repairs are performed. Coverage D is typically 20% of the coverage A limit.

Coverage E – Personal Liability

Provides coverage in the event you or family members in your household are legally responsible for bodily injury and/or property damage to others. It pays for your legal defense against a liability claim (lawsuit), and it also pays any court judgment against you for covered losses up to the policy limit. Coverage E examples include:

  • A guest at your home slips and falls in your walkway or driveway
  • Your dog (not an excluded breed) bites a person or another dog
  • A negligently maintained tree on your property falls on your neighbor’s home

Liability coverage will not protect you from all situations, such as an intentional act or punitive damages.

Coverage F – Medical Payments to Others

Pays reasonable and necessary medical expenses for people injury on your property. This is known as no-fault coverage because all bills are paid up to your policy limit for this coverage whether you are legally responsible or not. Coverage does not pay for injuries to you or members of your household. This coverage is not a substitute for health insurance, and business activities are excluded.

Make sure you read the exclusions in your policy for all coverages listed above.

Condominium Insurance Unit Owner (HO-6)

A condominium insurance policy (HO-6) provides coverage for the unit owner. Coverage includes interior of the unit (often referred to as a studs-in/walls-in policy), personal property, loss of use, personal liability and coverage for special assessment against the owners. Basic condo insurance consists of the following five coverages:

Coverage A – Dwelling

Provides insurance for the “interior” real property not covered in the master policy of your association. Coverage includes walls, flooring, fixtures, and cabinetry, and this type of policy is known as a walls-in policy. A review of your association’s master policy can help determine what is covered, and how much dwelling coverage you need.

Coverage C – Personal Property

Personal property coverage provides insurance for personal items damaged, lost, or stolen due to a covered loss. Coverage includes everything that is not permanently affixed to the interior of the unit such as clothing, computers, furniture, TV’s and other electronics, appliances, rugs, bikes, etc…

To protect yourself, complete an inventory of your personal property to estimate how much coverage you will need. Most people underestimate the value of their personal property, and when a claim is filed, you may not have enough insurance coverage to replace clothing, furniture, computer, TV’s, and all the small items that add up. Personal property insurance starts with a minimum of $25,000 coverage, and you can purchase more coverage for an additional cost.

There are two types of settlement options for your personal property in the event of a loss. You will receive Actual Cash Value or Replacement cost. Actual Cash Value will replace or repair your property minus depreciation. Replacement Cost will provide the full value to replace your property without depreciation. Make sure you select the appropriate option (if available) when you purchase your insurance policy.

Coverage is limited for the following high value items:

  • Cameras
  • Coins
  • Fine Arts
  • Furs
  • Golf Equvipment
  • Guns
  • Jewelry
  • Musical Instruments
  • Silverware, Goldware, and Pewterware
  • Watches

You can purchase more coverage for the items listed above and/or schedule these items separately by providing documentation including but not limited to an appraisal from a qualified and credentialed appraiser, picture of each item, and a copy of original purchase receipt.

Coverage D – Loss of Use

Loss of use is important if a covered loss makes your condo unlivable. This coverage pays for the reasonable increase in expenses to maintain your standard of living for a certain amount of time. These expenses include but are not limited to housing, food, and storage for personal property in your condo while repairs are performed.

Coverage E – Personal Liability

Provides coverage in the event you or family members in your household are legally responsible for bodily injury or property damage to others on or away from your property. It pays for your legal defense against a liability claim (lawsuit), and it also pays any court judgment against you for covered losses up to the policy limit. Coverage E examples include:

  • A guest at your home slips and falls in your condo hallway
  • Your dog bites a guest on your property
  • A pipe bursts in your condo and floods your neighbors condo

Liability coverage will not protect you from all situations, such as an intentional act or punitive damages.

Coverage F – Medical Payment to Others

Pays reasonable and necessary medical expenses to your guests for any injury caused by you or a resident member of your household or a pet regardless of where the injury occurred. This is known as no-fault coverage because all bills are paid up to your policy limit for this coverage whether you are legally responsible or not. This coverage does not pay for your injuries or injuries to members in your household, and this coverage is not intended as a substitute for health insurance.

Loss Assessment Coverage

Provides protection for special assessments levied against condo owners for covered losses incurred in your complex. In some cases, loss assessment coverage can cover your share of the master policy deductible. A basic limit of $1,000 is provided, but you can increase your coverage up to $50,000 for an additional cost.

Landlord/Rental Property Insurance (DP-3)

Dwelling & Fire Policy (DP-3) is a policy for a 1-4 family unit dwellings, which are either owner (California) or tenant occupied (all other states) structures. If you own a rental property or a multi-family house (2-4 family units) and live elsewhere, you will need to purchase a Dwelling & Fire Policy (DP-3). This policy will cover losses for the structure of the dwelling, personal property left for tenant use, fair rental value, personal liability, and medical payments to others.

If you have tenants in your rental property, make sure you have the right policy. If you have tenants in your home under a homeowners (HO-3) policy, you may provide the insurance company with cause to deny your claim. A landlord/rental property insurance policy includes the following six coverages:

A – Dwelling/Structure

Provides property coverage that protects your house and any attached structures if your property is damaged by a covered loss. Attached structures include an attached garage, a deck, or a front or back porch, and may be covered by the dwelling portion of your policy.

Coverage B – Other Structures

Provides coverage for other structures on your property not attached to your dwelling or home. Items covered include a detached garage, guest house, patio, or a shed. Coverage B is 10% of the limit for coverage A. More coverage is available for an additional cost.

Coverage C – Personal Property

This coverage extends to all of the personal property and contents kept at the rental property which are owned by the landlord. This includes items stored on the property by you, as well as furnishings provided by the landlord for tenant use.

Coverage D – Fair Rental Value

In the event a covered loss occurs to your rental property, and your tenants are unable to reside in the dwelling, we will reimburse you for lost rent from tenants while your damaged home is fixed, rebuilt, and made livable again.

Coverage L – Personal Liability

For an additional premium, premises liability can be added to your policy. Coverage is provided in the event you or family members in your household are legally responsible for bodily injury or property damage on or away from your property. It pays for your legal defense against a liability claim (lawsuit), and it also pays any court judgment against you for covered losses up to the policy limit. Coverage L examples include:

  • Tenant is injured due to a broken step, covered hole, or loose floorboard
  • Negligently maintained tree falls on your neighbor’s home

Liability coverage will not protect you in all situations, such as an intentional act or against punitive damages. Make sure you read all the exclusions listed in your policy.

Coverage M – Medical Payments to Others

Pays reasonable and necessary medical expenses for guests injured on the property. This is known as no-fault coverage because all bills are paid up to your policy limit for this coverage whether you are legally responsible or not. This coverage does not pay for your injuries or injuries to those (other than a “residence employee”) who regularly reside on any part of the property (your tenant).

Renters Insurance (HO-4)

If you live in an apartment, a rented condo, or a rented house, renters insurance will provide protection for your personal property as well as liability protection in the event someone is injured in your home. A basic renters policy protects your personal property for covered losses such as theft or damage, and the policy may pay for temporary living expenses if your rental is damaged and unlivable. If someone is injured because of your negligence, renters insurance can help protect you against the cost of a liability lawsuit. A standard renters insurance policy includes the following coverages:

Coverage C – Personal Property

Personal property coverage provides insurance for personal items damaged, lost, or stolen due to a covered loss. Coverage includes everything that is not permanently affixed to the interior of the unit you rent such as clothing, computers, furniture, TV’s and other electronics, appliances, rugs, bikes, etc…

To protect yourself, complete an inventory of your personal property to estimate how much coverage you will need. Most people underestimate the value of their personal property, and when a claim is filed, you may not have enough insurance coverage to replace clothing, furniture, computer, TV’s, and all the small items that add up.

There are two types of settlement options for your personal property in the event of a loss. You will receive Actual Cash Value or Replacement cost. Actual Cash Value will replace or repair your property minus depreciation. Replacement Cost will provide the full value to replace your property without depreciation. Make sure you select the appropriate option (if available) when you purchase your renters insurance policy.

Coverage is limited for the following high value items:

  • Cameras
  • Coins
  • Fine Arts
  • Furs
  • Golf Equipment
  • Guns
  • Jewelry
  • Musical Instruments
  • Silverware, Goldware, and Pewterware
  • Watches

You can purchase more coverage for the items listed above and/or schedule these items separately by providing documentation including but not limited to an appraisal from a qualified and credentialed appraiser, picture of each item, and a copy of original purchase receipt.

Coverage D – Loss of Use

Provides an additional living expense in the event your rental unit is damaged by a covered loss and the damage makes your home unsafe or unlivable. This coverage pays for the reasonable increase in expenses to maintain your standard of living for a certain amount of time, and include but are not limited to housing, food, and storage for your personal property while repairs are performed.

Coverage E – Personal Liability

Provides coverage in the event you or family members residing in your household are legally responsible for bodily injury or property damage on or away from your property. It pays for your legal defense against a liability claim (lawsuit), and it also pays any court judgment against you for covered losses up to the policy limit. Coverage E examples include:

  • A guest slips and falls on the patio or in the home you rent
  • Your dog bites a guest in the condo you rent
  • Water overflows your bathtub and floods your neighbor’s apartment

Liability coverage will not protect you in all situations, such as an intentional act or against punitive damages. Make sure you read all the exclusions listed in your policy.

Coverage F – Medical Payments to Others

Pays reasonable and necessary medical expenses to your guests for any injury caused by you or an insured member of your family or a pet regardless of where the injury occurred. This is known as no-fault coverage because all bills are paid up to the policy limit for this coverage whether you are legally responsible or not. You can purchase more coverage and increase your limit up to $5,000 for an additional cost. This coverage does not pay for your injuries or injuries to those (other than a “residence employee”) who regularly reside on any part of the property (your tenant).

Personal Umbrella Policy

A Personal Umbrella insurance policy provides additional liability coverage over and above your underlying auto, home, and other insurance policies. If you are at fault in an auto accident and caused serious injury to the other party, or if someone is injured on a property you own and can prove damages, you may be sued and exposed to potentially devastating liability claims or judgments. If you lose the lawsuit, the judgment could easily exceed the limits on your auto, home or landlord policy.

For example, if your Auto policy has a Bodily Injury limit of $300,000 per accident, and a lawsuit judgment against you amounts to $2 Million, you would be responsible for the additional $1,700,000. That’s where Umbrella coverage kicks in.

Personal Umbrella policy limits are typically available in increments of $1 million all the way up to $5 million.

When you are consider a Personal Umbrella policy, you need to think in terms of your protection beyond your personal assets.

Disclaimer

The information provided is for information purposes only. The terms, conditions, and verbiage contained in your insurance policy are legally binding and supersede information provided on this website. The information provided on this website does not create any obligations, or rights on the part of the insured, First American Property and Casualty Insurance Group, or an agent or broker. Lastly, the examples and definitions contained are not a substitute for actual the insurance policy provided by First American Property and Casualty Insurance Group.

Basic Insurance Terms and Definitions

Actual Cash Value

An amount equivalent to the fair market value of stolen or damaged property before the loss. Usually, actual cash value equals the current replacement cost minus depreciation (based on age, condition, time in use, and obsolescence). For vehicles, this amount may be determined using vendors such as Kelly Blue Book and True Market Value, which provide an estimate of current market value based on many factors.

Additional Living Expenses

Extra expense incurred by you when your property is inhabitable due to a covered loss. It covers expenses such as hotel rooms, restaurant meals, and laundry costs to permit the insured household to maintain its normal standard of living. In most cases, your insurance company will reimburse you for these costs.

Agent

A license person or organization authorized to sell insurance for an insurance company.

Binder

A temporary agreement that provides coverage until a policy is written or delivered to the consumer.

Broker

A licensed person or organization paid by you to look for and find insurance on your behalf.

Broker Fee

Amount of money charged by a broker to look for and find insurance on your behalf. The fee is earned and is not refundable. Prior to the fee being charged, it must be disclosed and agreed to by the insured, and this fee is not part of your insurance premium. It is a contractual agreement between you and the broker.

Burglary

A loss as a result of forced entry into your property.

California Automobile Assigned Risk Plan (CAARP)

Provides insurance when a driver is unable to purchase private passenger or commercial liability auto coverage due to a poor driving record.

Cancellation

The termination of insurance coverage during the policy period. Termination may be voluntary, involuntary, or mutual in accordance with provision contained in the contract. Flat cancellation occurs when a policy is cancelled as of its effective date without any premium charge.

Claim

Notice or demand by an insured or another party to an insurance company under the terms of a policy, a loss may be covered.

Claimant

A first of third party who asserts the right of recovery for an injury or loss.

Claim Adjuster

A representative who works at an insurance company who is trained to examine your claim and your home for damage due to a covered loss. The adjuster will provide a repair estimate based on their expertise, knowledge, and market value of your property at the time of the loss.

Commission

Portion of the premium paid to the agent by the insurance company as compensation for service provided.

Declarations

First page of your insurance policy that contains the following: full legal name of your insurance company, your name and address, policy number, effective and expiration dates, premium payable, limits of insurance, property covered by policy, deductibles paid by you in the event of a loss, and any lien-holder information.

Decline

When an insurance company refuses to accept your request for insurance coverage.

Deductible

The amount of the loss the insured is responsible to pay before benefits from an insurance company are payable. You may choose a higher deductible to lower your premium, but this will result in higher out of pocket cost if a loss is incurred.

Depreciation

Decrease in value due to age or wear and tear of property.

Endorsement

Amendment to the policy used to add or delete coverage. This amendment is also referred to as a “rider.”

Expiration Date

Date when the policy or coverage ends.

FAIR Plan

The California FAIR Plan is an association of all property insurers licensed to conduct business in California. It is designated to make property insurance more readily available to consumers who have a difficult time obtaining insurance from private insurers because their property is considered “high risk.”

First Party

The policyholder (insured) in the insurance contract with the insurance company.

Fraud

Dishonest and willful attempt to obtain insurance or submit a claim for money through misrepresentation of a material fact.

Fire Insurance

Coverage for a loss or damage to a building and content as a result of a fire.

Flood Insurance

Insurance coverage for losses resulting from a flood that are not provided in a homeowners or renters policy. For information about flood insurance, property owners or renters should contact their insurance agent or call the National Flood Insurance Program’s toll free information line at (800) 427-4661.

Hazard

Circumstances that increase the probability or severity of a potential loss.

Homeowners Insurance

A combination of coverages selected by you which cover the risks of owning a home. Coverage can include a loss due to fire, burglary, vandalism, earthquake, and other perils. Generally, earthquake coverage is not included in your homeowners policy. You must purchase this coverage separately.

Insured

Policyholder or individuals listed on the policy who are protected in the event of a claim or loss.

Insurer

The insurance company that provides insurance to the insured.

Liability Insurance

Coverage for all sums that an insured is legally obligated to pay due to bodily injury, property damage, or other legal liabilities covered by an insurance policy. Coverage is also provided for legal liability resulting from injuries or damage sustained as a result of an auto accident.

License

Certificate of authority issued by the Department of Insurance to an insurer, agent, broker, or broker-agent to sell and administer insurance.

Limits

Maximum amount of benefits the insurance company agrees to pay in the event of a specific loss.

Material Misrepresentation

Occurs when an applicant or policyholder makes a false statement of any material (important) fact on the application.

Medical Payments

Pays reasonable expenses incurred for necessary medical services because of bodily injury caused by an accident and sustained by you or any other person on the insured property or in an insured vehicle.

Nonrenewal

Occurs when an insurance company decides to not renew your policy at the end of the policy period.

Peril

A peril is a cause of loss. Examples of a cause of loss are fire, theft, or hail.

Policy

A written contract of insurance coverage between you (insured) and the insurance company (insurer).

Policy Limit

The maximum amount a policy will pay overall or under a specific coverage.

Premium

The amount of money an insurance company will charge for insurance coverage for your policy.

Producer

Term used by the insurance industry which designates agents and brokers.

Pro-Rata Cancellation

Occurs when a policy is terminated midterm by the insurance company, and the earned premium is calculated for the period the coverage was provided.

Property Damage

Damage to another person’s property as a result of a negligent or intentional act of the insured.

Quote

An estimate for the cost of insurance based on information supplied to the insurance company by the applicant. The quote may change based on information obtained and verified through credit reporting agencies, motor vehicle reports, or driving record.

Recision

Cancellation of a policy back to its effective date resulting in a return of all premiums charged.

Replacement Cost

The cost to repair or replace an item owned by the insured. If you do not have personal property replacement cost coverage, your insurance company will only pay actual cash value or market value at the time of the loss. In most cases, this does not cover the cost to fix or replace the item owned by the insured.

Replacement Value

The full cost to repair or replace damaged property owned by the insured with no deduction for depreciation. This coverage reimburses the insured up to policy limits and is subject to contract provisions.

Reinstatement

Occurs when a lapsed policy is restored to an in-force policy. Reinstatement of a policy may be effective after the cancellation date which creates a lapse of coverage. The insurance company may require evidence of insurance and payment of any past due premiums before the policy is reinstated.

Rider

A rider is also known as an endorsement. A rider is an amendment to the policy which is used to add or delete coverage.

Short-Rate Cancellation

When the policy is terminated or cancelled by the insured prior to the expiration date.

Third Party

An individual other than the policyholder or the insurance company who has suffered a loss, and may be able to collect compensation under the policy due to the negligent acts or omission of the policyholder.

Total Loss

Damage or destruction to real or personal property to the extent it cannot be repaired for rebuilt to its original condition prior to the loss. When the cost is too high in comparison to the value of the property prior to the loss, and insurance company will write the property off as a total loss.

Underwriting

The process of selecting applicants based on a set of criteria which classifies the insured based on appropriate risks. If the applicant is deemed an unacceptable risk based on a set of criteria, the application for insurance will be rejected.

Workers Compensation Insurance

Coverage which provides benefits for medical care, death, disability, and rehabilitation for employee job related injuries or conditions without regard to who is at fault.

Insurance Fraud

Insurance Fraud occurs when someone misrepresents a material fact, knowingly distorts the truth, or lies to gain some advantage or benefit from an insurance to which they are not entitled. This also includes an individual who denies an insurance benefit that someone is due and entitled to. The type of insurance fraud or details of the fraud will dictate if the issue is handled by an administrative arm of the Department of Insurance or the Fraud Division which handles criminal acts.

Typical insurance fraud includes:

  • Inflating legitimate claims
  • Misrepresenting material facts on an insurance application
  • Submitting claims for accidents, damages, or injuries which never occurred
  • Staging accidents
  • Professionals and technicians inflating the cost of service for insurance related claims

Insurance consumers should be aware that insurance fraud costs insured billions of dollars annually. These costs are transferred to consumers and business that pay a hefty price through high premiums. Auto and homeowners insurance policies may stay high because insurance companies may pass the cost of insurance fraud to policyholder.

Help Us Help You

Consumers can help us reduce cost by reporting any suspicious claims, accidents, or insurance transactions. When presented with a suspicious situation, ask plenty of questions, review the details collected, and contact the authorities.

Help First American Property and Casualty insurance group keep your premium low by reporting Insurance Fraud.

Disclaimer

The information provided is for information purposes only. The terms, conditions, and verbiage contained in your insurance policy are legally binding and supersede information provided on this website. The information provided on this website does not create any obligations, or rights on the part of the insured, First American Property and Casualty Insurance Group, or an agent or broker. Lastly, the examples and definition contained are not a substitute for actual the insurance policy provided by First American Property and Casualty Insurance Group.