If you have ever had a home repair or some type of natural disaster that did damage to your home, you know how important home insurance is. It is unfortunate that there are so many people that do not have any type of home insurance, and even more unfortunate that there are so many people that do have it, but have no idea what it does for them. To be best prepared, it is important that you know what your insurance policy says, before you have a home emergency. To make it easier, here is a list of terms, explained so that most anyone should be able to understand:

Indemnity is a term that you will see on every insurance policy. Indemnity is the main point of having insurance. Your insurance policy exists so that you and your loved ones may be given back the things that have been lost or damaged; indemnity is the part of your insurance that tries to keep you at the same financial standing after an issue, as you were previously. This is how your items are replaced or paid for, after something has happened to your home.

Act Of God is a very important term on any insurance policy. This refers to accidents and emergencies that occur without any warning or any way to prevent. This term includes damage done by earthquakes, lightning, or even war.

Depreciation is the term used to describe the every day, normal wear and tear your home or other claimable items may have suffered since it was first purchased. When your claim is being decided, your insurer will take into account your item’s value, after normal wear and tear. For extra cost, you may be able to get a “new for old” clause, which will account what you are claiming as new.

Due Diligence is the term used to describe the proper and expected care that should have been taken on any claimable item. If you haven’t taken the proper care of something in or on your home, it is likely that your claim will be denied.

Rebuild cost is the calculated amount that it would cost, if your home were to be destroyed. Your insurer can help you figure this out, or you can have a surveyor out to help you figure you rebuild cost.

Author Byline:

Al writes and blogs on home improvement, home insurance, home security and personal finance issues.