Insurance Glossary

Plain-English definitions of terms you'll encounter when dealing with homeowners insurance non-renewal. Industry jargon defined once, here, so you don't have to look it up mid-crisis.

A

Actual cash value (ACV): What your home or property is worth today after depreciation is subtracted from the replacement cost. If your roof is 15 years old and costs $20,000 to replace new, ACV might pay $8,000 after depreciation. Most standard policies now pay replacement cost value instead — check your policy declarations page. See also: Replacement cost value (RCV).
Admitted carrier: An insurance company licensed in your state through the standard regulatory process. Admitted carriers must follow state-approved rate and form rules, and are covered by your state's insurance guaranty association if they become insolvent. When shopping for coverage, admitted status is a significant consumer protection. See also: Surplus lines carrier, State guaranty association.
Adverse action: Any unfavorable insurance decision — a denial, non-renewal, cancellation, or less favorable rate or terms — based on information in a consumer report. Under the federal Fair Credit Reporting Act (FCRA), when an insurer takes an adverse action based on such a report, it must notify you, identify the reporting agency it used, and let you obtain a free copy of that report. This notice is your starting point for appealing a non-renewal driven by a CLUE report or a credit-based insurance score: it tells you exactly what data to check and dispute. See also: CLUE report (Comprehensive Loss Underwriting Exchange), Credit-based insurance score.
Assignment of Benefits (AOB): A form that transfers your right to file an insurance claim — and receive the payout — to a third party, typically a contractor. In Florida, AOB abuse by contractors drove significant litigation costs and contributed to the carrier exit crisis. Florida restricted AOB in homeowners insurance through SB 2A (2022). If a contractor asks you to sign an AOB, have a licensed attorney review it first.

C

Cancellation (mid-policy): Termination of a policy before its expiration date — not the same as non-renewal. Mid-policy cancellation by the insurer requires advance written notice (typically 20 to 45 days, depending on state) and is only allowed for specific reasons: non-payment of premium, material misrepresentation in the application, or a documented change in risk. Insurers rarely cancel mid-policy for risk reasons. See also: Non-renewal.
Captive agent: An insurance agent who represents only one company. State Farm agents are captive; they can only offer State Farm products. Captive agents know their carrier's products well but cannot shop multiple carriers for you when your options narrow. See also: Independent agent.
Citizens Property Insurance Corporation: Florida's state-chartered insurer of last resort. Not a private company and not a state agency — a nonprofit governmental entity funded by premiums and assessments. Citizens peaked at approximately 1.5 million policies in 2023. It can levy assessments on all Florida insurance policyholders — including auto and commercial — if claims exceed reserves. See also: Insurer of last resort, Residual market.
CLUE report (Comprehensive Loss Underwriting Exchange): A database maintained by LexisNexis that records insurance claims filed on a property for the past seven years. Insurers use CLUE reports to underwrite new policies and renewals. A property with multiple prior claims may be harder to insure regardless of who filed those claims — including claims filed by a previous owner. You can request your free CLUE report annually through LexisNexis.
Continuous load path: An unbroken chain of structural connections running from the roof, through the walls, down to the foundation, so that wind forces on the roof are carried into the ground instead of finding a weak link. Required for the FORTIFIED Gold designation. Straightforward to specify in new construction; verifying or completing one in an existing home can require opening walls, which is why Gold-level retrofits of older homes are rare and expensive. See also: FORTIFIED (IBHS FORTIFIED).
CoreLogic wildfire risk score: A proprietary wildfire risk score on a 1-100 scale used by some insurers for underwriting decisions. Not publicly accessible. Competes with Verisk FireLine. If a carrier declines you citing a "wildfire score," ask which vendor's score they used. See also: FireLine (Verisk FireLine), First Street Foundation.
Credit-based insurance score: A score derived from your credit history that many insurers use as one factor in deciding whether to offer coverage and at what price, where state law permits it. It is not the same as a lending credit score, though it draws on the same underlying credit data. Because errors on your credit record can lower it, a wrong entry can quietly drive an unfavorable insurance decision — which means correcting the credit error can change the insurance outcome. A few states restrict or ban its use in home insurance. See also: Adverse action, Underwriting.

D

Disaster moratorium: A temporary, state-ordered ban on non-renewals and cancellations of residential policies in an area hit by a declared disaster. California's is the broadest: under Insurance Code § 675.1 (SB 824), once the Governor declares a wildfire emergency, insurers cannot non-renew or cancel policies within the fire perimeter and adjoining ZIP codes for one year, with extra renewals for total-loss homes. Several other wildfire and hurricane states have adopted narrower versions. If your area had a declared disaster in the past year, a moratorium may make a non-renewal unlawful right now — confirm your ZIP code with your state insurance department before doing anything else. See also: Non-renewal.
Defensible space: A zone of managed vegetation around a home designed to slow the spread of wildfire and reduce ignition from embers. Most western states define 0-30 foot (Zone 1) and 30-100 foot (Zone 2) zones with different vegetation management requirements at each distance. Many carriers now require proof of maintained defensible space before writing or renewing WUI properties. Free assessments are available through state forestry agencies and local fire districts. See also: WUI (Wildland-Urban Interface).
Depopulation: The process of moving policies from a state's insurer of last resort to private carriers. Florida and Louisiana both mandate depopulation programs. When Citizens or Louisiana Citizens sends you a depopulation offer, you typically have 30 days to decline before the transfer happens automatically. Missing this window can mean losing eligibility to return to Citizens at the prior rate. See also: Insurer of last resort.
Diligent search (diligent effort): A rule in most states requiring a surplus lines broker to document that admitted carriers — often three — declined to write your home before placing you with a non-admitted (surplus lines) carrier. It exists to confirm you genuinely had no standard-market option. In a heavily non-renewed ZIP code, those declinations are easy to document because the admitted carriers really have left. You may be asked to sign a disclosure acknowledging the coverage is non-admitted and not protected by the state guaranty association. See also: Surplus lines broker, Surplus lines carrier.
Dwelling coverage: The portion of a homeowners policy that covers the structure of the home itself — walls, roof, foundation, and attached structures. Coverage limit should equal the full cost to rebuild the home at current prices (replacement cost value), not the market value or purchase price. Given construction cost inflation since 2020, coverage limits set several years ago may be significantly below today's rebuild cost. Review this limit at every renewal.

E

Elevation certificate: A document prepared by a licensed surveyor recording a property's elevation relative to the Base Flood Elevation (BFE) on FEMA flood maps. Used to determine National Flood Insurance Program (NFIP) premiums: homes elevated above BFE pay lower premiums. Required for many coastal and mapped-floodplain properties. Can cost $300 to $600 from a licensed surveyor and typically pays back through premium savings within one to two years for elevated properties. See also: NFIP (National Flood Insurance Program).

F

FAIR Plan (Fair Access to Insurance Requirements): A state-mandated pool providing basic property coverage to homeowners who cannot obtain admitted-market insurance. Every state with a FAIR Plan has a different product — California's 2025 Comprehensive policy now includes liability; most other state FAIR Plans cover fire and allied perils only. FAIR Plans are funded by assessments on all admitted carriers doing business in the state, and those costs can be passed through to all policyholders as surcharges after major events. See also: Insurer of last resort, Residual market.
FireLine (Verisk FireLine): A proprietary wildfire risk score on a 0-30 scale used by most major insurers for underwriting decisions. Higher score means higher risk. Not publicly accessible — you typically cannot look it up yourself without going through an agent or carrier. Carriers use FireLine thresholds as binary eligibility gates: above a certain score, the carrier will not write the property regardless of other characteristics. See also: CoreLogic wildfire risk score, First Street Foundation.
First Street Foundation: A nonprofit that publishes publicly accessible climate risk data, including wildfire risk scores (1-10 scale) and flood risk scores by property address at riskfactor.com. First Street's scores use their own methodology — not identical to the proprietary scoring systems carriers use internally — but provide a useful free proxy for understanding your property's climate risk profile before talking to agents or carriers. See also: FireLine (Verisk FireLine).
Force-placed insurance (lender-placed insurance): Coverage a mortgage lender purchases on a property when the homeowner's insurance lapses, is cancelled, or falls below the lender's minimum requirements. Force-placed insurance protects only the lender's financial interest — not the homeowner's personal property, not the homeowner's liability, and not the homeowner's equity above the loan balance. It is almost always more expensive than standard homeowners coverage and provides far less protection. Under Dodd-Frank, lenders must give 45 days' notice before placing force-placed coverage. See also: Non-renewal.
FORTIFIED (IBHS FORTIFIED): A tiered home-hardening certification developed by the Insurance Institute for Business & Home Safety. Three tiers, each including the one below it: FORTIFIED Roof (hardens the roof system — sealed roof deck, enhanced nailing, locked-down edges), FORTIFIED Silver (adds roof-to-wall connections, gable end bracing, and anchored attached structures), FORTIFIED Gold (adds a continuous load path and impact-protected windows, doors, and garage door). Primarily designed for wind resilience; a hail supplement exists for hail-prone regions. Designations are valid for five years, then require redesignation. Alabama and Louisiana mandate that carriers offer premium discounts for FORTIFIED-certified homes. See also: IBHS (Insurance Institute for Business & Home Safety), Sealed roof deck, Continuous load path.
FORTIFIED evaluator: An independent professional certified by IBHS to document that construction work meets the FORTIFIED standard. The evaluator — hired by the homeowner, not the contractor — photographs conditions before, during, and after the work, including details (deck seams, nailing patterns, hurricane straps) that are covered up as construction proceeds. Without evaluator documentation, IBHS will not issue a designation, no matter how well the work was done. Hire the evaluator before work begins. See also: FORTIFIED (IBHS FORTIFIED).

H

Hurricane deductible (wind deductible): A separate, higher deductible that applies specifically to hurricane or named storm damage — or in some policies, to any wind damage. Almost always expressed as a percentage of the dwelling coverage amount (typically 1 to 5%), not a flat dollar figure. A 2% hurricane deductible on a $350,000 home means $7,000 out of pocket before wind coverage begins. Standard in Florida, coastal states, Texas, and increasingly common in Colorado and the Midwest for hail exposure. Check your declarations page: if it says "2%" rather than "$2,000," you have a percentage deductible. See also: Wind/hail deductible.

I

IBHS (Insurance Institute for Business & Home Safety): A research and standards organization funded by the insurance industry. Develops and administers the FORTIFIED home-hardening certification program. Publishes research on which construction features and mitigation measures reduce losses from wind, hail, and wildfire. Not a regulatory body — carriers choose whether to recognize IBHS standards. See also: FORTIFIED (IBHS FORTIFIED).
Independent agent (independent insurance agent): An agent who represents multiple insurance companies and can shop competing carriers on your behalf. In a disrupted market where admitted carriers have exited, an independent agent with access to surplus lines markets may be your best path to finding replacement coverage. Ask explicitly whether the agent places surplus lines business and, if so, with which carriers. See also: Captive agent, Surplus lines carrier.
Insurer of last resort: A state-backed entity that provides homeowners insurance coverage when the private market will not write the risk. Common examples: California FAIR Plan, Florida Citizens Property Insurance Corporation, Louisiana Citizens, Texas FAIR Plan, TWIA. These entities are typically more expensive than admitted market coverage, offer less comprehensive products, and carry assessment risk — meaning all policyholders in the state can be charged surcharges if the insurer runs short of funds after a catastrophic event. See also: FAIR Plan, Residual market.

N

Named perils (named-perils policy): A policy that covers only the causes of loss specifically listed in the policy — fire, lightning, theft, and so on. Anything not named is not covered. Residual market products like the Texas FAIR Plan are typically named-perils policies, while standard homeowners policies often cover the dwelling on an "open perils" basis (everything except what is specifically excluded). The difference matters most after an unusual loss: under a named-perils form, the burden is on you to show the damage came from a listed peril. See also: Residual market.
NFIP (National Flood Insurance Program): The federal program that provides flood insurance for residential and commercial properties. Administered by FEMA. Standard homeowners policies do not cover flood damage from external sources — a separate NFIP or private flood policy is required. NFIP premiums are determined by property elevation, flood map designation, and coverage amount. Homeowners in non-Special Flood Hazard Areas (non-mapped floodplains) can still purchase NFIP coverage, typically at lower premiums. Elevation certificates can significantly reduce NFIP premiums for eligible properties. See also: Elevation certificate.
Non-renewal: When an insurance company decides not to offer a new policy when your current policy expires at its term end. Non-renewal is not the same as cancellation — it takes effect only at expiration and does not interrupt coverage during the current policy period. Insurers are required to give advance written notice of non-renewal (typically 45-60 days, though minimums vary by state). In most states, insurers are not required to explain the reason for non-renewal, though some states require carriers to disclose wildfire scores on request. See also: Cancellation (mid-policy).

R

Reinsurance: Insurance that insurance companies buy to spread their own catastrophic risk. When a carrier pays $500M in hurricane claims, its reinsurers cover the portion above the carrier's retention layer. Reinsurance costs have risen sharply since 2017-2020 as climate-related losses increased, and those increased costs are a primary stated reason for carrier exits from high-risk markets like Florida and California. Homeowners do not buy reinsurance directly — it operates behind the scenes, but its cost affects your premium.
Replacement cost value (RCV): The amount it would cost to rebuild or replace your home and property at today's prices, without subtracting for depreciation. Most standard homeowners policies pay RCV for dwelling coverage. In markets with rapid construction cost inflation, coverage limits set several years ago may be significantly below current RCV — leaving homeowners underinsured after a total loss. Review your dwelling coverage limit at every renewal and compare it to an independent contractor's rebuild cost estimate for your home. See also: Actual cash value (ACV).
Residual market: The collective term for state-backed insurance programs of last resort — FAIR Plans, Citizens, TWIA, and similar entities across the country. Homeowners in the residual market have coverage, but residual market products are typically more expensive, narrower in scope, and carry assessment risk (the ability to surcharge all state policyholders after a major event). The growth of residual market enrollment nationally is one of the clearest indicators of admitted market stress. See also: Insurer of last resort, FAIR Plan.
riskfactor.com: The publicly accessible website run by First Street Foundation that provides free flood, wildfire, wind, and heat risk scores by property address. Scores reflect First Street's own methodology, not the proprietary systems carriers use internally (Verisk FireLine, CoreLogic). Useful as a free starting point for understanding your property's risk profile before talking to agents. See also: First Street Foundation.

S

Sealed roof deck: A roof deck (the plywood or OSB sheathing under the shingles) with every seam taped or covered by an adhered waterproof membrane, so the deck itself sheds water even if a storm strips the roof covering. The core requirement of the FORTIFIED Roof designation and, per IBHS testing, the single biggest factor in preventing interior water damage during wind events. An unsealed deck can admit enough wind-driven rain through its seams to soak insulation, ceilings, and drywall — turning a roof repair into a gutted house. See also: FORTIFIED (IBHS FORTIFIED).
State guaranty association: A state-chartered fund that pays claims from insolvent admitted carriers, up to a per-claim dollar limit (typically $300,000 to $500,000, varying by state). If your admitted carrier becomes insolvent, the guaranty association steps in to pay eligible claims. Surplus lines carriers are not covered — if a surplus lines carrier becomes insolvent, your claims may go unpaid. Every state has a guaranty association; check your state's specific limits before relying on this protection. See also: Admitted carrier, Surplus lines carrier.
Surplus lines broker: A licensed broker authorized to place coverage with surplus lines (non-admitted) carriers. If an admitted agent cannot find you coverage in a tight market, they may refer you to a surplus lines broker. Before binding surplus lines coverage, ask your broker: Is this carrier on the state's approved surplus lines list? What is their AM Best rating? Are they covered by the state guaranty association if they become insolvent (the answer will be no)? See also: Surplus lines carrier, Independent agent.
Surplus lines carrier: An insurance company that is not licensed in your state through the standard admitted process. Surplus lines carriers can write risks the admitted market won't, which makes them an important option when admitted carriers exit a market. The tradeoffs: surplus lines carriers are not covered by the state guaranty association if they become insolvent, their rates are not state-regulated, and their forms are not state-approved. In a disrupted market, surplus lines coverage is often the only option — but understanding these differences matters before you sign. See also: Admitted carrier, State guaranty association.

T

TWIA (Texas Windstorm Insurance Association): Texas's insurer of last resort for wind and hail coverage in 14 Gulf Coast counties. Covers wind and hail damage only — not fire, theft, liability, loss of use, or flood. Homeowners in TWIA-eligible areas typically need both a TWIA policy for wind and a separate policy (from the admitted market or Texas FAIR Plan) for everything else. Like Florida Citizens, TWIA can issue post-event bonds and levy surcharges on all Texas policyholders if losses exceed reserves. See also: Insurer of last resort, Residual market.

U

Underwriting: The process an insurance company uses to evaluate a property's risk and decide whether — and at what premium — to offer coverage. Underwriting criteria include property location, construction type, age, wildfire or flood risk scores, claims history (CLUE report), and proximity to hazards. When a carrier "tightens underwriting" or "restricts new business," it means it is applying stricter eligibility criteria, which results in more non-renewals and declinations. You cannot appeal an underwriting decision to a regulator — but you can shop other carriers or pursue residual market options. See also: CLUE report, FireLine (Verisk FireLine).

W

Wind/hail deductible: A separate deductible that applies specifically to wind or hail damage, typically expressed as a percentage of the dwelling coverage amount rather than a flat dollar figure. Standard in Texas, Colorado, Florida, and coastal states — and increasingly common elsewhere as carriers reprice hail and wind risk. A 2% wind/hail deductible on a $400,000 home equals $8,000 out of pocket before wind or hail coverage begins. Check your declarations page: if it says "2%" rather than a dollar amount, you have a percentage deductible. See also: Hurricane deductible (wind deductible).
WPI-8 certificate: A Texas windstorm inspection certificate confirming that construction — including re-roofs, repairs, and additions — was built to the windstorm building code applicable in the coastal area. Issued by the Texas Department of Insurance (WPI-8 / WPI-8-E) or by TWIA (WPI-8-C). TWIA generally requires the certificate before it will cover a structure, with limited exceptions; uncertified work by a previous owner can block or limit coverage. When buying a coastal Texas home, ask for the WPI-8 history before closing. See also: TWIA (Texas Windstorm Insurance Association).
WUI (Wildland-Urban Interface): The zone where developed land — homes, subdivisions, infrastructure — meets undeveloped wildland vegetation: forests, brush, chaparral, and grasslands. WUI areas face elevated wildfire risk because structures are close to fire fuel and fire suppression is more difficult. Much of the current homeowners insurance crisis in California, Colorado, Arizona, Idaho, Montana, and New Mexico is concentrated in WUI communities. Rapid population growth in WUI zones over the past decade has placed more insured structures in areas carriers are actively withdrawing from. See also: Defensible space.

Last updated: June 2026.