Actual cash value- This kind of policy pays replacement cost, minus a deduction for depreciation. For example: to replace your stolen bike, which you bought for $500 but is now valued at $200 because of depreciation, your insurance company will pay you $200.

Actual cash value v. Replacement cost- Replacement cost is a higher level of coverage. It means that your insurance company will pay to replace what was lost, even its current value is much less than what you paid for it.

Deductible- The amount you pay before your insurance company starts paying.

Depreciation- The loss in value of something over time.

Floaters, riders, endorsements, and schedules- These terms have similar meanings. See the definitions below.

Floater– A floater insures movable property, such as jewelry, furs, baseball card collections, etc. It provides more coverage than a regular homeowners policy for such items.

Rider/Endorsement– A form attached to an insurance policy that alters the policy’s coverage, terms and/or conditions.

Schedule– A list of (scheduled) items that are covered under a policy. Schedules can list specific benefits, assets and other features that are unique to the policy, such as earthquake insurance.

Flood insurance- Flood insurance is offered through the National Flood Insurance Program. See http://www.floodsmart.gov for more information. Remember: homeowners insurance DOES NOT cover flood damage.

Guaranteed or extended replacement cost- This is the highest level of coverage. This type of policy covers replacement costs even if they exceed your policy limit.

Personal Liability- Protects you and members of your household from financial loss should someone claim injury on your property (and sue you).

Peril- Most insurance providers covers anywhere from 10-16 of the most commonly recognized perils, including fire, lighting, vandalism, theft, hail, etc.

Premium- The price of a policy over a 12 month period.

Replacement cost- This kind of policy pays the replacement cost, without a deduction for depreciation.  This is the most recommended type of valuation.