> Source: https://insurancemonster.com/glossary/
> A plain-English glossary of California auto and home insurance terms: SR-22, FAIR Plan, surplus lines, difference-in-conditions, HO-3, HO-6, and more.
> InsuranceMonster - independent California insurance broker (CA DOI Lic. #4445775).

# California insurance glossary

Clear definitions for the auto and home insurance terms that come up most in California.

- **Actual cash value (ACV)** - A claims valuation that pays replacement cost minus depreciation, so older items are worth less. Contrast with replacement cost coverage.
- **Admitted carrier** - An insurer licensed by the California Department of Insurance and backed by the California Insurance Guarantee Association if it fails. Contrast with surplus lines (non-admitted) insurers.
- **Binder** - Temporary proof of insurance that confirms coverage is in force before the full policy is issued.
- **Bodily injury liability** - Coverage that pays for injuries you cause to other people in an at-fault accident, up to your policy limits. Required in California.
- **Broker** - A licensed intermediary who represents you, the client, and shops your risk across multiple insurance carriers or MGAs, rather than selling for a single company.
- **Collision coverage** - Auto coverage that pays to repair or replace your vehicle after a collision, regardless of fault, subject to your deductible.
- **Comprehensive coverage** - Auto coverage for non-collision losses to your vehicle, such as theft, vandalism, fire, and weather damage.
- **Defensible space** - The managed area around a home, generally out to 100 feet, where vegetation is reduced to slow a wildfire and protect the structure.
- **Difference-in-conditions (DIC)** - A wrap policy that sits alongside a California FAIR Plan policy to add coverages the FAIR Plan excludes, such as liability, theft, and water damage.
- **Dwelling coverage** - The part of a home policy that pays to repair or rebuild the structure itself, ideally set to full rebuild cost.
- **Dwelling fire policy (DP)** - A policy for non-owner-occupied, seasonal, or vacant homes, available in DP-1, DP-2, and DP-3 forms of increasing breadth.
- **Endorsement** - An add-on that changes a policy, either adding, removing, or modifying coverage.
- **FAIR Plan** - California's insurer of last resort - a syndicated pool providing basic fire coverage when the standard market will not write a home. Not a state agency and not full homeowners insurance.
- **Fire Hazard Severity Zone (FHSZ)** - A California mapping designation (moderate, high, or very high) that rates wildfire hazard and influences insurance and building requirements.
- **HO-3** - The most common homeowners policy form, covering the dwelling on an open-perils basis and personal property on a named-perils basis.
- **HO-4** - A renters insurance policy, covering a tenant's belongings, liability, and living expenses, but not the building.
- **HO-6** - A condo unit-owner policy, covering the interior, belongings, liability, and loss assessments beyond the HOA master policy.
- **Liability coverage** - Coverage that pays for harm you cause to other people or their property, whether on the road or at your home.
- **Loss of use** - Coverage for additional living expenses, like a hotel and meals, if a covered loss makes your home uninhabitable.
- **Named-perils** - Coverage that applies only to perils specifically listed in the policy. Contrast with open-perils.
- **Non-admitted carrier** - See surplus lines. An insurer not licensed by the state, used for risks the standard market declines, and not backed by the guarantee association.
- **Non-owner policy** - An auto liability policy for a driver who does not own a vehicle, often used to satisfy an SR-22 requirement.
- **Non-renewal** - An insurer's decision not to continue a policy at the end of its term, distinct from mid-term cancellation, and accompanied by advance notice.
- **Non-standard auto** - Auto insurance for drivers considered high-risk due to tickets, accidents, a DUI, a lapse, a foreign license, or an SR-22 requirement.
- **Open-perils** - Coverage for all causes of loss except those specifically excluded. Contrast with named-perils.
- **Premium** - The amount you pay for an insurance policy, typically monthly, semi-annually, or annually.
- **Renters** - Renters insurance protects your personal belongings from unexpected events like theft, fire, or water damage.
- **Replacement cost** - A claims valuation that pays to replace damaged property with new equivalent items, without deducting for depreciation.
- **SR-22** - A certificate an insurer files with the DMV proving a driver carries the required liability coverage, often needed after a DUI, a lapse, or serious violations.
- **Surplus lines** - Coverage placed with non-admitted insurers for risks the standard market declines, such as many wildfire-exposed homes. Not protected by the California Insurance Guarantee Association.
- **Underinsured motorist** - Coverage that pays your damages when an at-fault driver's liability limits are too low to cover your losses.
- **Uninsured motorist** - Coverage that pays your damages when the at-fault driver has no insurance, a common situation in California.

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