Colorado Surplus Home
Insurance terms, in plain English.
Use this glossary alongside the definitions in your own policy. Contract language controls.
- Actual cash value (ACV)
- A valuation method that generally accounts for depreciation, subject to the definition and calculation in the policy.
- Admitted insurer
- An insurer authorized by the state to transact the relevant insurance business. Authorization does not mean every claim or amount is guaranteed.
- Binder
- Temporary evidence of insurance that must be issued or confirmed by a person with appropriate authority. An inquiry alone is not a binder.
- Deductible
- The amount or method of sharing a covered loss that the policy assigns to the insured. A percentage deductible must be read with its stated calculation base.
- Diligent effort
- The effort required to seek coverage from the admitted market before a surplus placement when applicable. The broker must evaluate current Colorado requirements and exceptions.
- Dwelling limit
- The stated limit for the insured building, subject to other policy terms. It is not necessarily the home’s sale price or mortgage balance.
- Endorsement
- A document that adds to or changes the policy. Read it together with the base form and declarations.
- Exclusion
- A provision identifying a cause, property, activity or circumstance the policy does not cover.
- FAIR Plan
- Fair Access to Insurance Requirements Plan. Colorado’s program offers limited property coverage to qualifying applicants; it is not equivalent to a broad homeowners package.
- Force-placed insurance
- Coverage a lender or servicer may obtain when it believes required insurance is missing. It may protect only the lender’s interest and can be expensive.
- Guaranty association
- A statutory mechanism addressing certain covered claims after an insurer becomes insolvent. Colorado surplus policies lack protection under the Colorado Insurance Guaranty Association Act.
- Loss of use
- Coverage that may help with specified living expenses or lost rent following a covered loss. Triggers, limits and time periods depend on the policy.
- Minimum earned premium
- A policy provision that may allow part of the premium to be retained after coverage begins, even if the policy ends early.
- Named perils
- Coverage structured around a list of covered causes of loss, subject to all conditions and exclusions.
- Nonadmitted insurer
- An insurer without a Colorado certificate of authority. An eligible nonadmitted insurer may participate in a properly arranged surplus placement.
- Nonrenewal
- A decision not to continue a policy for another term. It differs from cancellation during the current term.
- Open perils
- A coverage structure generally covering direct physical loss unless excluded or limited. It does not mean that every loss is covered.
- Replacement cost
- A valuation approach based on repair or replacement, subject to limits and conditions such as completing repairs and meeting claim requirements.
- Roof payment schedule
- A provision that may determine payment using roof age, material or another schedule. It can differ from ordinary replacement-cost or ACV wording.
- Surplus lines
- A regulated route for obtaining certain coverage from eligible nonadmitted insurers, through appropriately licensed intermediaries and subject to placement requirements.
- Vacancy
- A policy-defined condition concerning occupancy or contents. A home can be subject to vacancy restrictions even when its owner checks it periodically.