These are grouped by what they do rather than alphabetically, because the terms only make sense in relation to each other. Read it once end to end. After that, use it as a lookup.
How the contract is built
1. Policy form. The standardized contract underneath your policy, identified by a number on the declarations page like HO 00 03 or DP 00 03. It reads the same for everyone who holds it. The form determines what the contract assumes about your property before anyone types in your address. More on the five forms a rental can be written on.
2. Declarations page. The one or two pages at the front written specifically about your property. Named insured, location, limits, deductibles, and the list of forms that apply. Everything else in the packet is standard language. More on reading a declarations page.
3. Endorsement. A separate document that amends the base form. It can add coverage, remove coverage, or handle administration. Where an endorsement and the base form disagree, the endorsement controls. More on the seven that matter most.
4. Exclusion. Language stating that a cause of loss, a type of property, or a category of activity is not covered. Exclusions appear in several places in a policy, not one, and the definitions section functions as an exclusion by narrowing what a word means. More on where exclusions hide.
5. Sublimit. A cap that applies to one category inside a larger limit. A policy with a $600,000 dwelling limit can carry a $10,000 sublimit on water backup and a $1,500 sublimit on theft of business property. The headline number on the declarations page is rarely the number that applies to your specific loss.
What triggers coverage
6. Peril. A cause of loss. Fire, windstorm, hail, theft, vandalism. Not to be confused with the damage itself. The peril is what happened. The loss is the result.
7. Named perils. A structure where the policy lists the causes of loss it covers. If your loss does not match something on the list, it is not covered, and the burden is on you to show it matches. DP-1 and DP-2 work this way, and so does personal property on most homeowners forms.
8. Open perils, also called special form. A structure where the policy covers any cause of loss it does not specifically exclude. The burden shifts to the carrier to identify an exclusion. DP-3 and the dwelling portion of an HO-3 work this way. More on why the burden of proof matters.
9. Anti-concurrent causation. A clause stating that if an excluded cause contributes to a loss, the exclusion applies regardless of what else contributed, in any sequence. It exists to prevent arguments that a covered cause should carry a claim when a covered and an excluded cause combine. It is the most powerful sentence in most property policies.
10. Ensuing loss. An exception that restores coverage for damage that follows an excluded event. A policy can exclude faulty workmanship and still cover the fire that results from it. This is why you read an exclusion to the end of the paragraph rather than stopping at the first sentence.
The coverage buckets
11. Coverage A, dwelling. The structure itself. This limit should reflect the cost to rebuild, which is a construction number rather than a market value or a tax assessment. Rebuild cost and resale price move independently.
12. Coverage B, other structures. Detached buildings and structures on the property. Garage, shed, dock, fence, detached bunkhouse. Usually generated automatically at ten percent of Coverage A, which is a guess rather than a measurement.
13. Coverage C, personal property, and business personal property. Coverage C is contents. On a homeowners form it defaults to a percentage of Coverage A and runs on named perils. On a dwelling form it is limited to property kept on site to service the premises and the default limit is small. Furniture bought to serve paying guests is business personal property, which is a different category with different treatment.
14. Fair rental value and business income. Two ways to insure lost revenue, and they are not interchangeable. Fair rental value is measured against what the property would rent for on a lease, usually as a percentage of Coverage A. Business income is measured against what the operation actually earns. For a property producing nightly revenue, the second is the correct basis and the first is what most policies default to.
15. Ordinance or law. Coverage for the extra cost of meeting current building code during a rebuild. The base policy pays to replace what was there. It does not pay for the egress windows, insulation, or electrical upgrade that code now requires. This is an endorsement, usually sold as a percentage of Coverage A.
How the money gets calculated
16. Replacement cost. The claim pays what it costs to replace the damaged property with new property of like kind and quality, without deducting for age or condition.
17. Actual cash value. Replacement cost minus depreciation. A sixteen-year-old roof with a twenty-year life is worth a fraction of what a new one costs, and that fraction is what the claim pays. The gap between these two terms is the single largest number in most claim disputes.
18. Recoverable depreciation. On a replacement cost policy, the carrier often pays actual cash value first and releases the withheld depreciation after the work is finished and documented. It is your money, it is held back on purpose, and it is forfeited if you never complete the repair or never submit the invoices.
19. Coinsurance. A clause requiring you to insure the property to a stated percentage of its value, commonly eighty or ninety percent. Fall short and the claim payment gets reduced by formula, even on a partial loss well under the limit. Common on commercial property forms and easy to trip when rebuild costs rise faster than the limit does.
20. Percentage deductible. A deductible expressed as a percentage of Coverage A rather than a flat dollar amount, typically for wind, hail, named storm, or hurricane. Two percent on a $600,000 dwelling limit is $12,000, not two percent of the loss. Do this multiplication before you need to.
Who is covered, and where
21. Named insured. The person or entity the policy is issued to. It should match the deed. An LLC on title with an individual on the policy, or the reverse, becomes an argument at claim time.
22. Additional insured. A party added to the policy by endorsement so that the coverage extends to them, usually for liability arising out of the named insured's operations. It is not the same as a loss payee, which protects a lender's financial interest, and it is not the same as a certificate of insurance, which is only evidence that coverage existed on the day it was issued.
23. Residence premises. A defined term in every homeowners policy meaning the dwelling where you reside. The rest of the contract is built on top of it, including the definition of insured location on the liability side. The policy does not define what reside means, which is where the disputes come from. More on what a homeowners form assumes.
24. Insurable interest. A financial stake in the property that would be harmed by its loss. Without it there is nothing to collect, which is why the ownership entity, the mortgage, and the policy all need to describe the same arrangement.
25. Admitted and surplus lines. An admitted carrier is licensed in your state, files its rates with the regulator, and its policyholders are backed by the state guaranty fund if it fails. A surplus lines, or non-admitted, carrier is none of those things. Most dedicated short-term rental programs are surplus lines. That is normal for this risk class, and it makes the carrier's financial strength rating worth asking about.
How to use this page
Open your declarations page next to it. Work through the four things that matter most and use the definitions above to interpret what you find.
Find the base form number and decide whether you are on named perils or open perils. Find the occupancy description and compare it to how the property actually runs. Find the valuation basis on the dwelling and separately on the roof. Then convert your wind or hail deductible into dollars.
Those four answers, read through this vocabulary, will tell you more about your coverage than any summary anyone can give you over the phone.
What comes next
The liability vocabulary is its own subject and gets its own treatment later in this series. Occurrence versus claims-made, per-occurrence versus aggregate limits, and how an umbrella attaches to what sits beneath it are terms that behave differently from everything above, and they deserve more room than a glossary entry.
If you want a second set of eyes on what you find, start with a free Risk Score. Thirty checks across six risk domains, about eight minutes, no email required to see your results.
This is the eighth article in a series on short-term rental insurance fundamentals, and it closes the first section. Threshold STR reads policies against how properties actually operate, and delivers a written, ranked summary of the gaps.