3. Concepts of Home Ownership

Question 1

COINSURANCE CLAUSE

Answer 1

A clause in insurance policies covering real property that requires the policy holder to maintain fire insurance coverage generally equal to at least 80 percent of the property’s actual replacement cost.

Question 2

EQUITY

Answer 2

The interest or value that an owner has in property over and above any indebtedness.

Question 3

HOMEOWNER’S INSURANCE POLICY

Answer 3

A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.

Question 4

LIABILITY COVERAGE

Answer 4

Special insurance that provides coverage for injuries or losses sustained.

Question 5

REPLACEMENT COST

Answer 5

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.