--- title: "Overview of Financial Terminology for Homeowners Beginning a Rebuild" slug: "terminology" description: "When starting a home rebuild or repair, homeowners will encounter various financial terms across insurance, banking, construction, personal property, liability, and tax contexts. Understanding these terms is essential for making informed decisions. That said, this particular chapter should act a bit more as a reference guide, rather than a riveting summer novel and should serve as a primer for the glossaries which cover thousands of terms. We’ve sorted a number of the most common terms into a handful of articles to make them easy to reference on a move-forward basis including Insurance, Banking, Construction, Personal Property, Legal & Medical and Taxes. To get started, the following gives a taste of what’s to follow but certainly open the appropriate articles for more detail." updated: 2024-10-14T19:58:42Z published: 2024-10-14T19:58:42Z canonical: "rallybacks.loti.com/terminology" --- > ## Documentation Index > Fetch the complete documentation index at: https://rallybacks.loti.com/llms.txt > Use this file to discover all available pages before exploring further. # Terminology ## Chapter Overview of Financial Terminology for Homeowners Beginning a Rebuild or Repair ![](https://cdn.document360.io/e3e6d4bd-783c-404a-ae48-078db5956f3f/Images/Documentation/Loti - Chapter - Finance Terminology.webp) ### When starting a home rebuild or repair, homeowners will encounter various financial terms across insurance, banking, construction, Personal Property, liability, and tax contexts. Understanding these terms is essential for making informed decisions. That said, this particular chapter should act a bit more as a reference guide, rather than a riveting summer novel and should serve as a primer for the glossaries which cover thousands of terms. We’ve sorted a number of the most common terms into a handful of articles to make them easy to reference on a move-forward basis including Insurance, Banking, Construction, Personal Property, Legal & Medical and Taxes. To get started, the following gives a taste of what’s to follow but certainly open the appropriate articles for more detail. #### **Insurance Terms** 1. **Coverage** - **What It Is:** The amount of protection provided by an insurance Policy, detailing what is covered (e.g., dwelling, personal property) and the limits for each type. - **Relevance:** Ensures that you have enough protection to rebuild or repair your home and replace personal property. 2. **Premiums** - **What It Is:** The amount you pay, typically monthly or annually, to keep your insurance policy active. - **Relevance:** A key cost factor in maintaining insurance coverage during and after a rebuild. 3. **Deductibles** - **What It Is:** The amount you must pay out of pocket before your insurance company pays a Claim. - **Relevance:** Higher deductibles can lower premiums, but you’ll pay more upfront if a claim is made. ### ![](https://cdn.document360.io/e3e6d4bd-783c-404a-ae48-078db5956f3f/Images/Documentation/Loti - Bank Terms.webp) #### **Banking Terms Related to Mortgages and Loans** 1. Mortgage - **What It Is:** A loan used to purchase a home, where the property itself serves as collateral. - **Relevance:** If you have a mortgage, your lender may require you to maintain certain insurance coverages during a rebuild. 2. Loan-to-Value Ratio (LTV) - **What It Is:** The ratio of your loan amount to the appraised value of your property. - **Relevance:** Affects your ability to get additional financing or Refinancing options during a rebuild. 3. Equity - **What It Is:** The difference between your home’s current market value and the amount you still owe on your mortgage. - **Relevance:** Equity can be used to secure loans for rebuilding or repairs. ### ![](https://cdn.document360.io/e3e6d4bd-783c-404a-ae48-078db5956f3f/Images/Documentation/Loti - Construction Helmet Terms.webp) #### **Construction Project Terms** 1. Contract **Terms** - **What It Is:** The specific conditions, clauses, and agreements outlined in a construction contract between you and a Contractor. - **Relevance:** Defines the Scope of Work, timelines, payment schedules, and responsibilities, ensuring clarity and protection for both parties. 2. Change Order - **What It Is:** A document that outlines changes to the original construction contract, including cost adjustments and project modifications. - **Relevance:** Helps manage and document any changes during the rebuild process. #### **Personal Property Terms** 1. Depreciation - **What It Is:** The reduction in value of an item over time due to wear and tear or obsolescence. - **Relevance:** Affects how much your insurance will pay for lost or damaged items based on their current, not original, value. 2. Actual Cash Value (ACV) - **What It Is:** The value of your property after depreciation has been deducted from its replacement cost. - **Relevance:** ACV is what your insurance might pay if you have a standard policy, resulting in lower payouts for older items. 3. Replacement Cost Value (RCV) - **What It Is:** The cost to replace damaged or destroyed property with new items of similar kind and quality, without deducting depreciation. - **Relevance:** Ensures full reimbursement for replacing lost items, provided your policy includes RCV coverage. ### ![](https://cdn.document360.io/e3e6d4bd-783c-404a-ae48-078db5956f3f/Images/Documentation/Loti - Scales Terms.webp) #### **Liability & Medical Terms** 1. **Liability** - **What It Is:** Legal responsibility for injuries or damages you may cause to others, covered under your Homeowners Insurance. - **Relevance:** Important during a rebuild to protect against claims if someone is injured on your property. 2. **Retainers** - **What It Is:** A sum of money paid upfront to secure the services of a contractor, lawyer, or other professional. - **Relevance:** Helps ensure that professionals are available when needed and that you’re prioritized in their schedule. #### **Tax Terms** 1. **Deductions** - **What It Is:** Expenses that can be subtracted from your taxable income, reducing the amount of tax you owe. - **Relevance:** Rebuild-related costs, such as mortgage interest and some insurance payments, may be Deductible. 2. **Appraisals** - **What It Is:** An Assessment of your property’s value by a certified professional, often required for loans, insurance, or tax purposes. - **Relevance:** Crucial for determining the value of your home before and after rebuilding, affecting insurance and taxes. 3. **Trusts** - **What It Is:** A legal arrangement where a Trustee holds and manages property on behalf of beneficiaries. - **Relevance:** Useful for Estate planning and protecting your property during the rebuilding process, ensuring it’s managed according to your wishes. ### Learn More As you can probably see, this is just the tip of the iceberg but as always we are here to help. Let’s get going… Also sometimes referred to as Coverage C in your policy. This bucket of coverage includes everything NOT permanently attached to your home or other buildings on your property. This generally includes items such as clothing, furniture, toys, jewelry, household appliances and artwork as well as some more subtle things such as cash, food and even your identity. This is the legal contract between you (the insured) and your insurance company (the insurer). The primary purpose of this contract is to make your accidental loss financially palatable in exchange for a pre-determined fee (your premium). A formal request made by the policyholder (you) to your insurance company for coverage or payment for a covered loss. A mortgage is a type of loan to purchase your home or other types of real estate. The property itself is collateral for an agreement where the borrower pays the lender over time. In a claims process, checks for repairs in coverage A & B may be written out to both your lender as well as yourself. In addition, your lender will typically require a final inspection (just like when you initially opened your mortgage / purchased your home) before releasing final funds. A financial term used by lenders to express the ratio of a loan to the value of an asset purchased. Replacing an existing mortgage with a new one, typically with different terms. The difference between the market value of a property and the amount owed on it. A legally binding agreement between the contractor and the homeowner outlining the scope of work, terms, and conditions of the project. A person or company responsible for construction work. A detailed document specifying the work to be performed, including tasks, materials, and timelines. A document that outlines changes to the original scope of work, including adjustments to costs and timelines. Your personal property and associated items generally lose value over time due to age, use and general wear and tear. Depreciation is the percentage of value lost since you first purchased the item. Some items depreciate faster than others - such as TVs - and other items don’t depreciate at all - like antiques. We calculate this percentage automatically for you based on typical categories and use, but this value can be easily edited to account for unique items and situations. The estimated value of a particular item right before it was damaged or lost. Essentially, what you could have sold that item for immediately before the incident. We estimate this automatically for you (it can be edited) and is calculated by taking the original cost and subtracting depreciation over time. Like the industry, we use a simple calc vs. compound depreciation. Ex: The original price for a 3 year old chair was $100, depreciating at 10% per year. The ACV = $100 - (30% x $100) = $70 This is the cost to completely replace or repair your lost or damaged property in "today's" dollars. If you do have this coverage, your insurance company may issue you a check based on the Actual Cash Value of an item and then its on you to prove the replacement cost is higher and get reimbursed for the difference. This can process can also be referred to as "Recoverable Depreciation" An insurance policy that provides financial protection iin the event of a disaster which covers damages to your home, personal property and other assets. These policies can also provide liabiltiy insurance, cost of living expense reimbursements and more. The portion of the covered loss that you have to cover on your own. Basically, if you have a $5,000 deductible and your overall claim is $100,000 then your insurance company is repsonsible for $100k - $5k = $95,000 and you have to cover the remaining $5,000. The value placed on a property by a public tax assessor for the purposes of taxation. An individual or organization that holds or manages and invests assets for the benefit of another. All the money and property owned by a particular person, especially at death.