Home cost glossary
Short definitions of the terms that appear on quotes, policies, condominium documents, and closing statements. These describe common Canadian usage — the wording in your own contract, policy, or statute governs in any specific transaction.
- Replacement cost
- The cost to rebuild a structure or replace an item with one of similar kind and quality at today's prices, without deducting for age or wear.Used for the dwelling limit on a home insurance policy. It is not market value and does not include land.Home insurance costs
- Actual cash value
- Replacement cost minus depreciation for age and wear. Payouts on this basis are lower than replacement cost.Some policies apply this basis to a roof or older systems even when the rest of the policy is replacement cost.Home insurance costs
- Deductible
- The amount you pay yourself on a claim before the insurer pays anything. A higher deductible generally lowers the premium.Water and earthquake perils often carry their own, higher deductible. Check each peril separately.Home insurance costs
- Reserve fund
- Money a condominium corporation sets aside for major repair and replacement of common elements, guided by a reserve fund study.Read the study and the corporation's status or estoppel certificate before relying on the balance.Condo ownership
- Adjustment
- A closing calculation that splits prepaid or unpaid costs between seller and buyer for the part of the period each owns the property.Property tax, condo fees, and fuel are common adjustments. Your lawyer or notary prepares the statement.Closing costs
- Amortization
- The total length of time set to pay a mortgage down to zero, which determines how each payment splits between interest and principal.Different from the term, which is the length of the current contract with the lender.Total cost planner
- Contingency
- An amount you set aside in a renovation or repair budget for conditions discovered after work begins.You choose the amount. It is a planning allowance, not a published rate.Renovation ROI
- Lifecycle cost
- The total cost of owning a component over its useful life: purchase and installation, operating and maintenance costs, and eventual replacement.Useful when comparing a cheaper install with higher running costs against the opposite.Total cost planner
- Quote versus estimate
- A quote is a fixed price for a defined scope of work. An estimate is a contractor's best projection that can change as the work proceeds.Ask in writing which one you have been given, and what would change the price.
- Carrying cost
- The recurring cost of holding a property: mortgage payment, property tax, insurance, utilities, condo fees, and a maintenance reserve.Total cost planner
- STC (Sound Transmission Class)
- A single-number laboratory rating of how much airborne sound a specific tested assembly blocks.Applies to the tested assembly as built. Real buildings usually perform lower because of flanking paths.Sound insulation
- IIC (Impact Insulation Class)
- A rating of how much impact sound, such as footsteps, is transmitted through a floor–ceiling assembly.Sound insulation
- Endorsement
- An addition to an insurance policy that adds, limits, or changes coverage, such as sewer backup or overland water.Home insurance costs
- Load calculation
- A licensed electrician's calculation of the electrical demand a home places on its service, used to decide whether new loads can be added.Electrical panels