Insurance Claim Glossary
Insurance policies are written in complex legal and technical language. We've compiled this comprehensive glossary to help you understand your policy and navigate your property damage claim with confidence.
A
Actual Cash Value (ACV)
The value of your property at the time of loss, determined by subtracting depreciation from the replacement cost. ACV policies pay less than Replacement Cost Value (RCV) policies.
Additional Living Expenses (ALE)
Coverage that pays for the extra costs of living away from home while your property is being repaired after a covered loss (e.g., hotel bills, restaurant meals, temporary rentals).
Adjuster
A professional who investigates insurance claims to determine the extent of the insurance company's liability. There are three types: Company or Staff Adjusters (work for the insurer), Independent Adjusters (hired by the insurer), and Public Adjusters (hired by you, the policyholder).
Anti-Concurrent Causation Clause
A policy provision stating that if a loss is caused by two or more perils, one covered and one excluded, the entire loss is excluded regardless of the sequence of events. Commonly used to exclude wind damage when flooding also occurs.
Appraisal
A dispute resolution process built into most property insurance policies. If you and the insurance company disagree on the amount of loss, either party can demand appraisal to resolve the valuation dispute.
Appraisal Award
A binding legal document signed by at least two of the three appraisal panel members (the policyholder's appraiser, the carrier's appraiser, or the umpire) that establishes the final dollar amount of the property loss.
Appraiser Appointment
The formal selection of a competent, disinterested property valuation expert by either the policyholder or the insurance carrier to represent them in the appraisal process.
Assignment of Benefits (AOB)
A contract signed by a policyholder that transfers their insurance claim rights, benefits, and direct payment control to a third party, such as a contractor or mitigation company.
B
Bad Faith
A legal claim against an insurance company for failing to fulfill its obligations to its policyholders, such as unreasonably denying coverage, delaying payment, or refusing to investigate a claim in a proper manner.
Business Interruption (BI)
Coverage for lost income and extra expenses incurred when a business is forced to suspend operations due to direct physical loss or damage to its premises.
Business Personal Property (BPP)
Coverage under a commercial property policy that protects movable items owned by a business, such as inventory, office equipment, furniture, and machinery.
C
Carrier
Another term for the insurance company that issues and assumes the risk of an insurance policy.
Carrier Adjuster
An insurance adjuster who is directly employed by the insurance carrier to represent the insurer's interests and evaluate your claim.
Citizens Property Insurance Corporation
A state-backed, not-for-profit insurance corporation in Florida created to provide property insurance to eligible individuals who cannot find coverage in the private market.
Civil Remedy Notice (CRN)
A formal filing required in Florida before a policyholder can bring a lawsuit against an insurance carrier for bad faith, giving the carrier 60 days to resolve the dispute.
Claim
A formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event.
Co-Insurance Penalty
The reduction in a claim settlement payout resulting from a policyholder carrying less property insurance coverage than required by the policy's coinsurance clause.
Coinsurance
A penalty clause in commercial property policies that requires the policyholder to carry a minimum amount of insurance (usually 80 to 100 percent of the property's value). If the limit is too low, the payout for any partial loss is significantly reduced.
Commercial Property Claim
An insurance claim filed by a business entity or commercial property owner for damage to physical structures, equipment, or business operations.
Concurrent Causation
A legal doctrine stating that when a loss is caused simultaneously by multiple perils, some covered and some excluded, the entire damage is covered unless the policy contains an anti-concurrent causation clause.
Contingency Fee Contract
A service contract where the professional's fee is a percentage of the final recovery. Public adjusters typically utilize this model, meaning there are no upfront costs and no fee unless they secure a settlement.
D
Debris Removal
A standard policy coverage part that pays for the cost of clearing and disposing of damaged building materials, fallen trees, and wreckage after a covered peril.
Deductible
The amount you must pay out of pocket before your insurance coverage kicks in. Deductibles can be a flat dollar amount or a percentage of the dwelling coverage (common for wind, hail, or hurricane claims).
Deductible Buy-Back
An endorsement that allows policyholders to purchase a lower deductible for specific high-risk perils, such as windstorms, by paying a higher premium.
Demand Letter
A formal document sent by a policyholder or their representative to the insurance carrier detailing the loss, asserting coverage, and demanding a specific settlement amount.
Depreciation
The decrease in the value of property over time due to age, wear and tear, and obsolescence. Non-recoverable depreciation cannot be claimed back, whereas recoverable depreciation can be claimed once repairs are completed.
Depreciation Holdback
The portion of a replacement cost settlement withheld by the carrier until the policyholder submits proof (such as signed contracts and invoices) that repairs are complete.
Direction to Pay
A signed agreement authorizing the insurance company to issue claim checks directly to a contractor, roofer, or restoration firm instead of the policyholder.
Dispute Resolution Clause
A policy provision (such as appraisal or mediation) that details the mandatory steps and options available to resolve disagreements over coverage or valuation.
Duties After Loss
A list of mandatory requirements in an insurance policy that the insured must perform after a loss occurs, such as giving prompt notice, preventing further damage, and cooperating with inspections.
E
Endorsement
An amendment or addition to an existing insurance policy that changes its terms or scope of coverage. Also known as a rider.
Exclusion
Specific situations, conditions, or perils that are not covered by the insurance policy (e.g., standard home policies exclude flood and earth movement).
Exclusionary Language
Specific phrasing in an insurance policy that defines and limits what situations or events are explicitly denied coverage under the contract.
F
Fair Rental Value
Coverage that compensates a property owner for the loss of rental income while a tenant-occupied property is being repaired after a covered loss.
First-Party Claim
A claim made by the policyholder directly to their own insurance company for damage to their own insured property.
Florida Statute Section 626.854
The primary regulatory framework in Florida governing the ethical standards, contracts, fee caps, and conduct of public insurance adjusters.
G
Gradual Water Damage Exclusion
A common policy exclusion denying coverage for water damage that occurs slowly over time, such as slow leaks behind a wall, as opposed to a sudden, accidental burst pipe.
H
Hail Damage Claim
An insurance request seeking compensation for physical damage to roofs, siding, windows, and exterior structures caused by falling ice stones.
Hurricane Deductible
A separate, higher deductible for hurricane-related windstorm claims, typically expressed as a percentage (ranging from 1 to 10 percent) of the property's dwelling limit.
I
Independent Adjuster
An adjuster hired by the insurance company on a contract basis to handle claims. Although called 'independent,' they still represent the insurance company's interests.
Independent Claims Adjuster
A licensed professional who represents the insurance carrier on an outsource or contract basis to inspect and estimate losses.
L
Law and Ordinance Coverage
An endorsement providing additional coverage to cover the increased costs of building repairs required to bring the property up to current local construction codes.
Line-Item Estimate
A highly detailed construction cost estimate (often written in Xactimate) specifying the exact quantities, materials, and labor rates for every task required to rebuild a structure.
Loss Consulting
Professional advisory services provided to help policyholders document, organize, and present complex claims to their carriers.
Loss of Use
A provision in homeowners policies that covers Additional Living Expenses (ALE) and sometimes Fair Rental Value if the home cannot be occupied after a covered loss.
M
Material Misrepresentation
A false statement made by an applicant or policyholder during the policy purchase or claim process that affects the insurer's underwriting or coverage decisions, which can void the policy.
Mitigation
The policyholder's duty to take reasonable steps to prevent further damage to their property after a loss occurs (e.g., placing a tarp over a roof leak or extracting standing water).
Mitigation Contractor
A specialized water extraction, board-up, or dry-out contractor hired to perform emergency services to protect property immediately after a loss.
N
Named Peril Policy
An insurance policy that only provides coverage for the specific perils explicitly listed in the policy document.
Named Storm Deductible
A deductible applied to damages caused by weather systems officially named by the National Hurricane Center, typically calculated as a percentage of the dwelling limit.
Non-Recoverable Depreciation
Depreciation that is deducted permanently from the actual cash value of an item or structure, meaning the policyholder cannot recover this amount even after repairs are completed.
O
Open Peril Policy (All-Risk)
An insurance policy that covers direct physical loss caused by any peril, unless that peril is specifically excluded in the policy language. Generally broader than a Named Peril policy.
Ordinance or Law Coverage
An endorsement that covers the additional cost of bringing a damaged building up to the latest local and state building codes during the repair or rebuilding process.
Overhead and Profit (O&P)
An industry-standard addition (typically 10 percent for overhead and 10 percent for profit, or 20 percent total) added to repair estimates when the job requires a general contractor to coordinate multiple trades.
P
Peril
The specific cause of a loss, such as fire, windstorm, hail, theft, or sudden pipe burst.
Personal Adjuster
Common informal name for a Public Insurance Adjuster. The professional is personal in the sense that they represent the policyholder personally, not the insurance carrier.
Policy Limits
The maximum dollar amount an insurance company is contractually obligated to pay under a specific coverage part (such as Dwelling, Other Structures, or Personal Property) for a single loss.
Private Adjuster
Common informal name for a Public Insurance Adjuster. The professional is private in the sense that they are hired privately by the policyholder rather than employed by the insurance carrier.
Proof of Loss (POL)
A formal, sworn statement made by the policyholder to the insurance company regarding the extent of the property loss. It is a critical legal document that often has strict submission deadlines.
Proof of Loss Deadline
The strict time limit specified in the insurance policy (often 60 days from the date of the carrier's request) within which a policyholder must submit their sworn proof of loss.
Proof of Loss Sworn Statement
A notarized legal document signed by the policyholder declaring the exact cause, date, and financial value of a property loss.
Public Adjuster
A licensed professional hired exclusively by the policyholder to help evaluate, navigate, and negotiate an insurance claim. Also known informally as a private adjuster or personal adjuster. In Texas, licensed under Insurance Code Chapter 4102; in Florida, under Statutes Section 626.854.
Public Adjuster Fee Cap
The statutory limit on the percentage fee a public adjuster can charge for their services. In Texas, fees are capped at 10 percent of the recovery. In Florida, fees are capped at 10 percent during declared emergencies, and 20 percent otherwise.
Public Insurance Adjuster (PIA)
The formal license title for what is commonly called a public adjuster, private adjuster, or personal adjuster. Licensed in Texas by the Texas Department of Insurance (TDI) under Insurance Code Chapter 4102 and in Florida by the Department of Financial Services (DFS) under Florida Statutes Section 626.854. Represents the policyholder, not the insurance carrier.
R
Recoverable Depreciation
Depreciation that is temporarily withheld by the insurance carrier but can be claimed back by the policyholder once they submit proof that the repairs have been fully completed.
Replacement Cost Endorsement
A policy amendment that changes the payout method from actual cash value (ACV) to replacement cost value (RCV), ensuring no deductions for depreciation are made on covered repairs.
Replacement Cost Value (RCV)
The cost to repair or replace damaged property with new materials of like kind and quality, without any deduction for depreciation.
Right to Repair Clause
A policy provision giving the insurance company the option to repair the damaged property using their own contractors instead of making a direct cash payment to the policyholder.
S
Scope of Loss
A descriptive written document detailing the exact range and quantity of repairs, materials, and construction steps required to fix a damaged property, before pricing is applied.
Slab Leak
A water leak that occurs in the plumbing lines running underneath a concrete foundation or slab of a building, often requiring complex excavation to repair.
Staff Adjuster
An insurance claims adjuster who is a full-time employee of the insurance company, representing the insurer's financial interests exclusively.
Sub-Limits
Specific, lower limits of coverage within an insurance policy for certain types of property, such as caps on jewelry, firearms, or mold remediation.
Subrogation
The legal right of an insurance company to pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.
Sudden and Accidental Peril
An event that happens abruptly, unexpectedly, and without warning, which is the primary standard for a loss to qualify for coverage under standard property policies.
T
Texas Chapter 542A Notice
A mandatory pre-suit notice that policyholders must send to their insurance carrier at least 60 days before filing a lawsuit related to weather-related property claims in Texas.
Texas Insurance Code Chapter 542 (Prompt Payment Act)
A critical Texas consumer protection law that sets strict deadlines for insurance carriers to acknowledge, investigate, decide, and pay claims, imposing stiff penalties and interest on carriers who delay.
U
Umpire
A competent, impartial third party chosen to resolve differences between the two appraisers in the insurance appraisal process. Their decision, agreed to by at least one of the appraisers, is binding.
Umpire Selection
The formal process where the two appraisers agree on and appoint an impartial third party to act as the umpire in the appraisal dispute.
V
Vacancy Clause
A policy provision that restricts or suspends coverage if the insured building is left vacant for a specified period (typically 60 consecutive days) before a loss.
Vandalism Claim
An insurance claim filed to recover damages caused by willful or malicious destruction or defacement of property.
W
Wear and Tear
Damage or deterioration resulting from ordinary use or the passage of time. This is almost universally excluded from property insurance coverage.
Windstorm Exclusion
A policy provision explicitly removing coverage for damages caused by wind, hail, or named storms, requiring the policyholder to purchase a separate windstorm policy.
Windstorm Insurance Association (TWIA)
The Texas Windstorm Insurance Association, a state-mandated insurer of last resort providing wind and hail coverage for Texas gulf coast property owners in designated catastrophe areas.
X
Xactimate
The industry-standard estimating software used by most insurance companies and adjusters to calculate the cost of repairing or rebuilding property.
Xactimate Estimate
A comprehensive construction cost estimate created using the Xactimate software platform, detailing every material, dimension, trade, and regional labor cost.
Confused by Insurance Jargon?
The insurance company relies on complex language to minimize their liability. You don't have to navigate it alone. Our expert Public Adjusters understand the policy language inside and out.
