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/Staff Adjusters (work for the insurer), Independent Adjusters (hired by the insurer), and Public Adjusters (hired by you, the policyholder).
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.
B
Bad Faith
When an insurance company unreasonably delays, denies, or underpays a claim, failing to uphold their legal duty of good faith and fair dealing to the policyholder.
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.
C
Carrier
Another term for the insurance company that issues and assumes the risk of an insurance policy.
Claim
A formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event.
Coinsurance
A penalty clause in commercial property policies that requires the policyholder to carry a minimum amount of insurance (usually 80-100% of the property's value). If the limit is too low, the payout for any partial loss is significantly reduced.
D
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/hurricane claims).
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.
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).
F
First-Party Claim
A claim made by the policyholder directly to their own insurance company for damage to their own insured property.
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.
L
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
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).
N
Named Peril Policy
An insurance policy that only provides coverage for the specific perils explicitly listed in the policy document.
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.
P
Peril
The specific cause of a loss, such as fire, windstorm, hail, theft, or sudden pipe burst.
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.
Public Adjuster
A licensed professional hired exclusively by the policyholder to help evaluate, navigate, and negotiate an insurance claim. They ensure the policyholder's interests are protected against the insurance company.
R
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.
S
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.
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.
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.
X
Xactimate
The industry-standard estimating software used by most insurance companies and adjusters to calculate the cost of repairing or rebuilding property.
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.
