Insurance Claim Terms Defined | Searchable Glossary

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A B C D E H I L M O P R S U W X

Actual cash value (ACV): Replacement cost minus depreciation. Often the first payment on a replacement-cost claim.
Additional living expense (ALE): Coverage for extra costs of living elsewhere while your home is being repaired after a covered loss.
Amount of loss: The dollar value of a covered loss. This is what an appraisal panel decides.
Appraisal award: The written decision on the amount of loss, binding once signed by two of the three panel members.
Appraisal clause: The policy condition that allows either party to demand appraisal when they disagree on the amount of loss.
Appraiser: The person each side appoints to value the loss under the appraisal clause.
Bad faith: A legal claim that an insurer unreasonably handled or denied a claim. Decided by courts, not appraisal panels.
Coinsurance: A commercial policy clause that can reduce payment if a property is insured for less than a required percentage of its value.
Collapse coverage: Policy language covering the sudden falling-in of a building or part of it, often tied to causes such as the weight of snow or ice.
Contents coverage: Coverage for personal property, often called Coverage C on a homeowners policy.
Cosmetic damage exclusion: An endorsement that excludes damage affecting only appearance, often applied to metal roofs after hail.
Coverage A: Dwelling coverage on a homeowners policy, the limit for the house itself.
Declarations page: The summary page of a policy listing coverages, limits, deductibles and endorsements.
Deductible: The portion of a covered loss the policyholder pays before the insurer pays.
Depreciation: The reduction in value due to age, wear or obsolescence, subtracted from replacement cost to find actual cash value.
Direct physical loss: A common trigger phrase in property policies describing tangible damage to property.
Disinterested appraiser: An appraiser with no financial stake in the outcome or the repair work.
Dwelling fire policy: A policy form often used for rental properties, with different terms than a homeowners policy.
Extended replacement cost: An endorsement that pays above the dwelling limit, often by a set percentage, if rebuilding costs exceed it.
Holdback: Recoverable depreciation withheld until repairs are completed.
Ice dam: A ridge of ice at the eaves that traps meltwater, which can back up under roofing and into the home.
Line item: A single entry in an estimate describing a task, quantity and price.
Loss of use: Coverage that includes additional living expense and fair rental value after a covered loss.
Matching: The issue of whether undamaged materials must be replaced so repairs match in color and style.
Mitigation: Reasonable steps taken after a loss to prevent further damage, such as tarping or water extraction.
Ordinance or law coverage: Coverage for added costs of bringing a damaged building up to current codes.
Other structures: Coverage for detached structures such as fences, garages and sheds, often called Coverage B.
Overhead and profit (O&P): A general contractor’s charge for coordinating a job, often 10% overhead and 10% profit.
Percentage deductible: A deductible calculated as a percentage of the dwelling limit rather than a flat amount.
Proof of loss: A sworn statement of the amount claimed, which insurers may request within a set time.
Public adjuster: A licensed professional who represents a policyholder in negotiating the overall claim.
Recoverable depreciation: Depreciation that can be paid once repairs or replacement are completed under a replacement-cost policy.
Replacement cost value (RCV): The cost to repair or replace damaged property with materials of like kind and quality, without deduction for depreciation.
Scope of loss: The list of damaged items and the repairs needed. Many disputes are about scope rather than price.
Snow load: The weight of accumulated snow and ice on a roof, measured in pounds per square foot.
Square (roofing): 100 square feet of roof surface.
Subrogation: The insurer’s right to recover what it paid from a third party responsible for the loss.
Suit limitation clause: Policy language setting the time to file a lawsuit against the insurer.
Supplement: A request to add items or costs to an estimate after the initial review.
Surplus lines insurer: An insurer not licensed in the standard market that can cover hard-to-place risks.
Umpire: The neutral third panel member who decides items the two appraisers can’t agree on.
Wildland-urban interface (WUI): Areas where homes meet or mix with undeveloped wildland vegetation, with higher wildfire risk.
Xactimate: Estimating software widely used by insurers and contractors to price property repairs.

Property Claim Terms Defined in Plain English