Insurance Terms

COMMON INSURANCE TERMS

1. Actual Cash Value (ACV) - The market value of an insured item at the time of loss or damage, minus depreciation.

2. Additional Living Expenses (ALE) - Reimbursement for necessary expenses incurred as a result of a covered loss, such as hotel costs, dining, and transportation.

3. Appraisal - A written estimate of the value of property or the extent of damage.

4. Assignment of Benefits (AOB) - A document that allows a third party, such as a contractor, to receive payment directly from an insurance company.

5. Attachment Point - The point at which insurance coverage begins, as defined in a policy.

6. Betterment - An improvement made to a property that increases its value.

7. Building Code Upgrade - The cost of upgrading a building to meet current building codes after a loss.

8. Cancellation: Termination of an insurance policy before its expiration date.

9. Claim: A request for compensation from an insurance policy

10. Claims Adjuster - An individual who investigates and evaluates insurance claims to determine the amount of payment due.

11. Claims Made Policy - A type of insurance policy that covers losses that are reported during the policy term, regardless of when the loss actually occurred.

12. Coinsurance Clause - A provision in an insurance policy that requires the policyholder to carry insurance equal to a specified percentage of the property's value.

13. Coverage - The amount of protection provided by an insurance policy.

14. Coverage Limit - The maximum amount an insurance policy will pay for a loss.

15. Declarations Page - A summary of the insurance policy that lists the policyholder's name, address, policy limits, and other important information.

16. Deductible - The amount of money the policyholder is responsible for paying before insurance coverage takes effect.

17. Depreciation - A decrease in the value of an item over time, due to wear and tear, obsolescence, or other factors.

18. Endorsement: A change or addition to an insurance policy.

19. Excess Coverage - A type of insurance coverage that provides additional protection above the limits of other insurance policies.

20. Inland Marine Insurance - A type of insurance coverage that protects

21. Exclusion - A provision in an insurance policy that excludes coverage for specific types of losses or damage.

22. Extra Expense Coverage - Coverage that pays for the additional expenses incurred to continue business operations after a loss.

23. First Party Coverage - A type of insurance coverage that protects the policyholder's own property or interests.

24. Flood Insurance - A type of insurance coverage that protects against losses caused by flooding.

25. Flood Zone - An area designated by the Federal Emergency Management Agency (FEMA) as having a high risk of flooding.

26. Guaranteed Replacement Cost - A type of insurance coverage that pays the full cost of replacing a property or item, regardless of its actual value.

27. Hazard - A condition that increases the risk of loss or damage to property.

28. Hazard Insurance - A type of insurance coverage that protects against losses caused by hazards such as fire, theft, and wind damage.

29. Indemnification - Reimbursement or compensation for loss or damage.

30. Inflation Guard - An endorsement to an insurance policy that automatically increases coverage limits to keep pace with inflation.

31. Inland Marine Insurance - A type of insurance coverage that protects

32. Insurable Interest - The requirement that the policyholder have a financial interest in the property being insured.

33. Insurance Adjuster - An individual who investigates and evaluates insurance claims.

34. Insurance Fraud: The act of making false or misleading statements in order to collect insurance benefits.

35. Insurance Policy - A legal contract between the policyholder and insurance company that outlines the terms and conditions of coverage.

36. Limits of Liability - The maximum amount an insurance company is obligated to pay for a covered loss.

37. Loss: Damage or destruction to property.

38. Loss of use: Loss of rental income or additional living expenses incurred during the repair or replacement of damaged property.

39. Named Perils Policy - An insurance policy that provides coverage only for losses specifically listed in the policy.

40. Ordinance or Law Coverage - Coverage that pays for the cost of upgrading a building to meet current building codes after a loss.

41. Perils - The specific causes of loss or damage that are covered by an insurance policy.

42. Perils Insured Against - The specific risks or events covered by an insurance policy.

43. Personal Property Coverage - Coverage for personal property, such as furniture and clothing, that is not permanently attached to the building.

44. Policy: The legal contract between the insurance company and the policyholder that outlines the terms and conditions of the coverage.

45. Policyholder - The person or entity that holds an insurance policy.

46. Policy limit: The maximum amount of coverage provided by an insurance policy

47. Premium - The amount of money charged by an insurance company for insurance coverage.

48. Proof of Loss - Documentation that provides evidence of a covered loss, such as photos, receipts, and estimates.

49. Proximate Cause - The cause of a loss that is considered to be the most direct and significant.

50. Renewal - The process of extending an insurance policy for another term.

51. Loss of Rents Coverage - Coverage that pays for the loss of rental income as a result of a covered loss.

52. Public insurance adjuster: An independent adjuster who represents the policyholder in insurance claims and negotiations.

53. Renewal: Extension of an insurance policy after its expiration date.

54. Replacement cost value: The cost of repairing or replacing damaged property with new materials of similar kind and quality.

55. Sublimit - A limit of insurance coverage specified in an insurance policy for a particular type of loss.

56. Subrogation: The right of an insurance company to pursue a third party responsible for a policyholder's loss.

57. Umbrella Policy - An insurance policy that provides additional liability coverage above and beyond the coverage provided by other insurance policies.

58. Underinsured - A condition where the amount of insurance coverage is not sufficient to cover the cost of a loss.

59. Underwriting - The process by which an insurance company assesses risk and decides whether or not to offer coverage.

60. Valuation - The process of determining the value of property, including the extent of damage.

61. Waiver of Subrogation - A type of policy provision that prevents the insurance company from pursuing legal action against a third party that caused a loss.