Insurance Terms
Call Faber Adjusting (214) 914-2854
COMMON INSURANCE TERMS
Actual Cash Value (ACV) - The market value of an insured item at the time of loss or damage, minus depreciation.
Additional Living Expenses (ALE) - Reimbursement for necessary expenses incurred as a result of a covered loss, such as hotel costs, dining, and transportation.
Appraisal - A written estimate of the value of property or the extent of damage.
Assignment of Benefits (AOB) - A document that allows a third party, such as a contractor, to receive payment directly from an insurance company.
Attachment Point - The point at which insurance coverage begins, as defined in a policy.
Betterment - An improvement made to a property that increases its value.
Building Code Upgrade - The cost of upgrading a building to meet current building codes after a loss.
Cancellation: Termination of an insurance policy before its expiration date.
Claim: A request for compensation from an insurance policy
Claims Adjuster - An individual who investigates and evaluates insurance claims to determine the amount of payment due.
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.
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.
Coverage - The amount of protection provided by an insurance policy.
Coverage Limit - The maximum amount an insurance policy will pay for a loss.
Declarations Page - A summary of the insurance policy that lists the policyholder's name, address, policy limits, and other important information.
Deductible - The amount of money the policyholder is responsible for paying before insurance coverage takes effect.
Depreciation - A decrease in the value of an item over time, due to wear and tear, obsolescence, or other factors.
Endorsement: A change or addition to an insurance policy.
Excess Coverage - A type of insurance coverage that provides additional protection above the limits of other insurance policies.
Inland Marine Insurance - A type of insurance coverage that protects
Exclusion - A provision in an insurance policy that excludes coverage for specific types of losses or damage.
Extra Expense Coverage - Coverage that pays for the additional expenses incurred to continue business operations after a loss.
First Party Coverage - A type of insurance coverage that protects the policyholder's own property or interests.
Flood Insurance - A type of insurance coverage that protects against losses caused by flooding.
Flood Zone - An area designated by the Federal Emergency Management Agency (FEMA) as having a high risk of flooding.
Guaranteed Replacement Cost - A type of insurance coverage that pays the full cost of replacing a property or item, regardless of its actual value.
Hazard - A condition that increases the risk of loss or damage to property.
Hazard Insurance - A type of insurance coverage that protects against losses caused by hazards such as fire, theft, and wind damage.
Indemnification - Reimbursement or compensation for loss or damage.
Inflation Guard - An endorsement to an insurance policy that automatically increases coverage limits to keep pace with inflation.
Inland Marine Insurance - A type of insurance coverage that protects
Insurable Interest - The requirement that the policyholder have a financial interest in the property being insured.
Insurance Adjuster - An individual who investigates and evaluates insurance claims.
Insurance Fraud: The act of making false or misleading statements in order to collect insurance benefits.
Insurance Policy - A legal contract between the policyholder and insurance company that outlines the terms and conditions of coverage.
Limits of Liability - The maximum amount an insurance company is obligated to pay for a covered loss.
Loss: Damage or destruction to property.
Loss of use: Loss of rental income or additional living expenses incurred during the repair or replacement of damaged property.
Named Perils Policy - An insurance policy that provides coverage only for losses specifically listed in the policy.
Ordinance or Law Coverage - Coverage that pays for the cost of upgrading a building to meet current building codes after a loss.
Perils - The specific causes of loss or damage that are covered by an insurance policy.
Perils Insured Against - The specific risks or events covered by an insurance policy.
Personal Property Coverage - Coverage for personal property, such as furniture and clothing, that is not permanently attached to the building.
Policy: The legal contract between the insurance company and the policyholder that outlines the terms and conditions of the coverage.
Policyholder - The person or entity that holds an insurance policy.
Policy limit: The maximum amount of coverage provided by an insurance policy
Premium - The amount of money charged by an insurance company for insurance coverage.
Proof of Loss - Documentation that provides evidence of a covered loss, such as photos, receipts, and estimates.
Proximate Cause - The cause of a loss that is considered to be the most direct and significant.
Renewal - The process of extending an insurance policy for another term.
Loss of Rents Coverage - Coverage that pays for the loss of rental income as a result of a covered loss.
Public insurance adjuster: An independent adjuster who represents the policyholder in insurance claims and negotiations.
Renewal: Extension of an insurance policy after its expiration date.
Replacement cost value: The cost of repairing or replacing damaged property with new materials of similar kind and quality.
Sublimit - A limit of insurance coverage specified in an insurance policy for a particular type of loss.
Subrogation: The right of an insurance company to pursue a third party responsible for a policyholder's loss.
Umbrella Policy - An insurance policy that provides additional liability coverage above and beyond the coverage provided by other insurance policies.
Underinsured - A condition where the amount of insurance coverage is not sufficient to cover the cost of a loss.
Underwriting - The process by which an insurance company assesses risk and decides whether or not to offer coverage.
Valuation - The process of determining the value of property, including the extent of damage.
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.