Industry Terms

NOTICE: This document is for informational purposes only and is not intended to alter or replace the insurance policy. Additionally, this informational sheet is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company.

Actual cash value (ACV)
The value of your property, based on the current cost to replace it minus depreciation. Also see "replacement cost."
Additional living expenses (ALE)
Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable. Policies cap the amount of ALE payable to 20 percent of the policy's dwelling coverage.
Adjuster
An individual employed by an insurer to evaluate losses and settle policyholder claims. Also see "public insurance adjuster."
Appraisal
An evaluation of a home insurance property claim by an authorized person to determine property value or damaged property value. Many policies provide an "appraisal" process to resolve claim disputes. In this process, you and the insurance company hire separate damage appraisers. The two appraisers choose a third appraiser to act as an "umpire." The appraisers then review your claim, and the umpire rules on any disagreements. The umpire's decision is binding on you and the insurance company, but only for the loss amount. If there is a dispute over what is covered, you can still pursue a settlement of the coverage issue after the appraisal takes place. You are required to pay for your appraiser and half of the umpire's costs.
Claim
A policyholder's request for reimbursement from an insurance company under a home insurance policy for a loss to property.
Claimant
A person who makes an insurance claim.
First-party claim
A claim filed by an insured against his or her own insurance policy.
Insured
The person or organization covered by an insurance policy.
Insurer
The insurance company.
Loss
The amount an insurance company pays on a claim.
Loss of use
A provision in homeowners and renters insurance policies that reimburses policyholders for the additional costs (housing, food, and other essentials) of having to live elsewhere while the home is being restored following a disaster.
Peril
A specific risk or cause of loss covered by a property insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy. An all-risk policy covers all causes of loss except those specifically excluded.
Personal property
All tangible property (other than land) that is either temporary or movable in some way, such as furniture, jewelry, electronics, etc.
Policy
The contract issued by the insurance company to the insured.
Policy period
The period a policy is in force, from the beginning or effective date to the expiration date.
Premium
The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.
Public insurance adjuster
An individual employed by a policyholder to negotiate a claim with the insurance company in exchange for a percentage of the claim settlement. Public insurance adjusters must be licensed.
Renters insurance
A form of property insurance that covers a policyholder's belongings against perils. It also provides personal liability coverage and additional living expenses. Possessions can be covered for their replacement cost or the actual cash value, which includes depreciation.
Replacement cost
Insurance coverage that pays the dollar amount needed to replace the structure or damaged personal property without deducting for depreciation but limited by the policy's maximum dollar amount.
Rescission
The termination of an insurance contract by the insurer when material misrepresentation has occurred.
Staff adjuster
Employee of the insurance company's claims department.
Subrogation
Assignment of rights of recovery from insured.
Third-party claim
A claim filed against another person's insurance policy.

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