Insurance glossary & official resources

Glossary

Actual cash value (ACV)

A valuation that generally reflects replacement cost minus depreciation. How it is calculated depends on the policy and state law.

Replacement cost value (RCV)

The cost to replace damaged property with new property of like kind and quality, without deducting depreciation.

Depreciation

A reduction in value due to age, wear or obsolescence.

Deductible

The portion of a covered loss the policyholder pays before the insurer pays.

Declarations page

The summary page of a policy listing coverages, limits, deductibles and the insured property.

Endorsement

A written change to a policy that adds, removes or modifies coverage.

Exclusion

Policy language that removes coverage for certain causes or types of loss.

Peril

A cause of loss, such as fire, wind, hail or theft.

Mitigation

Reasonable steps taken to prevent further damage after a loss.

Additional living expenses (ALE)

Coverage some policies provide for increased living costs while a home is uninhabitable.

Proof of loss

A formal, often sworn statement of the amount claimed, sometimes required within a set time.

Adjuster

A person who evaluates an insurance claim. Company and independent adjusters work for insurers; public adjusters work for policyholders.

Public adjuster

A licensed professional hired by a policyholder to help prepare and present a claim, usually for a percentage fee.

Appraisal

A process in many property policies for resolving disagreements about the amount of loss.

Policy limit

The maximum amount a policy will pay for a covered loss.

Scope of loss

A description of the damage and the work needed to repair it.

Supplement

A request to add items or costs to an estimate after additional damage is found.

Subrogation

An insurer's right to pursue a third party who caused a loss it paid.

Business interruption

Commercial coverage some businesses carry for lost income after a covered loss.

NFIP

The National Flood Insurance Program, administered by FEMA.