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Insurance Glossary

Actual Cash Value (ACV) – Insurance companies typically use two types of replacement cost values in their policies. If your policy contains Actual Cash Value coverage, this means the insurance will pay the current fair market value of the lost property at the time of the loss. For instance, a television that you've owned for ten years will be reimbursed based on its current value, not the amount it would cost to replace it with a new one.

Adjuster – An insurance adjuster, who is sometimes called a claims adjuster, is an insurance specialist that estimates the value of insurance losses.

Claim – An insurance claim is the notification that you provide to your insurance company that a loss has been suffered.

Denial – When an insurance company deems a claim to be ineligible for reimbursement under the terms of the insurance policy, it sends a denial letter notifying you that the claim has been denied. Claims can be denied for any number of reasons including insufficient proof and loss values that are below the deductible amount.

Deductible – An insurance deductible is the predetermined dollar figure that the insured must pay toward the claim. For example, if you have a $500 deductible and have an auto insurance claim totally $10,000, you would be responsible for paying for the first $500 and the insurance company would cover the rest (up to policy limits).

Depreciation – Property loses value from age and wear and tear. This loss of value is known as depreciation.

Endorsement – Endorsements, also sometimes called riders, are written amendments to your insurance policy that add or remove coverage.

Exclusion – In an insurance policy, some items, damage causes, and types of damages can be specifically excluded from coverage. For example, your homeowners insurance policy may specifically exclude mold damage from coverage. Earthquakes, mudslides, and volcanic eruptions are also common exclusions.

Insured – The insured is the policyholder.

Insurer – The insurer is insurance company.

Peril – A peril is a cause of damage defined in your insurance policy such as a hurricane, wind storm, tornado, or earthquake. Some perils are covered while others may be specifically excluded from coverage. Other perils may be subject to a different deductible amount or have conditions attached to them.

Policy – A policy is the formal contract between an insurance company and an insured.

Policy Limit – A policy limit is the maximum dollar figure that an insurance company will pay for covered losses. In addition to having a maximum policy limit for an entire claim, your insurance policy likely has policy limits on specific types of losses such as medical losses, fine art, jewelry, or coin collections.

Premium – A premium is the monthly or annual cost for an insurance policy.

Rider – Riders, or endorsements are they are sometimes called, are written amendments to your insurance policy that add or remove coverage.

Statute of Limitations – The statute of limitations is the time period during which you can file an insurance loss starting from the date of loss and extending to a specific amount of time after that date.