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Insurance Glossary

Actual Cash Value – Actual cash value, or ACV, is a term associated with replacement cost coverage. When a policy specifies that replacement cost is based on actual cash value, this means that the current market value of the property at the time of loss will be used. For example, you may have paid $2000 for a laptop three years ago, but if it's only worth $300 at the time of loss, you will be compensated based on the actual cash value of $300.

Claim – An insurance claim is the notification that a policyholder must file with the insurance company after a loss has occurred.

Denial – If an insurance company finds a claim to be invalid, it denies it. This is called a denial.

Deductible – An insurance deductible is the amount of money, usually specified in the insurance policy, that the insured must pay toward a claim before the insurance company pays its portion.

Depreciation – This is the loss of value due to age or wear and tear. For example, a $2,000 laptop will depreciate over time. In a few years, that same laptop may only be worth $300.

Endorsement – An amendment to an insurance policy adding or removing coverage.

Exclusion – Insurance policies often exclude specific items, damages, and perils from coverage. For example, mold damage may be excluded from some homeowners insurance policies.

Insurance Adjuster – A licensed insurance professional that "adjusts" (estimates the value of loss) an insurance claim.

Insured – The insured is a policyholder.

Insurer – The insurer is an insurance company.

Peril – Cause of damage. In an insurance policy, perils can be anything from falling tree branches and burst pipes to terrorist attacks, earthquakes, fires, and mudslides. Many perils are specifically excluded from insurance policies.

Policy – An insurance policy is a formal, written contract between an individual or entity and an insurance company. The policy details the coverage, terms and conditions, policy limits, exclusions, premiums, deductibles, and other details.

Policy Limit – Insurance policies typically include policy limits which state the maximum amount of compensation an insured can receive for a given claim.

Premium – The annual (sometimes monthly) cost for insurance coverage.

Public Insurance Adjuster – Like an insurance company adjuster, public insurance adjusters are licensed insurance professionals that estimate the value of insurance losses. However, public adjusters work for policyholders (the general public), not insurance companies.

Rider – A rider is an amendment to an insurance policy adding or removing coverage.

Statute of Limitations – This is a period of time from the loss date to the final date that an insured can file a lawsuit related to an insurance claim.