Actual Cash Value – Often shortened to its acronym of ACV, actual cash value refers to a type of replacement cost coverage. If your insurance policy compensates you for your losses based on ACV, it will compensate you based on the value of the item at the time of loss. This value could be significantly lower than you originally paid and significantly lower than what an item will cost to replace.
Claim – A claim is a formal notification from a policyholder to the insurance company stating that an insurance loss has taken place.
Denial – An insurance claim denial means that the claim has been denied; the policyholder will not be compensated for the loss.
Deductible – An insurance deductible is the predetermined dollar amount that is paid by the policyholder toward the claim. For example, if your policy has a $500 deductible, you will be responsible for paying for the first $500 worth of losses.
Depreciation – A loss of value from either age or wear and tear.
Endorsement – An addition or removal of insurance coverage. For example, if you have a collectible automobile, you may need to get an endorsement adding coverage for the vehicle's additional value.
Exclusion – An insurance policy exclusion is a specific loss type, item, or cause of damage that is specifically excluded from coverage. For example, mold damage or mudslides may be exclusions.
Insurance Adjuster – A licensed insurance professional that assesses insurance claims and estimates losses.
Insured – A policyholder.
Insurer – An insurance company.
Peril – Perils are causes of insurance losses such as hurricanes, wildfires, and terrorist attacks. While many perils exist, some policies specifically exclude some from coverage. For instance, earthquakes and natural flooding are often excluded perils.
Policy – A contract between a policyholder and an insurance company is known as a policy.
Policy Limit – A policy limit is the maximum amount of coverage under the terms of an insurance policy.
Premium – The monthly or annual insurance payment is called a premium.
Rider – An amendment to an insurance policy adding or removing insurance coverage.
Statute of Limitations – Policyholders may file a claim-related lawsuit during a specified time period known as the statute of limitations.