Actual Cash Value – Replacement cost coverage typically comes in two forms: Actual Cash Value (ACV) and Guaranteed Replacement Cost coverage. With ACV, the loss is replaced based on its actual cash value at the time of loss. For example, your $800 washing machine may only be worth $150 at the time of loss. If so, it will be replaced on the current cash value, not its original $800 purchase price.
Claim – When a loss occurs, the insured must file a "claim" with the insurance company notifying the insurance company that a loss occurred and providing details about the loss and its cause.
Denial – When an insurance company determines that a loss is not covered under an insurance policy, the claim is denied.
Deductible – Insurance policies often include a provision where the insured must pay a portion of the claim before the insurance company covers the balance. The insured's portion is called a "deductible."
Depreciation – A loss of value due to age or wear and tear.
Endorsement – An addition or removal of coverage.
Exclusion – An exclusion in an insurance policy is a specific item, peril, or damage type that has been specifically excluded from coverage.
Insurance Adjuster – An insurance professional involved in adjusting and estimating insurance losses.
Insured – The policyholder.
Insurer – The insurance company.
Peril – Insurance policies provide coverage from specific causes of damage known as perils. For example, wildfires and hurricanes are perils. Perils can be excluded from coverage as well.
Policy – The contract between an insurance company and an insured.
Policy Limit – The maximum compensation awarded under the terms of an insurance policy. An insurance policy often contains multiple policy limits.
Premium – The cost of an insurance policy.
Public Insurance Adjuster – An insurance adjuster that provides insurance adjusting services to the general public (i.e., individual policyholders).
Replacement Cost Coverage – Replacement cost coverage spells out how losses are compensated. For example, actual cash value is one type of replacement cost coverage that compensates the insured for losses at their actual cash value at the time of loss. Guaranteed replacement cost coverage compensates the insured for losses at current market rates.
Rider – An insurance policy amendment that adds or removes coverage.
Statute of Limitations – A time period from a loss date to the final deadline for filing an insurance claim-related lawsuit.