Glossary of Common Insurance Terms
ACV – Meaning "actual cash value," ACV is a type of replacement cost coverage that compensates policyholders for losses based on what they were currently worth at the time of loss. While your HDTV may have cost $4,000 new, if you have ACV replacement cost coverage, then it won't be replaced at its original price but rather at its current cash value.
Adjuster – An adjuster is an insurance professional that specializes in insurance valuations. Insurance adjusters typically work for insurance companies. However, public insurance adjusters also exist. Public insurance adjusters offer their services to policyholders directly.
Denial – When an insurance company finds a claim to be invalid, it typically denies the claim and issues a denial letter.
Deductible – Many insurance policies have "deductibles" which are a required amount that the insured must cover on his own before the insurance company pays the balance of the covered losses. High deductibles are often used to keep premiums low.
Depreciation – Whether it's a car, house, fine artwork, or standard furnishings, most belongings go down in value due to age and wear and tear. This process is known as depreciation.
Endorsement – Most insurance policies have standard limits on the amount of coverage they provide for valuable items such as fur coats, antiques, and fine art. If you have valuable items that exceed coverage limits, you can increase coverage by purchasing an "endorsement" which adds coverage as needed.
Exclusion – Most insurance policies state what they will and will not cover. For example, an insurance policy might specifically exclude earthquakes and resulting damage from coverage. Anything excluded from a policy is referred to as an exclusion.
Insured – The insured is the person or entity that an insurance policy covers.
Insurer – The insurer is the company that has issued an insurance policy.
Peril – Insurance policies typically cover damage caused by certain types of "perils" such as high winds, fires, and vandalism. They will often specify perils that they won't cover, too, such as volcanic eruptions, natural flooding, and earthquakes.
Policy – A policy is the written contract describing the policyholder's insurance coverage along with its terms, limits, deductibles, premiums, exclusions, and other details.
Policy Limit – Insurance policies come with limits as far as how much coverage is offered. For example, a homeowner's insurance policy might have a policy limit of $300,000 for the structure and $30,000 for personal belongings. Additional coverage is typically available in the form of endorsements that you can buy.
Premium – An insurance premium is the regular, recurring cost of an insurance policy. Though many insurance companies allow policyholders to pay their premiums in monthly installments, most policies are one-year contracts.
Statute of Limitations – The time span between the insurance loss date and the final deadline for filing a related lawsuit is known as the statute of limitations.