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Insurance Glossary

ACV / Actual Cash Value – ACV stands for "actual cash value" which is a type of compensation insurance companies offer on some policies. When your insurance policy compensates your losses based on actual cash value, this means that your losses will be reimbursed at their current value at the time of loss – not the amount that you will need to replace those items and not the original amount you paid. For instance, your $2,000 laptop may only have an actual cash value of $300 at the time of loss. Therefore, you will be compensated just $300.

Claim – Policyholders who have suffered an insurance loss must file a "claim" with their insurance company. This is the official notice of loss containing pertinent details such as loss date, cause of loss, damages, and so on.

Denial – Insurance companies either approve or deny insurance claims. When a claim is denied, a denial letter is sent to the policyholder.

Deductible – An insurance deductible is the policyholder's financial responsibility for a portion of the damage. For example, your policy may have a $500 deductible. If so, you'd have to pay for $500 worth of damage before the insurance company becomes involved.

Depreciation – When property depreciates, it loses value. Depreciation is the loss of value typically caused by either age or wear and tear.

Endorsement – Insurance endorsements are amendments that add or remove coverage.

Exclusion – Insurance policies often exclude certain types of losses, causes of loss, and damage types. These specifically excluded items are known as exclusions.

Insurance Adjuster – An insurance adjuster is a licensed specialist that provides claims adjusting and estimating services to insurance companies or policyholders.

Insured – A policyholder.

Insurer – An insurance company.

Peril – A peril in an insurance policy is a cause of insurance losses. For instance, a flood is a peril as is a hurricane. Note that not all perils are covered. In fact, many insurance policies specifically exclude some perils such as terrorist attacks, mudslides, natural flooding, earthquakes, and volcanic eruptions.

Policy – A policy is a contract for insurance.

Policy Limit – A policy limit is a limit on the amount of coverage provided in an insurance policy.

Premium – A premium is the monthly or annual payment for insurance coverage.

Rider – A rider is an amendment to an insurance policy that either adds or removes insurance coverage, usually for specific items such as furs or fine art.

Statute of Limitations – The statute of limitations is a specified time period that spans from the date of loss to the final lawsuit filing date.