Insurance Claim Terms Glossary | ACV, RCV, Umpire & More

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A C D E F I L M O P R S T U X

Actual cash value (ACV): Replacement cost minus depreciation. Many policies pay ACV first and the rest after repairs.
Additional living expense (ALE): Coverage for the extra cost of living elsewhere while your home is being repaired. Also called loss of use.
Amount of loss: The dollar value of a covered loss. It’s the only question an appraisal panel decides.
Appraisal clause: The policy provision that lets either party demand appraisal when they disagree on the amount of loss.
Appraisal award: The written decision signed by at least two of the three panel members setting the amount of loss.
Appraiser: The person each side names to value the loss in appraisal. Policies usually require appraisers to be competent and impartial.
Coverage A: Dwelling coverage — the part of a homeowners policy that covers the house itself.
Coverage B: Other-structures coverage for detached garages, fences, sheds and similar buildings.
Coverage C: Personal property coverage for furniture, clothing, electronics and other belongings.
Declarations page: The summary page of your policy listing coverages, limits, deductibles and endorsements.
Deductible: The amount you pay toward a covered loss before the policy pays.
Depreciation: The reduction in value of an item due to age, wear or obsolescence.
Derecho: A long-lived, widespread windstorm associated with a line of fast-moving thunderstorms.
Detach and reset: Removing an item, such as a gutter or light fixture, to perform a repair and then reinstalling it.
Endorsement: A written change to a policy that adds, removes or modifies coverage.
Exclusion: A policy provision that removes coverage for certain causes or types of loss.
FAIR Plan: A state-mandated insurer of last resort. In Illinois, the Illinois FAIR Plan Association.
Ice and water shield: A self-adhering waterproof membrane installed at eaves, valleys and other vulnerable areas of a roof.
Ice dam: A ridge of ice at the edge of a roof that traps meltwater, which can then back up under shingles.
Like kind and quality: The standard that replacement materials should be similar in type and quality to what was damaged.
Line item: A single entry in an estimate, such as a quantity of shingles or a square footage of drywall.
Matching: Whether replacement materials reasonably match the undamaged materials next to them.
Mitigation: Steps taken to prevent further damage after a loss, such as tarping a roof or drying a basement.
Ordinance or law coverage: Coverage for added costs of complying with building codes when repairing or rebuilding.
Overhead and profit (O&P): A general contractor’s charges for managing a job, typically added when several trades are involved.
Percentage deductible: A deductible calculated as a percentage of the dwelling coverage limit rather than a flat dollar amount.
Proof of loss: A sworn statement of the amount claimed, which an insurer may request within a set time.
Recoverable depreciation: Depreciation withheld from the first payment and paid once repairs or replacement are complete.
Replacement cost value (RCV): The cost to repair or replace damaged property with like kind and quality, without depreciation.
Roofing square: A unit of roof area equal to 100 square feet.
Scope of loss: The full list of damaged items and the repairs needed to restore them.
Section 155: A provision of the Illinois Insurance Code that lets courts award attorney fees and a limited penalty for vexatious and unreasonable claim delays or denials.
Sewer backup endorsement: An endorsement that adds coverage for water backing up through sewers or drains, usually with its own limit.
Sublimit: A lower limit within a policy that applies to a specific type of property or loss.
Suit limitation: A policy provision setting the time within which a lawsuit must be filed against the insurer.
Supplement: A request for additional payment for items missing or underpriced in an estimate.
Test square: A 10-by-10-foot area of roof used to count and document hail impacts.
Umpire: The neutral third member of an appraisal panel who decides items the appraisers can’t agree on.
Xactimate: Estimating software widely used by insurers and contractors to price property repairs.