Insurance claim glossary: 90 terms from your letters and estimates

Actual cash value is the replacement cost minus depreciation. Many policies pay this amount first, even when you have replacement cost coverage. Some policies, and some roof endorsements, pay only ACV for certain items. Check your declarations page and loss settlement section to see which applies to you.

ALE pays the difference between your normal living costs and what you spend while displaced, such as a rental, hotel, extra meals out or extra mileage. It doesn’t pay your normal bills, like the mortgage you already pay. It has a dollar limit, and many policies also set a time limit. Keep every receipt and a simple log of what you spend.

An adjuster can be a staff adjuster employed by your insurer, an independent adjuster your insurer hires, or a public adjuster you hire yourself. The insurer’s adjuster works for the insurance company, not for you. Ask for the adjuster’s name, company, phone and email, plus their license number in states that license adjusters, and keep it all in your claim log.

Insurers sometimes send an advance so you can pay for urgent needs, like a hotel or emergency repairs, while the claim is still being reviewed. An advance is usually subtracted from your final payment. Ask in writing what the advance covers and which coverage it comes from, so you can track it.

Many homeowners policies say an excluded cause, like flood or earth movement, is excluded even if a covered cause also contributed. This matters most after hurricanes, when wind and storm surge both hit a home. How courts treat this wording varies by state. If your claim turns on it, this is a good time to talk with a licensed attorney or public adjuster in your state.

Appraisal settles the amount of the loss, not whether something is covered. You and the insurer each hire an appraiser, and the two appraisers pick a neutral umpire. An agreement signed by any two of the three usually sets the amount. Each side normally pays its own appraiser and shares the umpire’s cost, so read your policy’s appraisal section before asking for it.

With an AOB, the contractor can bill and deal with your insurer directly, and you may lose some control over your claim. Some states limit or ban AOBs: Florida, for example, bars them for residential property policies issued on or after January 1, 2023, with narrow exceptions. A “direction to pay” form is meant only to let the insurer pay the contractor directly, so read any contractor paperwork slowly to be sure it doesn’t hand over your whole claim.

After a hurricane, wildfire or big hailstorm, insurers often send in catastrophe adjusters, many of them independent adjusters. They may be handling many claims at once and may leave the area when the event winds down. Get their contact details, and ask who takes over your file if they move on.

If a government order, such as a wildfire evacuation, keeps you out of your home because a covered peril damaged neighboring property, some policies pay limited living expenses. The standard HO-3 form that many insurers use limits this to two weeks. Check the loss of use section of your own policy for the exact rule.

A claim starts when you report the loss, and it stays open until it’s paid, denied or closed. Every claim gets a claim number. Your policy lists what you must do after a loss, and the insurer follows its own steps and any timelines your state sets.

A claim diary is simple: the date, who you spoke with, what was said and what happens next. After a phone call, send a short email confirming what you agreed on. A good log helps you remember details months later and makes your requests easier to support.

Many homeowners policies pay full replacement cost on the house only if you carried coverage equal to a set share of the rebuilding cost, often 80%. If you carried less, the insurer may pay only the larger of the actual cash value or a proportional share of the repair cost. The exact rule is in the loss settlement section of your policy, so read it if your limits haven’t been updated in years.

Contents are usually covered under Coverage C. Some policies pay contents at replacement cost and others at actual cash value. You’ll usually need a list of what was damaged or lost, with descriptions, ages and prices, so start your inventory early.

Some policies, often in hail-prone states, add wording that excludes cosmetic damage to roofs or metal surfaces, such as dents in metal roofing that don’t let water in. Whether a dent is cosmetic or functional can become a dispute. Check your declarations page for a cosmetic damage endorsement before the inspection.

Coverage A protects the main house and things attached to it, like the roof, walls, floors, built-in cabinets and an attached garage. Your Coverage A limit is the most the policy pays for the house, so it should reflect what it would cost to rebuild today, which isn’t the same as your home’s market value. Several other coverages are often set as a share of this number.

Coverage B usually includes a detached garage, shed, fence, gazebo or driveway. Many policies set this limit at a share of Coverage A, often 10%. It has its own limit, so a large shed and fence claim can run out faster than you expect.

Coverage C pays for things like furniture, clothing and electronics damaged by a covered peril, and its limit is often 50% to 70% of your dwelling limit. Some categories, such as jewelry, firearms or cash, often have lower special limits. Check whether your policy pays contents at replacement cost or at actual cash value.

Coverage D usually includes additional living expenses, fair rental value (rent you lose when a part of your home you rent out can’t be used) and civil authority coverage. Its limit is often 20% of Coverage A, though some policies use a different share or a dollar amount, and some also cap the time. Ask your adjuster early how your loss of use coverage works and what receipts they want.

Your insurer uses the date of loss to confirm your policy was active and to measure deadlines like proof of loss, depreciation recovery and lawsuits. For storms, it’s usually the storm date. If you aren’t sure of the exact date, use weather reports and your photos to pin it down before you call.

Many policies pay reasonable debris removal costs as part of the limit for the damaged property. The widely used standard HO-3 form, for example, adds 5% of that limit if the damage plus debris removal goes over it, and caps tree removal at $1,000 per loss, with no more than $500 for any one tree. After a wildfire or total loss, debris costs can be large, so ask early how your own policy handles them.

The declarations page, often called the dec page, shows your policy number, policy period, Coverage A through D limits, your deductibles and the forms that make up your policy. It also lists Coverage E and F, the liability and medical payments coverages, which are for injuries or damage to other people, not damage to your own home. It’s the first page to pull up after a loss, and your insurer or agent can email a current copy if you can’t find yours.

Your deductible is taken out of the claim payment. It isn’t a bill you pay to the insurer. Most deductibles are a flat dollar amount, but some wind, hail or hurricane deductibles are a percentage of your dwelling limit, which can be much larger.

A denial letter should explain the reason and point to the policy wording it relies on. Under a model rule from the National Association of Insurance Commissioners (NAIC), which a number of states have adopted in some form, a denial must be in writing and must cite that wording. Some states also require insurers to tell you in writing how to ask the state insurance department to review a denial. Read the letter next to your policy, and ask in writing for any report or photos the decision was based on.

Depreciation is why your first check is often smaller than the estimate total. It’s listed on the estimate, usually line by line. Some depreciation is recoverable and some isn’t, depending on your policy. If an item’s age or condition is wrong on the estimate, you can ask for a correction in writing.

Desk adjusters often review what a field adjuster or contractor sends in, write or approve the estimate and handle payments. On smaller claims, a desk adjuster may handle the whole claim from photos you upload. You can ask whether anyone will inspect in person if you think photos are missing damage.

Gutters, satellite dishes, solar panels and appliances often need to be detached and reset during repairs. If D&R lines are missing, the estimate may not cover all the labor the job really needs. Compare these lines with your contractor’s scope.

If you’re insured, you can still apply for FEMA help after a declared disaster for needs your insurance doesn’t cover, but you must tell FEMA about all your coverage. FEMA will ask for your insurance settlement or denial letter by a deadline stated in its letter to you. Money FEMA gives you while you wait on insurance may have to be repaid once your settlement arrives, so keep receipts showing how you used the aid.

Most policies require you to report the loss promptly, protect the property from more damage, list damaged items, show the damage when asked, keep records and, if asked, sign a proof of loss. Missing a duty can create problems with your claim. Find this section in your policy and use it as a checklist.

Endorsements, sometimes called riders, can add things like water backup coverage or change how your roof is paid. Where an endorsement and the main policy conflict, the endorsement generally controls. Your declarations page lists the endorsement form numbers, so read each one when you review your coverage.

Insurers often hire engineering firms on roof, foundation, wind and water claims to decide cause and extent of damage. The report can carry a lot of weight in the decision. You can ask for a copy, read it closely for errors in dates, measurements or photos, and send a written response with your own evidence.

An EUO is more formal than a recorded statement and is usually led by the insurer’s attorney with a court reporter. Your policy may require you to attend and provide documents. If you’re asked to sit for an EUO, it’s reasonable to talk with a licensed attorney in your state first.

Common exclusions in homeowners policies include flood, earth movement, wear and tear, long-term leaks, and pest damage. Exclusions are read together with the rest of the policy, and some have exceptions written inside them. If a denial cites an exclusion, find that exact wording in your policy.

Extended replacement cost adds a set percentage on top of your Coverage A limit, such as 20% or 25%, depending on the insurer. It helps after big disasters, when labor and materials can jump in price, and it usually applies only if you actually rebuild. Guaranteed replacement cost, a different option, pays what it takes to rebuild your home as it was, even above the limit. Look for either one on your declarations page or in an endorsement.

FAIR plans are state-managed plans available in about three dozen states and Washington, D.C. Their coverage is often narrower than a standard homeowners policy: many cover only the dwelling, with belongings and other structures as add-ons, and they often leave out perils such as theft. If you have a FAIR plan policy, read its forms closely because claim rules and coverages can differ from a regular policy.

The field adjuster takes photos and measurements and often writes the first estimate. Be there for the inspection if you can, walk them through every damaged area and show your own photos. Ask when you’ll get a copy of the estimate.

FNOL is when the claim officially begins. You can usually report by phone, app or online. Give the facts you know, the date and cause if known, and how to reach you. Avoid guessing about details you’re unsure of, and write down the claim number and the name of the person you spoke with.

Under the NFIP, a flood is a general and temporary condition of water covering two or more acres of normally dry land, or two or more properties, one of which is yours. Flood damage, like rising water or storm surge, is generally covered only by a separate flood policy from the NFIP or a private flood insurer. Water from a burst pipe or roof leak is usually not considered flood, and the difference matters a lot after hurricanes.

An HO-3 usually covers the house on an open perils basis, meaning all causes of damage are covered unless excluded, and covers belongings on a named perils basis. Other forms include HO-5, which is broader, and HO-8, a modified form for some older homes. Your declarations page names your form.

Hurricane and named storm deductibles are often a percentage of your dwelling limit, commonly 1% to 5%. Your policy and state rules define what triggers it, such as a storm being named or a hurricane warning being issued. Check your declarations page before the season starts.

Ice dams form when heat melts snow higher on the roof and the water refreezes at the colder edge. Whether the inside water damage is paid depends on your policy wording and on whether the insurer sees a sudden event or long-term roof wear. Photograph the ice, the roof edge and any interior stains as soon as it’s safe.

If your community declares your flood-damaged home substantially damaged, ICC can pay up to $30,000 to raise, floodproof, relocate or demolish it. ICC is part of the NFIP flood policy, not your homeowners policy. It’s paid on top of your flood repair claim, but the total paid on a residential policy can’t go over $250,000.

Insurers often use independent adjusters, especially after disasters when claim volume spikes. Even though they’re outside contractors, they still work on the insurer’s behalf. Their estimate usually goes to a desk adjuster at the insurance company for review and payment.

Many homeowners policies figure replacement cost using material of like kind and quality, so the estimate should price a product comparable to yours, not a cheaper grade and not an upgrade. If you choose an upgrade, such as better flooring or a heavier shingle, you usually pay the difference. If the estimate prices a lower grade than you had, send photos, receipts or product labels in writing.

Insurance estimates are built from line items, like “remove and replace drywall, 120 square feet.” Reading line by line is the best way to spot missing work, wrong measurements or the wrong material. Compare each line with your contractor’s estimate and your own photos.

When a replacement part can’t match what is left, homeowners often ask for a larger area to be replaced so the home has a uniform look. An NAIC model rule calls for replacing items in the area to a reasonably uniform appearance, and some states have adopted matching rules, but many policies are silent on it. Ask your insurer in writing how they handle matching for your claim, and check your state insurance department’s guidance.

Some states run mediation programs for disputed property claims, often after declared disasters. In Florida, for example, the insurer pays the cost of mediation under the state program. A mediator doesn’t decide the outcome and either side can walk away, but a settlement you sign there can be binding, so read it closely. Your state insurance department can tell you whether a program applies to your claim.

Most policies make protecting your home from further harm one of your duties, for example covering a hole in the roof, turning off the water or drying wet rooms. The reasonable cost of these steps is usually paid as part of the claim. Photograph the damage before and after, and keep every receipt and invoice.

Mold that results from a covered water loss may be covered up to a smaller limit, while mold from long-term leaks is often excluded. Acting quickly on water damage helps protect both your home and your claim. Check your policy for a fungi or mold endorsement.

Because your lender has a stake in the home, claim checks for the house are often made out to both you and the lender. The lender may hold the money and release it in stages as repairs are done. Call your lender’s loss draft department early to learn their steps.

If a cause isn’t on the list, it isn’t covered. Many HO-3 policies cover personal property on a named perils basis, with perils like fire, windstorm, hail, theft and certain kinds of water damage. Compare with open perils, which works the other way.

NFIP policies follow federal rules, even though most are sold and serviced through private insurance companies and agents. For a home, federal law caps building coverage at $250,000 and contents coverage at $100,000. NFIP claims have their own deadlines, including a signed proof of loss due within 60 days of the loss unless FEMA extends it.

On an ACV policy or an ACV item, depreciation is usually not recoverable. It simply reduces what you’re paid. Your estimate may label each line as recoverable or non-recoverable, so read those columns closely.

Also called special form or all risk coverage, open perils is common for the house itself under an HO-3 policy. Instead of listing what is covered, the policy lists what isn’t, so a loss to the house is generally covered unless an exclusion or limit applies. That’s why reading the exclusions section carefully matters so much.

Codes may require upgrades your old home didn’t have, such as new electrical work, more roof sheathing or stronger framing. Standard policies commonly include a small amount, often 10% of the dwelling limit, and you can buy more. Ask your contractor which code items apply and whether your insurer has included them.

O&P is often added when a repair needs several trades, such as roofing, drywall and painting, coordinated by a general contractor. It’s usually figured as a percentage of the repair cost, and no single rate applies to every job or insurer. Check whether your estimate includes O&P, and ask in writing why if it doesn’t.

Pack-outs are common after fire, smoke and water losses. Ask for a written inventory with photos before anything leaves the home, and keep a copy. The cost is usually part of your contents or dwelling claim, depending on your policy and insurer.

Your policy either lists the perils it covers or covers all perils except those excluded. Knowing the peril that caused your damage is the first step in knowing which coverage applies.

A good inventory lists each item, its brand, age, what you paid if known and what it costs to replace today. Photos, receipts, bank statements and online order history all help. After a total loss, rebuild the list room by room from memory and photos.

Each coverage has its own limit, shown on your declarations page. Some items also have smaller special limits inside a coverage, called sublimits. Payments under one coverage don’t usually reduce the limit of another.

Many homeowners policies say you must send one within 60 days after the insurer asks for it, and NFIP flood claims require one within 60 days of the loss unless FEMA extends that deadline. Read it carefully before you sign, check the numbers and keep a copy. If you later find more damage, ask how to submit an amended or supplemental proof of loss.

Public adjusters work for the policyholder, not the insurance company, and are usually paid a percentage of the claim payment. Not every state allows them, and some states cap their fees: Florida, for example, allows up to 10% on claims from a declared state of emergency filed within a year of the declaration, and 20% on other claims. Check the license with your state insurance department and read the contract before signing.

Many policies pay the reasonable cost of these repairs as part of your claim. Do only what protects the property, take photos first, and keep receipts. Avoid permanent repairs before the adjuster inspects, unless waiting would cause more damage, and tell your insurer what you did.

An adjuster may ask to record your account of what happened. Stick to facts you know, say so if you’re unsure, and don’t guess at dates or causes. You can ask for a copy or transcript of the recording.

With replacement cost coverage, many insurers pay ACV first and then pay the held-back depreciation when you send proof the work is complete, such as a final invoice. Your policy sets a deadline for this, and some states require more time: California, for example, allows at least 12 months from the first ACV payment, or 36 months for a loss tied to a declared state of emergency. Track the amount still owed for each line.

Most routine claim checks don’t require a release. If you’re asked to sign one, read exactly what it gives up, especially words like “full and final.” If you’re unsure, talk with a licensed attorney in your state before signing.

R&R lines include both removal labor and the new material and installation. Compare them with “repair” or “clean” lines, which pay less. If you believe an item must be replaced rather than repaired, explain why in writing with photos.

Many insurers will reopen a claim when more damage related to the same loss is found, often during repairs. Time limits apply, set by your policy and state law. Ask in writing, include photos and a contractor’s description, and reference your original claim number.

RCV is the estimate total before depreciation is taken off. With replacement cost coverage, you can usually collect the full RCV, minus your deductible, once repairs are complete. Before that, many insurers pay only ACV.

A reservation of rights letter isn’t a denial. It tells you which coverage questions are open. Read it closely, keep doing your duties after loss, and respond in writing with any facts that answer the questions raised.

Some policies pay older roofs on a schedule or on an actual cash value basis, which can mean a much smaller payment than replacement cost. These endorsements are listed on the declarations page. Read yours before a roof claim so the payment doesn’t surprise you.

If the insurer pays you the full value of an item, it may have the right to take the damaged item and sell it. In some cases you can keep it for an agreed reduction in payment. Do not throw away damaged items until the adjuster says it’s all right.

Scheduling an item usually gives it a set value and broader coverage than the standard contents limit, and it gets around the lower special limits on things like jewelry. You typically need an appraisal or receipt to schedule it. These items show up on your declarations page or an endorsement.

The scope is the foundation of the estimate: if an item is missing from the scope, it won’t be priced. Compare the insurer’s scope with your contractor’s scope and your photos, room by room, and ask in writing for missing items to be added.

Roof estimates are priced by the square. A small error in the number of squares, or a missing waste allowance, can change the roof payment. Compare the squares on the insurer’s estimate with your roofer’s measurements.

Every state has an insurance regulator, often called the department of insurance. You can call or file a complaint online at no cost, and many departments run consumer help lines after disasters. They can also confirm whether an insurance company, agent or adjuster is licensed, while contractor licenses, where a state requires them, are handled by a different agency.

Common sublimits apply to jewelry, cash, firearms, business property at home, mold and trees. A sublimit caps that category even if your overall contents limit is much higher. Check the special limits section of your policy.

If a neighbor’s contractor or a faulty appliance caused your loss, your insurer may pursue them after paying your claim. If they recover money, you may get some or all of your deductible back. Avoid signing anything with the responsible party without telling your insurer.

Many policies cover sudden and accidental water discharge but exclude damage from a leak that went on for weeks or months. The timeline matters, so document when you first noticed the water and act quickly.

Many policies say you must file any lawsuit within a set time after the date of loss, and the standard HO-3 form uses two years. State law can change that period, and the clock can keep running while you’re still negotiating. If your claim may end in court, talk with a licensed attorney in your state well before the deadline.

Supplements are common once repairs begin and hidden damage appears. Send photos, a description and the added cost to your adjuster, referencing the claim number. A contractor often prepares the supporting estimate, but the claim is still yours.

In a total loss, the dwelling limit, debris removal, ordinance or law coverage and loss of use all become important. Some states have valued policy laws: Florida, for example, generally requires the insurer to pay the full dwelling limit when a covered peril causes a total loss of the building. You’ll also likely need to list your contents from memory, photos and records.

Both parties must sign before the check can be deposited. With a lender, you may need to send the check to the lender, who holds the money and pays it out as work is done, sometimes after inspecting the finished job. Ask your lender for their written process early.

The two appraisers usually pick the umpire together. If they can’t agree, many policies let either side ask a court to appoint one. The umpire only resolves the items the appraisers can’t agree on.

After big disasters, rising labor and material costs can leave many homes underinsured. Underinsurance can also trigger a coinsurance penalty on some policies. Review your dwelling limit each year against a current rebuilding cost estimate.

Most states have laws or rules based on model acts from the National Association of Insurance Commissioners. They often address responding to communications, investigating promptly and explaining denials, and the NAIC model rule, for example, calls for insurers to acknowledge a claim within 15 days. Each state sets its own deadlines, and your state insurance department enforces them and accepts complaints.

Many standard policies exclude water backup unless you add an endorsement, and the endorsement often has its own limit. Water backup is different from flood. Check your declarations page for this endorsement.

Insurers often cite wear and tear when damage looks old, such as worn shingles or corroded pipes. Sudden storm damage can still be covered on an older roof. Good photos taken soon after the event help show what is new damage.

In storm-prone areas, policies may use a 1%, 2% or higher deductible for wind and hail instead of a flat amount. It can apply to any windstorm, not just hurricanes. Look for it on your declarations page.

Many policies cover interior rain damage only if wind or hail first created an opening in the roof or walls. Rain that comes through an existing gap may be treated differently. Photograph the opening and the interior damage together if you can.

Xactimate turns the scope of loss into line items with local prices. Because many insurers use it, contractors often write their estimates in Xactimate too, which makes line by line comparison easier. The software doesn’t decide coverage; people do.