Insurance Glossary

Understanding Your Coverage terms

Navigating insurance starts with understanding the language. Use this glossary to decode your policy documents.

Actual Cash Value (ACV): The value of your property at the time of loss, determined by taking the replacement cost and deducting for age and wear-and-tear (depreciation).

Claim: A formal request made by the policyholder to the insurance company for financial reimbursement after a covered loss.

Deductible: The amount you agree to pay out-of-pocket before your insurance policy begins to pay for a covered loss.

Depreciation: The decrease in the value of property over time due to age, wear, and tear.

Endorsement (or Rider): A written amendment to an insurance policy that changes, expands, or restricts the standard coverage (e.g., adding a jewelry endorsement to a home policy).

Exclusion: Specific situations, conditions, or property that the insurance policy explicitly states it will not cover (e.g., flood damage is an exclusion on standard home policies).

Liability: Legal responsibility for causing bodily injury or property damage to another person.

Loss of Use: Coverage that pays for additional living expenses (like a hotel or food) if a covered peril makes your home uninhabitable during repairs.

Premium: The amount of money you pay to the insurance company in exchange for coverage.

Replacement Cost Value (RCV): The cost to replace or repair damaged property with new materials of similar kind and quality, without deducting for depreciation.

Subrogation: The legal process where your insurance company pays your claim, and then seeks reimbursement from the at-fault third party’s insurance company.

Umbrella Insurance: A separate policy that provides additional liability limits above and beyond the limits of your primary auto or homeowners insurance policies.