Insurance Claims Glossary

A working reference for insurance adjusters, claims professionals, policyholders, and anyone navigating the claims process. Covers property, casualty, auto, workers' compensation, and liability terms.

• A

• Actual Cash Value
  The value of damaged or destroyed property at the time of loss, calculated as replacement cost minus depreciation.
• Additional Living Expenses
  Coverage that reimburses policyholders for the reasonable extra costs incurred to maintain their normal standard of living while their home is uninhabitable after a covered loss.
• Agreed Value
  A policy provision fixing the value of insured property in advance, eliminating disputes over ACV at loss time for that property.
• Agreed Value Auto
  A classic or specialty auto policy that sets a fixed value for the vehicle in advance of a total loss.
• Appraisal Clause
  A policy provision for resolving disputes over the amount of loss through neutral appraisers instead of litigation.
• Arbitration
  A binding or non-binding process where an arbitrator or panel decides a dispute outside of court, per contract or agreement.
• Assignment of Benefits
  A legal transfer of insurance claim rights or benefits from a policyholder to a third party, such as a contractor or restoration vendor.

• B

• Bad Faith
  Unreasonable insurer conduct in handling a claim, potentially creating extracontractual liability beyond the policy limits in some jurisdictions.
• Betterment
  A deduction from a claim payment when new parts improve the vehicle's condition beyond pre-loss state.
• Bodily Injury
  Physical injury, sickness, or disease sustained by a person, including death resulting therefrom, in liability policies.
• Builders Risk
  Short-term property insurance covering a building under construction or renovation against damage during the project.
• Business Interruption
  Coverage for lost income and continuing operating expenses when a covered peril suspends business operations.

• C

• Catastrophe Adjuster
  An adjuster deployed to a disaster zone to handle high volumes of claims after hurricanes, wildfires, or other catastrophes.
• Claims-Made Policy
  A policy that covers claims first made against the insured and reported to the insurer during the policy period, subject to retroactive date rules.
• Code Upgrade
  The cost to bring repaired or rebuilt property into compliance with current building codes, often covered only under ordinance or law coverage.
• Coinsurance
  A policy provision requiring the insured to carry insurance up to a stated percentage of the property value, with a penalty for underinsurance at claim time.
• Collision Coverage
  First party auto coverage for damage to your vehicle from collision with another object or vehicle or rollover.
• Compensable Injury
  An injury or illness that arises out of and in the course of employment and qualifies for workers compensation benefits.
• Comprehensive Coverage
  First party coverage for damage to your vehicle from non-collision events such as theft, fire, vandalism, hail, and animal strikes.
• Concurrent Causation
  A loss resulting from two or more causes operating together, where at least one cause is covered and another may be excluded.
• Consequential Loss
  Indirect financial loss that follows from direct physical damage, such as lost profits or extra expenses, often limited or excluded unless separately insured.
• Contractual Liability
  Liability assumed by contract, such as hold harmless agreements, which may be covered by GL only when the contract is insured contract.
• Coverage Dispute
  A disagreement over whether the policy applies to a particular loss or claim.
• Coverage Opinion
  A legal or technical analysis of whether a policy covers a particular loss or claim scenario.

• D

• Debris Removal
  Coverage for the cost to remove damaged property and rubble from the premises after a covered loss.
• Deductible
  The amount the insured must pay out of pocket before the insurer pays on a covered claim, or the amount subtracted from each loss.
• Demand Package
  A structured submission from a claimant or attorney setting forth liability, damages, and settlement demand before litigation.
• Depreciation
  The reduction in the value of property over time due to age, wear and tear, and obsolescence, used to calculate actual cash value.
• Designated Home State
  A licensing state an adjuster declares as home when residing in a state that does not issue adjuster licenses, used for non-resident licensing elsewhere.
• Desk Adjuster
  An adjuster who manages claims primarily from the office using photos, estimates, and phone interviews without field inspection.
• Diminished Value
  The reduction in market value of a repaired vehicle because it now has a significant damage history.
• Directors and Officers Liability
  Coverage for personal liability of corporate directors and officers for alleged wrongful acts in managing the organization.

• E

• Employer Liability
  Coverage for lawsuits by employees excluded from workers comp or alleging employer intentional or gross negligence, depending on policy.
• Employment Practices Liability
  Coverage for claims by employees alleging discrimination, harassment, wrongful termination, and similar workplace issues.
• Errors and Omissions
  Professional liability coverage for negligence, mistakes, or failure to perform professional duties.
• Estimate Supplement
  Additional estimate amounts requested after hidden damage, code requirements, or scope changes are discovered after initial inspection.
• Examinations Under Oath
  A formal, sworn interview of the insured by the insurer's counsel regarding the claim, required by many property policies when requested.
• Excess Coverage
  Liability insurance that pays only after underlying primary limits are exhausted, often following the terms of the primary policy.
• Extended Replacement Cost
  An endorsement that pays a stated percentage above the dwelling limit if reconstruction costs exceed the policy limit due to demand surge or inflation.

• F

• Field Adjuster
  An adjuster who inspects loss sites in person, measures damage, and prepares estimates on location.
• First Party Claim
  A claim by the policyholder against their own insurer for benefits under their policy.
• Functional Replacement Cost
  Settlement basis that replaces damaged property with modern, functionally equivalent materials that may differ from original ornate or obsolete construction.

• G

• Gap Insurance
  Coverage that pays the difference between ACV on a totaled vehicle and the remaining loan or lease balance.
• General Liability
  Commercial insurance covering third party bodily injury, property damage, and personal and advertising injury arising from business operations.

• I

• Impairment Rating
  A percentage estimate of permanent loss of function assigned using medical guidelines after MMI.
• Indemnity
  The principle of restoring the insured to the same financial position as before the loss, without profit.
• Independent Adjuster
  A claims adjuster who contracts with insurers or TPAs to handle claims but is not an employee of a single carrier.
• Independent Contractor Exclusion
  Workers compensation typically does not cover true independent contractors; misclassification creates coverage and penalty exposure.
• Independent Medical Examination
  A medical exam of a claimant by a physician chosen by the insurer to verify injury, treatment, or disability.

• L

• Lien
  A legal claim against a settlement or award for reimbursement, such as a workers comp carrier's lien on a third party recovery.
• Light Duty
  Modified work within medical restrictions offered by the employer during recovery from a work injury.
• Liquor Liability
  Coverage for bodily injury or property damage arising from serving alcohol, especially for businesses in the liquor trade.
• Loss of Use
  Coverage paying for rental transportation while your vehicle is repaired from a covered claim.

• M

• Managing General Agent
  An intermediary with underwriting authority from an insurer to bind coverage, price risks, and appoint retail agents in a territory.
• Maximum Medical Improvement
  The point when an injured worker's condition has stabilized and is not expected to improve further with treatment.
• Mediation
  A voluntary dispute resolution process where a neutral mediator helps parties settle without binding authority.
• Medical Payments Coverage
  Optional auto coverage paying reasonable medical expenses for you and passengers after an accident, regardless of fault, usually with low limits.
• Monopolistic State Fund
  States where workers compensation insurance must be purchased only from the state fund, not private carriers.

• N

• Named Perils
  Coverage form that insures only against the specific perils listed in the policy, such as fire, windstorm, or vandalism.
• Nurse Case Manager
  A registered nurse who coordinates medical care and return-to-work for an injured worker, often hired by the carrier or employer.

• O

• Occurrence
  In liability insurance, an accident or harmful event during the policy period; in property, an event causing loss.
• Open Perils
  Coverage form that insures against all causes of loss except those specifically excluded in the policy.
• Ordinance or Law Coverage
  Coverage that pays the additional cost to repair or rebuild a structure to comply with current building codes following a covered loss.
• OSHA Recordable
  A work-related injury or illness that meets OSHA criteria for recording on the employer's OSHA 300 log.

• P

• Permanent Partial Disability
  Benefits for permanent impairment that limits but does not eliminate ability to work.
• Permanent Total Disability
  Benefits when a worker cannot return to any gainful employment after maximum medical improvement.
• Personal Injury
  In liability insurance, offenses such as false arrest, libel, slander, invasion of privacy — not physical bodily injury.
• Personal Injury Protection
  No-fault medical and wage loss benefits for you and passengers after an auto accident, regardless of fault, in no-fault states.
• Pollution Liability
  Coverage for third party claims and cleanup costs from pollution releases, excluded or limited in standard GL.
• Premises Liability
  Liability for injuries occurring on property owned or occupied by the insured due to dangerous conditions.
• Products Liability
  Legal liability for bodily injury or property damage caused by a product after it leaves the insured's control.
• Professional Liability
  Coverage for financial loss to others caused by negligent acts, errors, or omissions in professional services.
• Proof of Loss
  A formal statement signed by the insured documenting the amount and details of a claim, often required before the insurer pays.
• Property Damage Liability
  Coverage for physical damage to tangible property of others for which the insured is legally liable.
• Proximate Cause
  The dominant or legally recognized cause that sets a chain of events in motion and is sufficiently related to the resulting loss.
• Public Adjuster
  A licensed adjuster hired by the policyholder to document, present, and negotiate a property insurance claim.

• R

• Rental Reimbursement
  An optional auto coverage that reimburses rental car costs during a covered repair period.
• Replacement Cost Value
  The cost to repair or replace damaged property with materials of like kind and quality at current prices, without any deduction for depreciation.
• Reservation Letter
  Informal shorthand for a reservation of rights communication from insurer to insured about potential coverage limitations.
• Reservation of Rights
  A letter from an insurer stating it is investigating or defending a claim without waiving the right to later deny coverage.

• S

• Salvage Value
  The residual value of damaged property sold as scrap or rebuildable after a total loss.
• Scope of Loss
  The written description of damaged property and operations needed to return the insured to pre-loss condition.
• Staff Adjuster
  An employee adjuster who handles claims solely for one insurance company.
• Statute of Limitations
  A law limiting the time within which a lawsuit must be filed after a claim accrues.
• Subrogation
  The insurer's right to pursue a third party who caused the loss, after paying the insured, to recover amounts paid.
• Substandard Repair
  Vehicle repairs that fail to restore the vehicle to pre-loss condition in quality, safety, or appearance.
• Sworn Statement in Proof of Loss
  A proof of loss given under oath, often notarized, attesting to the accuracy of the claim; required by some policies or states.

• T

• Temporary Total Disability
  Benefits when an injured worker cannot work at all for a limited period while recovering.
• Third Party Administrator
  A company that handles claims processing and benefits administration on behalf of insurers or self-insured employers.
• Third Party Claim
  A claim by someone who is not the policyholder against the insured, typically covered by liability insurance.
• Tolling
  Pausing or extending a legal deadline so the remaining time can run later.
• Total Loss
  When repair cost exceeds a threshold relative to actual cash value, or the vehicle is structurally unsalvageable, so the insurer pays ACV and takes salvage.

• U

• Umbrella Policy
  Excess liability insurance that sits above primary policies and may broaden coverage for certain claims.
• Underinsured Motorist Coverage
  Coverage that applies when the at-fault driver's liability limits are too low to cover your damages.
• Uninsured Motorist Coverage
  Coverage for your bodily injury (and sometimes property damage) when an at-fault driver has no liability insurance.

• V

• Vacancy Clause
  Policy language that limits or excludes coverage when a building has been unoccupied or vacant for a specified period.
• Valued Policy
  A policy that agrees in advance on the value of insured property, so that amount is payable in full in the event of a total loss.
• Vocational Rehabilitation
  Services to help an injured worker return to suitable employment, including retraining and job placement.

• W

• Workers Compensation
  Insurance providing medical benefits and wage replacement to employees injured in the course of employment, and protecting employers from most tort suits.

• X

• Xactimate
  Industry-standard estimating software using localized unit pricing for property repair and reconstruction scopes.