Insurance Terms

Whether you are facing your first insurance claim dispute or you have prior experience, it is important to have a glossary of insurance terms at your fingertips. We hope these commonly used property insurance terms will prepare policyholders for asking the right questions, and serve as a tool for those seeking to better communicate with public adjusters and insurance companies. 

The Merlin Law Group Blog also serves as an excellent resource for more in-depth information regarding insurance claims.

Actual Cash Value:

Often called just “ACV.” This is one way of calculating a value of lost or damaged property that is determined by the insurance company. This numbers is often calculated by determining replacement cost value minus depreciation and known to be rather subjective as it is the insurance company who is putting a value to the policyholder’s property. Be very inquisitive into how depreciation is being calculated.

Any Occupation Disability Insurance:

Under this type of policy, benefits are payable so long as the insured is prevented from engaging in work for which he is
suited and the type of work is not limited to a certain specific occupation.

Application Misrepresentation:

Application Misrepresen-tation:

Fraudulent, negligent, or innocent misstatement of information on an insurance policy, or a lack of complete information policy can be considered an application misrepresentation. This can be grounds for a denial from the insurance company when filing a claim, however, some inaccurate information may not bar your claim and you should have your legal rights reviewed.


A process available under some insurance policies where there is an disagreement on the amount of the loss. Specific policies have controlling language and different jurisdictions allow for different processes.

Assisted Living:

Housing designed for senior citizens who need assistance with their daily routines but do not need intensive care. This can be distinguished from a nursing home in some insurance policies.

Bad Faith:

Bad Faith can be described as intended deception. In insurance terms, this can be ill fulfillment of contractual obligations to the policyholder. This can be an unfair or deceptive action by the insurance company and can also be present when the adjusters are not properly trained. Read more information about Bad Faith Claims here.


An individual who could receive payment due to will, life insurance policy, retirement plan, annuity, trust, or other contract.

Benefits (Medical and Hospital Expenses):

(Medical and Hospital Expenses):

The costs for health care services covered by an insurance company.

Business Owner’s Policy:

A policy of insurance specific for business typically for property, liability and business interruption coverage.

Catastrophe Loss:

A loss of large magnitude where there was very little ability to forecast.


A formal request from a policyholder to their insurance company for payment due to loss and damage incurred and covered under the policy.

Company Insurance Adjuster:

An adjuster sent by an insurance company to assess the amount of compensation necessary for a person who has made a claim on
their insurance policy.


Check your insurance policy’s listed conditions; these are requirements that must be upheld or followed by the insured when seeking coverage.


Often called the “dec pages.” The declarations are insurance forms within an insurance policy that give details of insurable interest, demographic information of the insured, and some of the specifics of the property covered.

Direct Loss:

Property loss or damage that is a direct result of an event or unbroken chain of events that is covered under the insurance policy.

Examination Under Oath (EUO):

A formal proceeding during which an insured, under oath and in the presence of a court reporter, is questioned by an attorney for the insurance company, or in some cases an insurance representative. You should retain an attorney to attend any Examinations Under Oath with you because this is formal testimony specific for your loss and claim. The attorney for the insurance company does not represent you.


As a policyholder or a property, being subject to loss or damage because of a contingency or hazard.


A circumstance that has the potential to increase the probability or severity of a loss.

Independent Adjuster:

This adjuster has the ability to be a freelance representative adjuster who is paid to adjust losses on behalf of insurance companies.
This adjuster can work for many different insurance companies on different claims and is not the adjuster for a certain designated company. This adjuster is not a policyholder adjuster or a  public adjuster.


The person or entity covered by an insurance policy (Policyholder).


A person or company authorized to write property and/or casualty insurance under the laws of the particular state (Insurance Company).

Irrevocable Beneficiary:

A life insurance policy beneficiary whose compensation cannot be changed without his or her consent.

Loss Payment Clause:

A Loss Payment Clause is a fairly standard provision that can be found within commercial and residential insurance policies. The “loss payment” provision is one of the few provisions favoring the policyholder and should be followed when funds are tendered.


Failure to exercise reasonable care, resulting in loss or damage to oneself or others.

Nursing Home:

A private institution providing residential accommodations with health care, especially for the elderly.

Own Occupation Disability Insurance:

Insures the person and gives insurance benefits in the event the person is unable to pursue his usual line of work.
Applies specifically to the policyholder’s own career or job, not just employment in general.

Package Policy:

A policy which is a single contract where two or more policies are combined.


A written contract containing the insurance terms and conditions of an agreement.


The amount paid monthly, quarterly, or yearly for insurance coverage that reflects the expectation of loss.

Primary Insurance:

The coverage that holds superiority when more than one policy covers the same loss.

Proof of Loss:

A formal statement made by the insured to the insurer regarding a claim, especially in property insurance, so the insurer can determine its liability under the policy. Requests for proof of loss should be handled in a timely manner. Policyholders need to be familiar with the time requirements of these forms, because strict adherence is often required as a requirement to payment.


Contingencies or specifics detailed in the various sections of an insurance policy.

Proximate Cause:

An event well related to a legally recognized injury and is named the cause of the injury, which is covered under the insured’s policy.

Public Adjuster:

A Public Adjuster is a licensed and trained specialist that adjusts insurance claims for homeowners, commercial property owners and businesses. Public adjusters are insurance adjusters who work solely for the policyholder and not the insurance company on a particular claim.

Replacement Cost Value:

The cost of replacing the property loss or damage without a reduction for depreciation due to normal wear and tear or age.


Value that remains after loss or damage.


Stated period of time for which an insured’s policy is in effect.

Third Party:

Someone other than the policyholder or insurer who has experienced loss or is entitled to be compensated due to acts of the insured.


The appraisal process of an insurance claim is made up of a two appraisers and if needed an umpire, chosen by mutual agreement.  Any agreement by two of the three is binding. An umpire is typically an expert in the field of the repairs needed, such as an engineer or an architect.


*NOTE: These are general definitions to increase familiarity with insurance terms; please check your specific insurance policy for definitions

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