Insurance Appraisal Glossary: 40 Claim Terms Defined

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Actual cash value (ACV): The value of damaged property after depreciation is subtracted from its replacement cost. Many policies pay ACV first and the rest after repairs are completed.
Additional living expenses (ALE): Extra costs of living elsewhere while a home is uninhabitable after a covered loss, such as rent and higher food costs. Usually paid under Coverage D.
Appraisal award: The signed written decision that sets the amount of loss. Under most policies it is valid once any two of the three panel members sign it.
Appraisal clause: The policy condition that lets either party resolve a disagreement over the amount of loss through two appraisers and an umpire rather than in court.
Appraisal demand: The written notice one party sends the other to invoke the appraisal clause, usually naming the claim and the party’s appraiser.
Betterment: An improvement beyond the pre-loss condition of the property. Insurers may argue that part of a repair is betterment and not owed.
COMAR: The Code of Maryland Regulations. Title 31 contains insurance regulations, including standards for how insurers handle claims.
Coverage A – Dwelling: The part of a homeowners policy that covers the house itself and attached structures such as an attached garage or deck.
Coverage B – Other structures: Coverage for detached structures on the property, such as a detached garage, shed or fence, often set as a percentage of Coverage A.
Coverage C – Personal property: Coverage for belongings such as furniture, clothing and electronics, whether at home or, within limits, elsewhere.
Coverage D – Loss of use: Coverage for additional living expenses or lost rental income while the property can’t be used after a covered loss.
Declarations page: The summary page of a policy listing the insured, the property, coverage limits, deductibles and endorsements.
Depreciation: The reduction in value for age, wear and condition. It is subtracted from replacement cost to reach actual cash value.
Derecho: A long-lived, widespread windstorm from a line of thunderstorms. The June 29, 2012 derecho caused heavy tree and roof damage across Maryland.
Disinterested appraiser: An appraiser with no personal or financial stake in the outcome beyond a normal fee. Most appraisal clauses require it.
Examination under oath: A formal, recorded interview of the policyholder under oath that many policies allow the insurer to request during a claim investigation.
Hurricane deductible: A deductible, often a percentage of Coverage A, that applies to damage from a hurricane or named storm as the policy defines it. Common near the Chesapeake Bay and the coast.
Ice dam: A ridge of ice at the roof edge that traps melting snow, which can back up under shingles and into the home. A frequent winter problem in Garrett and Allegany counties.
Line item: A single entry in a repair estimate showing a task or material, its quantity, unit and price.
Maryland Insurance Administration (MIA): The state agency that regulates insurers in Maryland and takes consumer complaints. It is led by the Maryland Insurance Commissioner.
Maryland Joint Insurance Association (MJIA): Maryland’s insurer of last resort for property owners who can’t obtain coverage in the regular market, similar to a FAIR plan.
Matching: The question of whether undamaged materials must be replaced so repairs match in color, texture or style, such as siding or flooring.
Mitigation: Reasonable steps to prevent further damage after a loss, such as tarping a roof or drying out water. Most policies require it.
Mortgagee clause: The policy provision that protects the mortgage lender’s interest, which is why claim checks are often made out to both owner and lender.
Named storm: A storm given a name by the National Hurricane Center. Some policies use this term to trigger a special percentage deductible.
Nor’easter: A coastal storm with strong northeast winds, heavy rain or snow and tidal flooding. The 1962 Ash Wednesday storm is a well-known Maryland example.
Ordinance or law coverage: Coverage for added costs of meeting current building codes during repairs, such as upgraded electrical work or roof decking. Often limited unless increased by endorsement.
Overhead and profit (O&P): A general contractor’s charge for running the job and earning a margin, often shown as 10% overhead and 10% profit in estimates. A frequent point of dispute.
Party wall: A shared wall between two attached buildings, typical of Baltimore rowhouses. Fire, water and roof damage can cross party walls and complicate claims.
Proof of loss: A sworn statement of the amount claimed that some policies require within a set time after the insurer asks for it.
Recoverable depreciation: The depreciation withheld from an actual cash value payment that the policy allows you to collect once repairs or replacement are completed.
Replacement cost value (RCV): The cost to repair or replace damaged property with materials of like kind and quality, without subtracting depreciation.
Reservation of rights: A letter in which the insurer continues handling a claim while reserving the right to deny coverage later.
Scope of loss: The list of all damaged items and the repairs needed. Many appraisal disputes are really disputes over scope.
Square (roofing): A roofing measurement equal to 100 square feet of roof surface, used to price shingles and membranes.
Supplement: A request to add items or costs to an estimate after work begins or hidden damage is found.
Tulip poplar: A tall, fast-growing tree common in Maryland woodlands whose limbs and trunks often fall on homes in high winds.
Umpire: The neutral third member of an appraisal panel who decides items the two appraisers can’t agree on.
Waiver: Giving up a right, sometimes by conduct. Delays or inconsistent actions can lead to arguments that a party waived appraisal.
Xactimate: Estimating software widely used by insurers and contractors to price repairs with regional unit costs.