Glossary Of Adjuster Insurance Terms

Adjuster Glossary Terms

• Actual Cash Value (ACV)

  Replacement Cost minus depreciation.

• Adjuster

  A licensed professional who investigates, evaluates, and negotiates insurance claims.

• Adverse Selection

  High-risk individuals being more likely to seek insurance.

• Arbitration

  Alternative dispute resolution where a neutral third party decides the outcome.

• Assignment

  Transfer of policy rights from one party to another (usually requires insurer consent).

• Authorized (Admitted) Insurer

  Insurer licensed to do business within the state.

• Bad Faith

  Failure of insurer to act fairly and honestly toward insured; may create additional liability.

• Binder

  Temporary proof of insurance until a policy is issued.

• Burden of Proof

  Duty of a party to demonstrate a fact (in claims, insured must show loss is covered).

• Business Interruption Insurance

  Covers loss of income due to a covered property loss.

• Claim

  A demand by an insured for payment under an insurance policy.

• Claimant

  The person who makes a claim - may be first-party (insured) or third-party.

• Comparative Negligence

  Apportions damages based on percentage of fault.

• Compensatory Damages

  Compensation for actual financial and nonfinancial injuries.

• Concealment

  Intentional withholding of material fact; may void a policy.

• Concurrent Causation

  When multiple perils occur simultaneously; some states require coverage if at least one covered peril contributed.

• Consideration

  Premium + truthful information exchanged for insurer's promise to pay claims.

• Coverage Trigger

  Event that activates coverage (occurrence, claims-made, etc.).

• Declarations Page

  Summary page listing policyholder, limits, deductibles, and property covered.

• Deductible

  Amount the insured pays before insurance responds.

• Depreciation

  Reduction in value due to age, wear, or obsolescence.

• Direct Loss

  Physical damage to property; required before indirect loss is payable.

• Duty to Defend

  Insurer’s obligation to defend insured in a liability lawsuit.

• Effective Date

  Date insurance coverage begins.

• Endorsement

  Written amendment changing policy terms or coverages.

• Estoppel

  Legal prevention of a party from denying what they previously represented as true.

• Evidence of Loss

  Documentation proving a covered loss occurred.

• Exclusions

  Specific things the policy does NOT cover.

• First-Party Claim

  Claim made by the insured for their own loss.

• First Notice of Loss (FNOL)

  Initial report made to insurer or adjuster informing them of a loss.

• Flood

  Rising water or overflow; covered under NFIP, not standard homeowners.

• Fraud

  Intentional deception for financial gain; criminal offense.

• Good Faith

  Honest and fair dealing by both insurer and insured.

• Gross Negligence

  Severe carelessness showing reckless disregard for safety.

• Hazard

  Condition increasing chance of loss (moral, morale, physical).

• Hold Harmless Agreement

  Contract where one party agrees to indemnify another.

• Indemnity

  Restoring the insured to financial condition before the loss occurred.

• Indirect Loss

  Consequential loss (e.g., loss of income, extra expenses).

• Insurable Interest

  Financial interest in property; must exist at time of loss.

• Insuring Agreement

  Defines what the insurer agrees to cover.

• Investigation

  Adjuster's process of determining what happened, coverage, and loss amount.

• Judgment Rating

  Rate based on underwriter expertise when no established rate exists.

• Joint and Several Liability

  Any single defendant can be held responsible for entire damages.

• Key Facts Statement

  Summary of policy in plain language (used in some states).

• Knowledge Requirement

  Adjuster must maintain current knowledge of laws, policies, and practices.

• Liability

  Legal responsibility for damages caused to another.

• License

  State authorization to act as an adjuster.

• Loss

  Unintended damage resulting in a claim.

• Loss of Use

  Coverage for additional living or rental expenses after a covered loss.

• Loss Ratio

  Losses ÷ premiums; used to evaluate insurer performance.

• Material Misrepresentation

  False information that affects underwriting decisions; grounds for voiding policy.

• Mediation

  Nonbinding negotiation with impartial mediator.

• Moral Hazard

  Increased chance of loss from dishonesty of insured.

• Morale Hazard

  Carelessness due to having insurance (e.g., not locking doors).Named PerilsPolicy covers ONLY perils listed.

• Negligence

  Failure to act with reasonable care.

• No-Fault Insurance

  Each party’s insurer pays their own damages regardless of fault.

• Occurrence

  Accident or repeated exposure resulting in loss.

• Open Perils

  Covers ALL perils except exclusions.

• Overinsurance

  Insurance amount exceeds value of property; may discourage indemnity or encourage fraud.

• Personal Injury

  Nonphysical harms: libel, slander, false arrest.

• Personal Lines

  Policies for individuals (auto, homeowners).

• Proof of Loss

  Formal sworn statement required before payment.

• Property Damage

  Physical injury to or loss of use of tangible property.

• Qualified Loss

  A loss meeting the policy’s definition and terms.

• Quote

  Preliminary premium estimate.

• Reservation of Rights

  Notice from insurer that they are investigating but may deny coverage.

• Replacement Cost

  Cost to replace without deduction for depreciation.

• Res Ipsa Loquitur

  The thing speaks for itself - negligence inferred from the event.

• Rescission

  Cancellation of a policy from its start due to misrepresentation or fraud.

• Salvage

  Property remaining after loss; insurer may sell to offset payments.

• Schedule

  List of specific items and their values covered by policy.

• Settlement

  Mutual agreement for claim payment.

• Statute of Limitations

  Time limit to file a legal action.

• Strict Liability

  Liability without proof of negligence.

• Subrogation

  Insurer recovers claim costs from responsible party.

• Tort

  Civil wrongdoing resulting in liability.

• Total Loss

  Property cannot be repaired, or cost exceeds value.

• Tortfeasor

  Party committing a tort.

• Third-Party Claim

  Claim someone else makes against the insured.

• Umbrella Policy

  Excess liability policy with broader protection.

• Unoccupancy

  Property contains contents but no people present.

• Underwriting

  Risk evaluation for policy approval and premium rating.

• Umpire

  Neutral third party in appraisal disputes.

• Vacancy

  No people AND no contents.

• Vandalism

  Intentional property damage.

• Valued Policy

  Pays full policy amount in total loss regardless of actual value.

• Waiver

  Intentional relinquishment of a known right.

• Workers’ Compensation

  Insurance covering employee workplace injuries.

• Written Premium

  Total premium recorded during a period.