Property claim & appraisal glossary
Plain definitions of the terms that appear on a property claim file, from the first notice of loss to the appraisal award.
A
Actual cash value
The value of damaged property after depreciation is subtracted from the cost to replace it. It is one of the two common bases on which a claim payment is calculated; the other is replacement cost value.
Appraisal
A method of resolving a disagreement about the amount of a covered loss, provided for in many property policies. Each side selects an appraiser, the appraisers attempt to agree on the amount, and an umpire decides the points they cannot settle. Appraisal addresses the amount of the loss, not whether the policy covers it.
Appraisal clause
The section of a property policy that describes the appraisal process: how it is invoked, how the appraisers and an umpire are chosen, and how the result is reached. Its wording varies from policy to policy, which is why it is the first thing an appraiser reads on a new file.
Appraiser
The person a party selects to represent its position on the amount of loss in an appraisal. An appraiser inspects the property, prepares or reviews the estimate, and works with the opposing appraiser toward an agreed figure.
Assignment of benefits
An agreement in which a policyholder transfers some or all of the right to claim payment under the policy to a third party, often a contractor or restoration company that performs the work. Whether and how it may be used depends on the policy and the jurisdiction.
Award
The written result of an appraisal, setting out the amount of loss agreed by the two appraisers, or by one appraiser and the umpire. It is signed by the parties who agree with it and concludes the appraisal.
C
Carrier
The insurance company that issued the policy and is responsible for adjusting and paying covered claims under it. Also called the insurer.
Claim file
The complete record of a claim: the assignment, policy information, correspondence, photographs, estimates, reports, notes, and the history of what happened and when. In ClaimFileHQ the claim file is the record everything else attaches to.
D
Date of loss
The date the damage occurred or, for events that develop over time, the date the loss is considered to have begun. It anchors the policy period, the deductible, and the deadlines on the file.
Declarations page
The front section of a policy that identifies the insured, the covered property, the policy period, coverage limits, deductibles, and endorsements. It is usually the first document an adjuster or appraiser asks for.
Deductible
The portion of a covered loss the policyholder is responsible for before the policy pays. It may be a flat amount or a percentage of the coverage limit, and it is stated on the declarations page.
Depreciation
The reduction in an item's value attributable to age, wear, and condition. In a claim estimate it is the difference between replacement cost value and actual cash value.
Desk adjuster
An adjuster who handles claims from an office rather than in the field, working from the photographs, estimates, and reports that others submit. The term describes where the work is done, not who employs the adjuster.
E
Estimate
An itemized statement of the work and materials needed to repair or replace damaged property, with a price for each line. Estimates are usually prepared in estimating software and are the basis for the amount of a claim.
F
Field adjuster
An adjuster who inspects the property in person, documents the damage, and prepares or verifies the estimate. Field adjusters may be staff adjusters or independent adjusters.
Final package
The set of documents assembled when a file closes: the final estimate, photographs, reports, correspondence, and any award or agreement, organized for delivery to the client or the carrier.
I
Impasse
The point in an appraisal at which the two appraisers have exchanged positions and cannot agree on an item or on the total. Reaching impasse is what brings the umpire into the process.
Independent adjuster
An adjuster who is not employed by the carrier but is retained by it, often through an adjusting firm or a third-party administrator, to handle claims on its behalf. Independent adjusters represent the carrier, not the policyholder.
Insured
The person or entity covered by the policy: the policyholder and anyone else the policy names as insured. On a claim file the insured is the party whose property was damaged.
L
Line item
A single entry in an estimate: one described task or material, its quantity, its unit price, and its total. Estimates, supplements, and appraisal positions are usually compared line by line.
M
Matching
The question of whether repaired or replaced materials must match the undamaged materials around them, for example replacing a whole roof slope or an entire room of flooring when only part of it is damaged. Whether matching is owed depends on the policy language and the jurisdiction.
Mitigation
Reasonable steps taken after a loss to prevent further damage, such as tarping a roof or drying a water-damaged interior. Policies generally expect the insured to mitigate, and mitigation costs are commonly documented as part of the claim.
P
Peril
The cause of a loss, such as wind, hail, fire, water, or theft. A policy names the perils it covers and the ones it excludes, and identifying the peril is one of the first steps in adjusting a claim.
Position letter
A written statement of one party's position on the amount of loss, usually accompanied by an estimate and supporting documentation. In appraisal, exchanging position letters is how the two appraisers identify what they agree on and what is at impasse.
Proof of loss
A formal, signed statement from the insured describing the loss and the amount claimed, submitted to the carrier with supporting documentation. Many policies require one, and the policy sets out its form and timing.
Public adjuster
A licensed adjuster who represents the policyholder rather than the carrier, preparing and negotiating the claim on the insured's behalf. Public adjusters are engaged and compensated by the policyholder, not by the carrier.
R
Recoverable depreciation
The depreciation withheld from an actual cash value payment that the policy allows the insured to recover once the repair or replacement is completed and documented. It is the difference between the initial payment and the replacement cost value, subject to the policy's conditions.
Re-inspection
A second inspection of the property, usually to verify damage that was disputed, to review a supplement, or to confirm that repairs were completed. A re-inspection is scheduled with the same parties as the original inspection.
Replacement cost value
The cost to repair or replace damaged property with materials of like kind and quality at current prices, without a deduction for depreciation. Many policies pay actual cash value first and the balance as recoverable depreciation.
Reservation of rights
A letter in which a carrier states that it is investigating or handling a claim without giving up any right to later deny coverage or rely on a policy defense. It puts the insured on notice that a coverage question exists.
S
Scope
The list of damage and the repair work needed to address it, described before prices are attached. Agreeing on scope, what is damaged and what it takes to fix it, is a separate step from agreeing on price, and differences over scope are a common reason for supplements and appraisal.
Staff adjuster
An adjuster employed directly by the carrier. Staff adjusters may work in the field or from a desk.
Supplement
A request to add items or quantities to an estimate that were missed, could not be seen at the first inspection, or were discovered during the repair. Supplements are submitted with documentation, and the carrier approves, revises, or declines them.
T
Third-party administrator
An organization that handles claims on behalf of a carrier or a self-insured entity, typically by dispatching work to a network of partner companies, 1099 contractors, and employees and reviewing what the assigned professional sends back. Often abbreviated TPA.
U
Umpire
A neutral third person in an appraisal, selected by the two appraisers or appointed when they cannot agree on one, who decides the items the appraisers cannot settle. The umpire's decision, joined by either appraiser, forms the award.
These terms describe a file. ClaimFileHQ is the file.
Documents, photos, scheduling, correspondence, and history on one claim record, so the position letter and the award live next to the estimate they are about.