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Property claim glossary
The words on an estimate and a claim, defined the way adjusters, estimators and restoration companies use them. Each entry says where the term comes up and links to the guide that goes deeper. Definitions describe process; none of them says what a policy pays or what a claim is worth.
- Actual cash value (ACV) also: ACV
The replacement cost of damaged property minus depreciation for its age and condition. On a replacement-cost policy it is the first payment, with the depreciation paid later once repairs are done; on an actual-cash-value policy it is the only payment. The adjuster's estimate shows it as a separate total.
Where it comes up: The first check after the estimate; the gap between the estimate total and the check.
Read: recoverable depreciation
- Additional living expense (ALE) also: ALE, loss of use
Reasonable extra costs of living away from home while it is uninhabitable because of a covered loss: a hotel or rental, extra mileage, laundry, restaurant meals above normal grocery spend. Paid against receipts up to the policy's limit or time period. Not the same as paying the mortgage, which continues.
Where it comes up: Fire, major water and storm losses that force a move-out.
- Adjuster also: claims adjuster, field adjuster, desk adjuster
The person who investigates a claim for the carrier, inspects the damage, writes or reviews the estimate and recommends payment. A field adjuster visits; a desk adjuster works from photos and documents. Staff adjusters are carrier employees; independent adjusters are contracted by carriers, especially after storms. None of them represent the policyholder.
Where it comes up: Every claim; the inspection and the estimate.
- Air mover also: fan, blower
The high-velocity fan used in drying, placed to move air across wet surfaces; charged per unit per day on the mitigation estimate. The number of units follows the IICRC S500 guidance by wet area, and the number of days follows the drying log, which is why both appear on carrier reviews.
Where it comes up: Mitigation estimates and their review.
- Antimicrobial treatment also: antimicrobial application
Applying an EPA-registered product to surfaces that were wet to limit microbial growth while they dry, charged per square foot on the mitigation estimate. Appropriate for category 2 and 3 water and for materials that stayed wet; a common point of review on category 1 losses.
Where it comes up: Mitigation estimates.
- Appraisal (clause) also: appraisal clause, appraisal process
A policy condition for settling a dispute over the amount of a loss without a lawsuit. Each side picks an appraiser, the appraisers pick an umpire, and an award signed by any two of the three sets the amount. It does not decide whether the policy applies to the damage. Each side pays its own appraiser and half the umpire.
Where it comes up: When supplements have stalled and the gap is about cost, not coverage.
Read: appraisal clause
- Assignment of benefits (AOB) also: AOB
A signed agreement transferring the policyholder's right to claim payment to a contractor, so the contractor deals with the carrier and is paid directly. Several states restrict or ban it for residential property claims, and many carriers prohibit it in the policy. A direction to pay is the narrower, more common alternative.
Where it comes up: Contractor contracts; state rules on who may be paid.
- Category of water also: category 1, 2, 3 water, black water, gray water
The IICRC S500 classification of water by contamination: category 1 is clean (a supply line), category 2 is significantly contaminated (a washing machine overflow), category 3 is grossly contaminated (sewage, rising floodwater, water that has sat). The category drives what can be dried in place and what must be removed and disposed of.
Where it comes up: Mitigation scope and the estimate's demolition lines.
- Certificate of completion
A signed statement from the contractor, sometimes countersigned by the homeowner, that the repairs in the approved estimate are finished, with the completion date. Carriers ask for it with the final invoice before releasing recoverable depreciation; lenders ask for it before endorsing the final check.
Where it comes up: Closing the claim; the holdback.
Read: recoverable depreciation
- Certified restoration company
On Restoration.com.co, a company that has passed eight verifiable checks (legal entity, state license, general liability, workers' compensation, IICRC firm status, carrier-format estimating, a signed code of conduct, declared trades and service areas) and renews yearly. Certification verifies credentials; it is not a workmanship guarantee.
Where it comes up: Choosing a company for the mitigation and rebuild.
- Claim number
The carrier's reference for one loss, assigned when the loss is reported. Every document, photo, email and call about the claim should carry it. A second loss at the same property gets a second number, and documents sent under the wrong number are the most common reason a file looks incomplete.
Where it comes up: Every submission to the carrier.
- Code upgrade also: ordinance and law coverage, building code coverage
The extra cost of repairing to current building code when the original construction no longer complies: a drip edge, ice and water shield, updated electrical or venting. Standard policies limit or exclude it; an ordinance-and-law provision pays a stated amount. On an estimate it appears as separate code-required line items.
Where it comes up: Roofing and rebuild estimates; a frequent supplement item.
- Containment also: containment barrier, negative air
Plastic sheeting and zippered doors sealing a work area, with a negative-air machine filtering and exhausting the air so dust, soot or mold spores do not spread to the rest of the home. Standard for mold and fire work and for demolition near occupied rooms; charged by area and by day.
Where it comes up: Mold, fire and demolition scopes.
- Contents also: personal property, Coverage C
Belongings as opposed to the building: furniture, clothing, electronics, tools. Paid item by item from a contents inventory, with its own limit, sub-limits for categories like jewelry, and its own depreciation. Cleanable contents go to the restoration company's manifest; destroyed contents go on the replacement list.
Where it comes up: Fire, flood and large water losses.
Read: contents inventory
- Contents manifest also: pack-out inventory
The restoration company's item-by-item record of what it packed out, cleaned, stored and returned, with photos and condition notes. It proves what was in the home and what was saved; it is separate from the homeowner's list of what was destroyed, and the two should be reconciled.
Where it comes up: Pack-out jobs; contents claims.
Read: contents inventory
- Cosmetic damage also: cosmetic exclusion
Damage that changes how a surface looks without affecting how it works, such as hail dents on metal roofing that do not open a seam. Some policies carry an endorsement excluding cosmetic damage to roofs; whether a mark is cosmetic or functional is an inspection question, documented with close photos and a chalk-marked test square.
Where it comes up: Metal roofs; hail claims.
- Debris removal also: haul-off, dumpster
Removing and disposing of damaged building materials and contents after a loss: dumpster rental, hauling, landfill and disposal fees. It appears as its own line items on the estimate and is paid under the policy's debris-removal provision, which may have its own limit on top of the dwelling limit.
Where it comes up: Demolition and rebuild estimates.
- Deductible also: hurricane deductible, wind-hail deductible
The policyholder's share of a loss, subtracted from the payment. A flat dollar amount for most perils; a percentage of the dwelling limit for hurricane or wind-and-hail in many states. It is subtracted once per claim, not per payment, and it is never paid back.
Where it comes up: The first check; estimates that show it as a deduction.
- Dehumidifier also: LGR dehumidifier, desiccant
The machine that removes the moisture air movers lift from wet materials; sized by the volume and class of the loss and charged per unit per day. Low-grain refrigerant units are the residential standard; desiccants are used for dense materials and cold conditions.
Where it comes up: Mitigation estimates.
- Denial also: claim denied, partial denial
The carrier's written decision that the policy does not apply to a loss, or to part of it, with the policy language relied on. A partial denial pays some items and declines others. The letter, the reason and the policy section are the starting point for a written response, a complaint to the state insurance department, or review by a public adjuster or attorney.
Where it comes up: After the inspection or the estimate review.
Read: denied claim what to do
- Depreciation
A deduction for the age and condition of damaged property, applied line by line in the adjuster's software from each material's expected life. It separates replacement cost from actual cash value. Recoverable depreciation is paid back when repairs are done; non-recoverable depreciation is not.
Where it comes up: Every replacement-cost estimate.
Read: recoverable depreciation
- Direction to pay also: DTP
A signed instruction from the policyholder asking the carrier to pay the contractor directly for the work in the estimate. Narrower than an assignment of benefits: the policyholder keeps the claim and its rights; only the payment is redirected. Carriers accept it in most states; lenders on the policy still have to endorse.
Where it comes up: Contractor contracts; final payment.
- Dry standard also: drying goal
The moisture level at which a material is considered dry, set by comparing to an unaffected reference area of the same material in the same building. Equipment comes off when readings reach it. Carriers question drying days that run past the day the log shows dry standard.
Where it comes up: The last day of mitigation; equipment charges.
- Drying log also: moisture log, psychrometric log
The daily record a mitigation company keeps of moisture readings by location, temperature, humidity and equipment on site, from arrival to dry standard. It is the evidence of what was wet, how long drying took, and why the equipment days on the estimate are what they are.
Where it comes up: Water losses; the mitigation estimate and its review.
- Duties after loss also: conditions, your duties after loss
The policy section listing what the policyholder must do: give prompt notice, protect the property from further damage, keep damaged items for inspection, keep records and receipts, provide a contents inventory, submit to examination under oath if asked, and send a sworn proof of loss when required.
Where it comes up: The first days of a claim; the proof of loss.
Read: proof of loss
- Estimate also: scope, line-item estimate
A line-by-line statement of the repair: each item with a quantity, a unit, a unit price and a total, grouped by room or area, with totals for replacement cost, depreciation, actual cash value and deductible. The carrier's estimate and the contractor's estimate are compared line by line; a lump-sum bid cannot be.
Where it comes up: The central document of every claim.
- ESX file also: ESX
The Xactimate project file format. It contains the sketch, the line items and the pricing, and it lets another Xactimate user open and edit the estimate rather than retype it from a PDF. Carriers and estimate services exchange ESX files; homeowners usually receive the PDF.
Where it comes up: Sending an estimate to a carrier or an estimating service.
- Examination under oath (EUO) also: EUO
A formal, recorded interview of the policyholder by the carrier's representative, usually an attorney, under oath, allowed by the policy's conditions. It is not a lawsuit and not a deposition, but the answers carry the same weight. Policyholders commonly attend with their own attorney.
Where it comes up: Large, unusual or questioned claims.
- Final invoice
The contractor's itemized bill for the completed work, matching the approved estimate and its supplements line for line with actual quantities. It is the document that releases recoverable depreciation and closes the claim; a lump-sum invoice cannot be matched and is sent back.
Where it comes up: Closing the claim.
Read: recoverable depreciation
- Flood (NFIP) also: flood insurance, NFIP, National Flood Insurance Program
Rising surface water from outside the home, excluded by standard homeowners policies and insured separately, mostly through the federal National Flood Insurance Program with its own forms, adjusters and strict proof-of-loss deadline. A burst pipe is not flood; water coming in from the street is.
Where it comes up: Storm and hurricane claims; proof-of-loss deadlines.
Read: proof of loss
- Holdback also: depreciation holdback, withheld depreciation
The recoverable depreciation the carrier keeps until repairs are complete and the final invoice is in. It is the difference between the first check and the replacement-cost total, less the deductible. Policies set a deadline for claiming it, often 180 days to two years after the loss.
Where it comes up: The gap between the estimate and the first payment.
Read: recoverable depreciation
- IICRC also: IICRC S500, IICRC S520
The Institute of Inspection, Cleaning and Restoration Certification, which publishes the standards restoration work is measured against: S500 for water damage, S520 for mold, S700 for fire and smoke. Carriers, adjusters and contractors cite the standards when they disagree about scope; firms and technicians hold its certifications.
Where it comes up: Scope disputes; certification criteria.
- Independent adjuster also: IA
An adjuster contracted by a carrier rather than employed by it, common after storms when carriers need extra inspectors. Works for the carrier, not the policyholder, and often writes the first estimate that a staff desk adjuster then reviews. Not to be confused with a public adjuster.
Where it comes up: Catastrophe claims; who inspected.
- ITEL report also: ITEL, product match report
A laboratory report that identifies a flooring, roofing or siding sample and says whether a matching product is available. Carriers and contractors use it to decide whether a repair can patch or must extend to a whole area so the surface matches.
Where it comes up: Matching disputes; roofing and siding claims.
Read: matching rule by state
- Like kind and quality also: LKQ
The replacement standard in most policies: materials of the same type, grade and function as what was damaged, not an upgrade and not a downgrade. Where the original is discontinued, the nearest available equivalent is used, which is where matching questions begin.
Where it comes up: Material choices on the estimate; matching.
Read: matching rule by state
- Line item
One row of an estimate: a description, a quantity, a unit (square foot, linear foot, each, day), a unit price and a total. Estimating software draws line items from a price list by region. Disputes are settled line by line, which is why a lump-sum number cannot be compared to an estimate.
Where it comes up: Reading, writing and supplementing estimates.
- Loss settlement also: loss settlement provision, conditions section
The policy section that says how a loss is valued and paid: replacement cost or actual cash value, when depreciation is released, the deadline for completing repairs, and any matching language. It is the first section to read when a payment is smaller than expected.
Where it comes up: Any payment question.
Read: recoverable depreciation
- Matching also: matching rule, reasonably uniform appearance
The question of how far a repair extends when new material does not match the undamaged material next to it: the damaged area only, the whole slope or elevation, or the whole surface. Decided by the policy wording, a state regulation where one exists, and otherwise by the carrier's practice and case law.
Where it comes up: Roof, siding and flooring repairs after a partial loss.
Read: matching rule by state
- Mitigation also: emergency services, water mitigation
The first phase of a loss: stopping further damage and stabilising the property. For water, extraction, removal of unsalvageable materials, drying and antimicrobial treatment. Policies require the policyholder to mitigate, and mitigation is invoiced and paid before the rebuild, usually on its own estimate.
Where it comes up: Days one to ten of a water loss.
- Moisture map also: moisture mapping
A diagram of the affected rooms with moisture readings marked by location on the day of arrival, showing how far water travelled into walls, floors and ceilings. Together with the drying log it is the evidence for the extent of a water loss and for the demolition lines on the estimate.
Where it comes up: The first mitigation visit; scope review.
- Moisture meter also: pin meter, pinless meter
The instrument that measures moisture in a material, either with pins that penetrate the surface or a pad that reads through it. Readings fill the moisture map and the drying log, and they are compared to an unaffected reference area to decide what is wet and when it is dry.
Where it comes up: Mitigation visits.
- Mortgagee also: lender, loss payee
The lender named on the policy. Claim checks above a threshold are made out to the homeowner and the mortgagee together, and the lender endorses them after its own inspection or paperwork, often releasing funds in stages. This queue is separate from the carrier's and adds time to every payment.
Where it comes up: Cashing the checks; the depreciation release.
- Non-recoverable depreciation
Depreciation the carrier never pays back: on an actual-cash-value policy, on items the policy lists as actual-cash-value only (often roofs over a certain age, or contents without replacement-cost coverage), or where repairs are not made. The estimate's totals page usually labels it.
Where it comes up: Reading the estimate's totals; roof schedules.
Read: recoverable depreciation
- Notice of loss also: first notice of loss, FNOL, reporting the claim
Reporting the loss to the carrier: date, cause, location and a short description. It opens the claim and starts the carrier's acknowledgement and contact deadlines. Prompt notice is a policy condition; it is not the proof of loss, which is a later sworn statement.
Where it comes up: Day one.
Read: proof of loss
- Ordinance and law also: ordinance or law coverage, code upgrade coverage
The policy provision that pays the extra cost of meeting current building codes during a covered repair, and sometimes the cost of demolishing undamaged parts that code requires replaced. Usually a percentage of the dwelling limit. Without it, code-required upgrades on the estimate may be unpaid.
Where it comes up: Older homes; roofing and electrical upgrades.
- Overhead and profit (O&P) also: O&P, 10 and 10, general contractor overhead and profit
Two percentages, conventionally ten and ten, applied to an estimate's subtotal to compensate a general contractor for running a multi-trade job: supervision, scheduling, permits, insurance, office. Included when the repair reasonably needs a general contractor; the three-trade rule of thumb is a guideline, not a law.
Where it comes up: The estimate's totals page; a frequent supplement item.
Read: overhead and profit
- Pack-out
Removing contents from a damaged home to clean, store and return them, with a manifest and photos of every item. Charged by the box or the item with storage by the month. The manifest doubles as evidence for the contents claim.
Where it comes up: Fire, smoke and large water losses.
- Peril also: named peril, covered peril
The cause of a loss as the policy names it: fire, windstorm, hail, sudden discharge of water, theft. Policies list perils they insure against or, on open-perils forms, list what they exclude. The adjuster's first question is which peril caused the damage, because that decides which policy terms apply.
Where it comes up: The cause-of-loss line on every form.
- Prompt-payment law also: claims handling statute, unfair claims settlement practices act
State law or regulation setting deadlines for carriers to acknowledge a claim, start investigating, decide it and pay it, with consequences for missing them. Deadlines differ by state (15 days to acknowledge is common) and are the basis of a complaint to the state insurance department.
Where it comes up: Delayed claims; complaints.
- Proof of loss also: sworn proof of loss, sworn statement in proof of loss
A signed, notarised statement of the claim: date and cause of loss, interests in the property, other insurance, and the amount claimed, with the estimate and contents list attached. Due within a policy-set period, commonly 60 days from the carrier's request or from the loss; federal flood claims run from the loss and are strict.
Where it comes up: When the carrier asks, and always on flood claims.
Read: proof of loss
- Public adjuster also: PA
A licensed professional who represents the policyholder in a claim for a fee, usually a percentage of the payment, capped by law in many states. Prepares and negotiates the claim and can act as the policyholder's appraiser. Not a lawyer and not an estimator for contractors; the only adjuster who works for the insured.
Where it comes up: Disputed or large claims.
- Recoverable depreciation
The depreciation a replacement-cost policy pays back after repairs are completed and the final invoice is submitted. Released up to what was actually spent, within the policy's completion deadline. The single most common amount left unclaimed on a property claim.
Where it comes up: After the work is done.
Read: recoverable depreciation
- Replacement cost value (RCV) also: RCV, replacement cost
What it costs today to repair or replace the damaged property with like kind and quality: the estimate's line-item total before depreciation and deductible. On a replacement-cost policy it is the full amount payable once repairs are done, in two payments.
Where it comes up: The top line of every estimate.
Read: recoverable depreciation
- Reservation of rights also: ROR letter
A letter in which the carrier continues to handle the claim while stating that it may later decline part or all of it under named policy terms. It is not a denial; it is notice that a coverage question is open, and it usually names the facts the carrier is still investigating.
Where it comes up: Early in questioned claims.
- Roof slope also: slope, facet, roof plane
One flat plane of a roof. Hail and wind damage is assessed slope by slope, and matching questions are often settled at the slope: a damaged slope is replaced whole, undamaged slopes may be left, or all slopes visible together are replaced for a uniform appearance.
Where it comes up: Roof claims; matching.
- Scope also: scope of work, scope of loss
What the repair includes: which rooms, which materials, which operations, and in what quantities. The estimate expresses the scope as line items, grouped by room. Most disagreements on a claim are scope disagreements (whether an item belongs on the estimate at all) rather than price disagreements (what a line costs once it is there).
Where it comes up: Every estimate comparison and supplement.
- Scope narrative
A few sentences at the top of an estimate or supplement explaining what happened, what was affected and why the listed work is required, in plain words. Desk adjusters read it before the line items; a clear narrative resolves many questions before they are asked.
Where it comes up: Estimates and supplements.
- Sewer backup also: water backup, sump pump overflow, backup endorsement
Water entering through drains, sewers or a failed sump pump. Standard policies exclude it; an endorsement adds it with its own limit. It is category 3 water, so the mitigation scope includes removal and disposal of porous materials and the estimate is reviewed against the endorsement's limit.
Where it comes up: Basement losses.
- Sketch also: floor plan, room sketch
The measured drawing of each affected room that estimating software uses to calculate quantities: floor area, wall area, perimeter, ceiling. Produced on site with a laser measure or from a scan. Quantities on the estimate are wrong when the sketch is, so the sketch is checked first.
Where it comes up: The start of every estimate.
- State insurance department also: department of insurance, DOI, insurance commissioner
The state regulator that licenses carriers, adjusters and public adjusters, publishes consumer guides, and takes complaints about claim handling. A complaint does not decide the claim, but it puts the carrier's handling on the record and usually produces a written response within weeks.
Where it comes up: Delays, denials and conduct complaints.
- Sub-limit also: special limit, inner limit
A lower cap inside the policy for a category or peril: mold remediation, water or sewer backup, jewelry, business property, debris removal. The claim is paid up to the sub-limit regardless of the overall policy limit. Sub-limits are listed on the declarations page or in the policy's special limits section.
Where it comes up: Mold, backup and contents claims.
- Supplement also: supplemental claim, supplemental estimate
A request to add items to, or increase quantities on, an estimate the carrier has already approved, with documentation for each change: photos, measurements, a reason the item is required. Submitted in writing through the carrier's document channel before the work is done where possible. Reviewed line by line.
Where it comes up: After the first estimate, before and during repairs.
- Test square also: 10 by 10 test square
A ten-by-ten-foot area marked on a roof slope in which an inspector counts hail hits. Carriers commonly use a count per test square as the threshold for replacing the slope; the number varies by carrier and the count is one of the most argued facts on a hail claim.
Where it comes up: Hail inspections.
Read: hail damage roof
- Three-trade rule
A carrier rule of thumb that overhead and profit is included when a repair involves three or more trades, on the theory that coordinating them needs a general contractor. It is a guideline from practice, not a statute or regulation; the underlying test is whether a general contractor is reasonably required.
Where it comes up: O&P decisions on estimates.
Read: overhead and profit
- Umpire
The neutral third person in an appraisal, chosen by the two appraisers or appointed by a court or regulator when they cannot agree. Decides only the items the appraisers dispute. Must be impartial, with no financial interest in the outcome; some states license or register umpires.
Where it comes up: Appraisal.
Read: appraisal clause
- Unit price
The price per unit of a line item (per square foot of drywall, per day of air mover, per linear foot of baseboard) from the estimating software's regional price list for the month. Disputes about unit prices are settled by the price list date and region; disputes about quantities are settled by the sketch and photos.
Where it comes up: Line-item comparison.
- Waste factor also: waste, material waste
The extra material, expressed as a percentage, added to a quantity because cutting and fitting consume more than the measured area: shingles by roof shape, flooring by layout, carpet by roll width. A line without waste under-orders material; carriers and contractors argue over the percentage, not the principle.
Where it comes up: Roofing and flooring lines.
- Xactimate
The estimating software most carriers and restoration contractors use, published by Verisk. It calculates quantities from a sketch, prices line items from a monthly regional list, and applies depreciation, overhead and profit and tax on a totals page. Its project files are ESX; carriers often require estimates in its format.
Where it comes up: Nearly every residential property claim in the United States.
Informational only: these definitions describe how the claim process and estimates work. They are not legal, coverage or claim-value advice. Read your policy and talk to your carrier, or a licensed public adjuster or attorney, for that.