Insurance Glossary

Actual Cash Value (ACV)

Actual cash value is replacement cost minus depreciation for age and wear. On home and auto claims, ACV settlements can be materially lower than replacement-cost payouts for older items.

home

Bilateral Exclusion

A bilateral exclusion treats paired body parts as one condition. If one knee was treated pre-policy, the insurer may exclude both knees even if the second was never symptomatic.

pet

Contestability Period

The contestability period—typically two years after issue—lets life insurers review application accuracy. Material misrepresentations discovered during this window can affect claim outcomes.

life

Deductible

A deductible is the amount you pay out of pocket before insurance responds to a covered loss. Higher deductibles usually lower premium but increase your cost at claim time.

home

Extended Replacement Cost

Extended replacement cost adds a percentage buffer above dwelling limits when rebuild costs spike after widespread disasters. It helps avoid underinsurance when labor and materials surge.

home

First Notice of Loss (FNOL)

FNOL is your initial report to the insurer after a loss. Prompt FNOL preserves coverage, assigns an adjuster, and starts the documentation trail for liability and damage review.

auto

Hail Deductible

A separate hail or wind deductible—often a percentage of dwelling coverage—applies in storm-prone regions. It can be higher than your standard all-peril deductible.

home

Liability Limit

Liability limits cap what your policy pays for bodily injury and property damage you cause to others. Split limits (e.g., 100/300/100) define per-person, per-accident, and property caps.

auto

Loss of Use

Loss of use (additional living expense) covers temporary housing and extra costs when a covered peril makes your home or rental uninhabitable during repairs.

renters

Medigap Plan G

Medigap Plan G covers most Medicare cost gaps except the Part B deductible. It is a common choice for new enrollees comparing predictable supplement coverage against Plan N copays.

medicare

Pre-existing Condition

A pre-existing condition showed signs, symptoms, or treatment before policy effective date or waiting periods ended. Pet and some health policies often exclude these conditions permanently.

pet

Premium

Premium is the price you pay to keep coverage active—monthly or annually. It reflects risk factors, limits, deductibles, discounts, and carrier pricing filings in your state.

auto

Recoverable Depreciation

On replacement-cost claims, carriers may hold back depreciation until repairs are completed and invoiced. Recoverable depreciation is the withheld amount you can claim after work is done.

home

Replacement Cost

Replacement cost pays to repair or replace damaged property with similar materials at current prices, subject to policy limits and deductibles. It is the default goal for dwelling coverage on many homeowners policies.

home

Scheduled Personal Property

Scheduling adds specific high-value items (jewelry, bikes, cameras) with agreed limits and sometimes lower deductibles. It fixes gaps left by standard personal property sub-limits.

renters

Sub-limit

Sub-limits cap payout for certain categories—jewelry, cash, water backup—below your total personal property limit. They are a common reason theft claims pay less than expected.

renters

Subrogation

Subrogation lets your insurer recover claim payments from an at-fault party after paying you. Your cooperation and accurate statements during FNOL support successful subrogation.

auto

Uninsured / Underinsured Motorist (UM/UIM)

UM/UIM coverage pays when an at-fault driver has no insurance or limits too low to cover your injuries. Limits and stacking rules vary by state and materially affect serious accident recovery.

auto

Waiting Period

Waiting periods delay coverage for accidents or illnesses after enrollment—commonly 14 days for accidents and longer for orthopedic or cruciate conditions. Claims during waits are usually denied.

pet