| Who handles your claim | A staff adjuster (insurer employee) or independent adjuster hired by the insurer |
| Time to report a claim | Varies by policy — often 30 to 60 days, but some require "prompt" notice |
| Two main valuation methods | Actual Cash Value (ACV) and Replacement Cost Value (RCV) |
| Right to appeal a denial | Yes — most policies and state regulations provide an internal appeal process |
| Public adjuster option | You can hire one independently; they work for you, not the insurer |
Why Claims Vocabulary Matters
When you file an insurance claim, you enter a process shaped entirely by terms most policyholders have never had to think about before. Misunderstanding even one word — like confusing actual cash value with replacement cost — can leave you expecting a check that covers a new item when you're actually entitled to a depreciated one.
This guide defines the terms you'll encounter from the moment you report a loss to the day your claim closes. For a walkthrough of the process itself, see how the insurance claims process works from start to finish. If you're brand new to filing, navigating a claim for the first time is a useful companion.
| Who handles your claim | A staff adjuster (insurer employee) or independent adjuster hired by the insurer |
| Time to report a claim | Varies by policy — often 30 to 60 days, but some require "prompt" notice |
| Two main valuation methods | Actual Cash Value (ACV) and Replacement Cost Value (RCV) |
| Right to appeal a denial | Yes — most policies and state regulations provide an internal appeal process |
| Public adjuster option | You can hire one independently; they work for you, not the insurer |
Core Claims Terms, Defined
These are the terms you're most likely to see in letters, phone calls, and settlement documents during a claim.
First Notice of Loss (FNOL)
The initial report you file with your insurer to start a claim. This kicks off the formal claims process and is typically required within a specific time window stated in your policy.
Adjuster
The person who investigates your claim on behalf of the insurer, evaluates the damage, and determines how much the insurer will pay. You may also hire a public adjuster to represent your interests independently.
Proof of Loss
A formal, signed statement you submit documenting the facts of your loss — what was damaged, when, and its value. Insurers often require this before processing a settlement.
Actual Cash Value (ACV)
The value of a damaged or destroyed item at the time of the loss, accounting for depreciation. ACV is typically lower than what it would cost to buy the same item new today.
Replacement Cost Value (RCV)
The cost to replace a damaged item with a comparable new one at current prices, without deducting for depreciation. Policies that pay RCV generally carry higher premiums than ACV policies.
Subrogation
The right of your insurer to step into your shoes and pursue a third party who caused your loss after paying your claim. If the insurer recovers money, you may receive a portion back if you paid a deductible.
Reservation of Rights
A formal notice from an insurer stating it will investigate and may pay a claim, but reserves the right to deny coverage later based on policy terms. It does not mean your claim is denied.
Coverage Denial
A written determination that your claim is not covered under your policy. Denials must generally cite the specific policy provision being applied. You have the right to appeal most denials.
Depreciation
The reduction in an item's value over time due to age, wear, and obsolescence. Insurers use depreciation to calculate actual cash value payouts.
Deductible
The dollar amount you pay out of pocket before your insurance covers the rest of a covered loss. A higher deductible usually means a lower premium, and vice versa.
Duty to Cooperate
A standard policy requirement obligating you to assist your insurer during a claim investigation — providing documents, answering questions, and allowing inspections. Failing to cooperate can jeopardize your claim.
Examination Under Oath (EUO)
A formal, recorded interview your insurer may request as part of a claim investigation, often in complex or disputed cases. You are typically required to comply under most policy terms.
For broader policy vocabulary — terms that govern your coverage before a claim ever happens — see our plain-language policy glossary. Cost-sharing terms like deductibles and coinsurance are explained in depth at Deductible, Premium, Copay, Coinsurance: The Four Cost Terms Decoded.
Terms and Coverage Vary by Policy and State
Every term in this guide can be defined differently depending on your specific policy language and your state's insurance regulations. This reference is general educational information — not legal or insurance advice. Always read your actual policy documents and consult a licensed insurance professional for questions about your specific coverage or claim.
Settlement and Resolution Terms
Once your insurer evaluates your claim, the focus shifts to settlement — what you'll be paid and how. Understanding these terms helps you evaluate whether an offer is appropriate and what options you have if you disagree.
~10%
Claims that result in a dispute or appeal
Industry estimates suggest a meaningful share of claims involve some form of dispute over coverage or valuation, underscoring why knowing your rights matters.
30–60 days
Typical insurer response window after FNOL
Most state insurance regulations require insurers to acknowledge a claim within a set number of days and provide a coverage decision within a reasonable timeframe.
- Settlement: The agreed-upon payment that resolves your claim. Accepting a settlement typically closes the claim, so review the amount carefully before signing.
- Release of liability: A document you may be asked to sign upon receiving payment, confirming the claim is resolved and you won't seek additional compensation for that loss.
- Appraisal clause: A provision allowing both sides to hire independent appraisers if there's a dispute over the dollar value of a loss. A neutral umpire breaks ties. Not all policies include this.
- Supplemental claim: A request for additional payment after the initial settlement, typically when new damage is discovered during repairs. Most policies permit these within a defined window.
Understanding your coverage type matters here — the same loss can result in very different settlements depending on whether your policy pays actual cash value or replacement cost.