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Key Insurance Terms

If your property has been damaged due to a man-made or natural disaster good chances are one of your first calls will be to your insurance agent.

From 2014-2018, 5.6 percent of insured homes had a claim, according to the Insurance Information Institute. Wind and hail accounted for the largest share of claims (2.3 percent), followed closely by water damage and freezing (2.1 percent). Fire and lighting and theft account for the other 1.2%.

 

key insurance terms

When navigating an insurance claim, it’s important to fully understand all insurance terms. Here are three terms that many homeowners are unfamiliar with but are important to know.

1. Actual Cash Value (ACV) – An estimate of the fair market value of your property (i.e. home, roof, furniture in your home) prior to damage. ACV is what it would cost to replace your property minus depreciation, which is how much value the property has lost due to age and wear and tear since you bought it. 
 
2. Effective Age – An appraiser’s estimate of a structure’s age based on its current condition, rather than its actual age. The effective age takes into account how well a property has been maintained and can be older or younger than the chronological age.
 
3. Inflation Protection Adjusts your home insurance policy limits to account for increases in costs to repair or replace your home or property due to inflation.

In the event you are faced with property damage knowing the terminology will go a long way in helping you maximize your insurance claim.

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