Key Terms

Abatement

The act or process of diminishing the presence of a pollutant (e.g., asbestos or lead) in either degree or intensity.

Accurate Content Valuation Software (ACVS)

An electronic inventory tracking and pricing system that makes pack-out, inventory and cleaning information processes more efficient and accurate.

Actual Cash Value

The fair market value of a property, taking into account factors that might augment or reduce the value of the property in question.

Adjuster

An adjuster reviews and settles claims on behalf of the insurance company. The adjuster could be an employee of the insurance company or an independent contractor hired by the company.

Agent

An individual authorized by an insurance company to create, modify, and terminate contracts of insurance or to arrange to do so or to advise on contracts of insurance.

Betterments

Physical improvements beyond mere maintenance or repairs that augment the value of a property.

Biohazards

A biological substance that may pose a risk to human health or the environment. Examples of biohazards include human and animal bodily urine/fluids, feces, decomposition.

Claim

The exercising of a policyholder’s right under a policy to be paid by his or her insurance company for certain financial losses suffered. A claim can be any notification of a possible loss under an insurance policy, whether or not any payment follows. For every claim that is reported, the insurance company must set aside money (“reserves”) sufficient to cover its anticipated cost.

Contents

Possessions and belongings that can be packed in a moving truck if you were to change residences. This might include documents, books, clothing, machinery, office equipment, furniture, artwork, antiques, media, electronics and more.

Contents insurance

Insurance that covers the loss or damage of personal possessions. This insurance is especially important for renters to purchase as a standalone policy to protect them in the event of a loss.

Deductible

An agreed specified sum to be deducted from the amount of loss and assumed by the insured.

Delamination

When a carpet’s face fibres separate from the carpet backing, causing the carpet to lose dimensional stability.

Depreciation

Reduction in the value of property through use, ageing, deterioration and obsolescence.

Emergency

Refers to any unexpected event that may cause harm to persons or properties and requires IMMEDIATE attention. Emergencies may result from events such as a flood, sewer back-up, fire, storm damage, biological hazards and more.

Fair Market Value

Price at which a buyer and seller, under no compulsion to buy or sell, will trade.

Fixtures

Anything that is attached to real property is known as a “fixture.” Fixtures when permanently attached to real property become part of the real property. Tenant’s fixtures are fixtures of a removable nature and are the responsibility of the tenant for insurance purposes. Whether a fixture is a tenant’s fixture and movable or a landlord’s fixture and immovable is frequently determined by the purpose of the fixture. A more accurate guide is generally found, however, in the lease itself or in an agreement between the landlord and tenant at the time of installation of the fixture. The tenant may have an insurable interest in permanent fixtures, particularly where the lease has some time to run during which the tenant would have the use of these fixtures.

Fixtures & Fittings

Parts or furnishings of a building, considered as permanent attachments as opposed to movable items such as stock, office furniture, etc.

Homeowners insurance

An elective combination of coverages for the risks of owning a home. It may include coverage for fire, burglary, vandalism, earthquake and other perils.

Improvements and Betterments

Additions or changes to a rented premises by a tenant at his own expense. Also called Tenant’s Improvements.

Insurance

A contract between an insurance company and its customer for a specific period of time. It protects the customer financially against a loss. Insurance is also a mechanism for dispersing risk because it shares the losses of the few among the many.

Insurance Policy

A written contract of insurance.

Insured

The entity (individual or otherwise) whose risk of financial loss from an insured peril is protected by the insurance policy.

Insurer

The company that provides insurance coverage.

Like Kind and Quality (LKQ)

Refers to the replacement of damaged, destroyed or lost property with used property of similar type and condition.

Loss

A word often used in place of the word “claim.” It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy, has happened.

Named Insured

The person in whose name the policy is issued (see Insured or Policyholder). Technically, he or she would be the first party to the contract, the second party being the insurance company that issues the policy.

Notice of Loss

A notice detailing the losses and the circumstances surrounding how they occurred required by insurance companies immediately after an accident or other loss.

Owner’s, Landlord’s And Tenant’s Liability

Liability insurance coverage which gives protection because of liability arising out of ownership, use or occupancy; operation or maintenance of buildings or premises.

Peril

This is the cause of loss or damage. A homeowner’s policy, for example, insures against perils like windstorms, fire and theft.

Personal Property Insurance

Home insurance covers the contents of a home and other personal property that the named insured and members of the household own, wear or use (including clothing, cameras, furniture, etc.) while on the premises. It may even cover personal property of others (excluding roomers or boarders who are not related to the insured) that is not otherwise insured. There will normally be coverage for personal property while it is temporarily away from the home anywhere in the world (see also “Personal effects/property floater“). Personal property not normally kept at home is not covered. Personal property in a warehouse is usually covered against theft without a time limit, but other perils may not be covered or may be covered for only up to 30 days.

Personal Property Insurance Coverage Limitations

The maximum amount a policy will pay, either overall or under a particular coverage.

Policy

Legally binding contract effecting insurance or certificates thereof, including all clauses, riders, endorsements and renewals.

Policy Conditions

Provisions that state the rights and duties of the insured or insurer.

Pre-Existing Condition

A health or physical condition that existed prior to the effective date of a medical insurance policy. Some health and disability policies contain provisions that preclude coverage for loss arising from preexisting conditions.

Pre-Loss Conditions

The condition of properties and belongings prior to a loss occurring.

Property Insurance

Covers an insured’s property against damage, destruction or loss by a covered peril.

Proof of Loss

A formal statement made by a policyholder to the insurance company regarding a claim, specifying its circumstances and the amount of loss, especially in property insurance.

Property and Casualty (or General) Insurance

This is the branch of the insurance industry that covers home, car and business insurance. (The other branch of the industry is life and health insurance.)

Property Damage

Property damage is damage to or the destruction of public or private property, caused either by a person who is not its owner or by natural phenomena. Property damage caused by persons is generally categorized by its cause: neglect (including oversight and human error), and intentional damage. Intentional property damage is often, but not always, malicious. Property damage caused by natural phenomena may be legally attributed to a person if that person’s neglect allowed for the damage to occur.

Proximate Cause

Cause of loss or damage. An unbroken chain of cause and effect between the occurrence of an insured peril and damage to property.

Psychrometrics, or Psychrometry

The science and practice associated with atmospheric air mixtures, their evaluation, control and effect on materials. In disaster restoration, psychrometry is used to determine the efficacy of drying structures.

Remediation

Methods and actions—including containment, biological treatments, and more—used to remove or eliminate contamination of an affected site.

Replacement Cost

The cost of replacing property without depreciation deduction. (See also Actual cash value and Depreciation)

Salvage

On paying for a total loss of property, an insurance company takes title to what remains of or what is recovered of the property. This is a right of salvage.

Secondary Damage

Additional damage caused by the initial loss or emergency. An example of secondary damage is mold growth in a structure resulting from flooding or water damage.

Smoke Damage

Essentially, the devaluation by smoke, not fire, of merchandise and property. Such damage is covered by the fire policy.

Subrogation

Once a company has paid a loss for which someone other than the policyholder is responsible, it may have the right to recover this loss from the guilty party. This right is called subrogation.

Tenant’s Policy

A package policy specially designed to meet the normal insurance requirements of a private tenant covering personal belongings and liabilities.

Total Loss

Loss of all the insured property. Also a loss involving the maximum amount for which a policy is liable.

Water Damage Clause

A portion of the policy affording coverage for certain specific causes of water damage.

Water Damage

Water damage describes a large number of possible losses caused by water intruding where it will enable attack of a material or system by destructive processes such as rotting of wood, growth, rusting of steel, delamination of materials such as plywood, and many, many others.

Water Damage Restoration

Water damage restoration is the process of restoring a property to pre-loss condition after sustaining any level of water damage. While there are currently no government regulations in the United States dictating procedures, two large certifying bodies, The Cleantrust (formerly IICRC) and the RIA, do recommend standards of care. Most companies use the IICRC procedural standard, which is the S500. It is based on reliable restoration principles, research and practical experience with extensive consultation and information gathered from numerous sources. These include the scientific community, the international, national and regional trade associations serving the disaster restoration industry, chemical formulators and equipment manufacturers, cleaning and restoration schools, restoration service companies, the insurance industry, allied trades persons and others with specialized experience. The S500 water damage guide is subject to further revision as developments occur in technology, testing and processing procedures.