At Douglas Cost Guide, we know that insurance terms and definitions can sometimes be dense and difficult to understand. That’s why we’ve compiled an insurance glossary to serve as your comprehensive reference guide while you’re learning more about your insurance policy.

Actual Cash Value (ACV) – ACV refers to the actual value of an item after depreciation is taken into account.

Appraisal – An assessment of an item’s value.

Claim – A request made by an insured person (or their beneficiary) for a payout of benefits provided by their insurance policy.

Deductible – A portion of loss—due to damage, accident, etc.—that you agree to pay before insurance benefits can be claimed.

Depreciation – The value that is lost by your insured items over time due to age and condition.

Dwelling – The living quarters inhabited by a household, i.e., a house, an apartment, etc.

Dwelling Coverage – The insurance coverage that applies to your home, typically includes auxiliary, attached or detached structures like your garage or swimming pool.

Economic Depreciation or Obsolescence – Economic or environmental changes that lower the value of your home, such as zoning changes, environmental issues within the neighbourhood, and other factors and / or uses nearby that are detrimental to your house and / or property.

Functional Depreciation or Obsolescence – The reduction in value of a feature’s function in your home. Over time, as technology advances and new property solutions are developed, outdated features become less valuable.

Guaranteed Replacement Cost – Guaranteed Replacement Cost is a type of coverage that means your losses will be completely covered—guaranteed—even if the cost of replacement exceeds the amount that was initially estimated.

Insurance Adjuster – An employee of the insurance company or an independent adjusting firm / business that investigates claims made by the insured to assess the cost of damage, repair costs, recommendations for remediation or replacement and more.

Insurance Agent – A licensed insurance professional who assists clients in selecting insurance that’s appropriate for their needs. Agents are employed by an insurance company or broker.

Insurance Broker – A licensed insurance professional who performs largely the same duties as an agent but is independent and works with several insurance companies (rather than just one). They can sometimes provide better rates, since they simply have more companies to choose from.

Insurance Policy – A binding legal contract between you and your insurance company that lays out the insurance agreement and its limitations (i.e., what is covered and what is not, deductibles, and more).

Insurance Premiums – The money you pay for your insurance policy.

Insurance to Value – The cost of replacing your home, as close as possible to its original state. It can also be interpreted as an agreement that your home’s value matches what is stated in the policy.

Market Value – The value of your home according to the current real estate market, or what your home would sell for if you listed it. This value can vary considerably due to outside economic factors.

Peril – An event that damages your property, resulting in financial loss.

Physical Depreciation – The age and general wear and tear that lessens the value of your home.

Replacement Cost – A type of insurance that ensures that your insurance company will pay for repairs or replace damaged parts of your home up to a certain amount, regardless of depreciation.

Replacement Cost Valuator Tool – A tool, such as the Agricultural and / or Residential Cost Guides, that helps property owners and professionals generate accurate replacement cost estimates.

Reproduction Cost New – The cost of replacing a dwelling or its improvements with an exact copy, when possible. However, if some components are obsolete or unavailable, it may not be possible or desirable to provide an exact replacement.