Act of God: an accident or event that is the result of natural causes such as floods, earthquakes, tornadoes or lightning.

Actual Cash Value (ACV): An amount equal to the cost of lost or damaged property less depreciation.
Example: A $10,000.00 loss is depreciated 10%. The amount of the payment would be $9,000.00.

Additional Living Expense (ALE): The coverage in your policy which pays for your temporary accommodations during the reconstruction of your home. Additional Living Expenses include any additional expenses incurred because of the loss.
Example: Rent and utilities at the home you live in during the reconstruction of your home would be considered ALE. Going out to eat for every meal would not be ALE because it is not a condition created by the loss.

Change Order: This is additional work requested by the property owner. If a homeowner wants to upgrade from a vinyl floor to a tile floor, this would be considered a Change Order. A Change Order could also be additional work to what is being performed per the original estimate.
Example: If three sides of the exterior are being painted according to the original estimate and the homeowner wants the fourth side painted, then a Change Order for the additional cost would be presented to the homeowner and payment would be their responsibility. Change Orders can also be a reduction to the scope of work.

Code Upgrades: Upgrades required to rebuild the structure in order to meet today's building codes. Usually code upgrades revolve around "life/safety" issues such as smoke detectors, electrical wiring, and fall protection (handrails). Code upgrades may or may not be covered under your insurance policy.

Contents: Personal property owned by the insured. This would include everything that is not permanently attached to the structure. If you were to move, what things would you take with you and what would remain for the new owner? If you would take it, it is considered contents.

Deductible: An amount that the policyholder has agreed to pay on each claim. This varies by policy and is the responsibility of the homeowner. This amount is deducted by the insurance company from the payment they make. A $10,000.00 loss that has a $500.00 deductible would result in a payment from the insurance company of $9,500.00.

Depreciation: a decrease in the value of property over time.
Example: A roof has a life expectancy of 30 years and it is 3 years old. Depreciation would be 10%.
1. Recoverable Depreciation is the amount of money the insurance company will pay upon completion of repairs. If 10% recoverable depreciation was withheld from the initial payment, 10% would then be paid once the repairs are completed.
2. Non-Recoverable Depreciation is the amount of money the insurance company will not pay on the claim. If 10% non-recoverable depreciation is taken by the insurance company, it is the responsibility of the homeowner to pay that portion of the claim in addition to the deductible.

Dwelling Coverage: A section of a homeowner’s insurance policy that covers a house and attached structures against fire, theft, wind and other perils.

Escrow Account:
1. An account established by a mortgage company in the event of a property loss. The mortgage company will disperse "draws" based on progress. A typical large loss would have three draws issued -1/3 at the start of the job, 1/3 at completion of rough-in and 1/3 at substantial completion (90%).
2. An account established by the property owner and the contractor. The account is in both names and withdraws can only be made with the consent of both parties. This is done to protect both parties.

Estimate: An analysis of the damaged property estimating the amount of damage to the property and the cost to repair it. This analysis may be completed by the insurance adjuster, the insurance restoration contractor or both parties.

Exclusions: Part of an insurance policy that rules out coverage of certain risks, persons, property or locations.

Frame: A type of construction. A frame building is primarily made with wood frames and joists.

Inspections:
1. A formal inspection by a City or County official if a permit is pulled. There are usually two inspections: one at the rough-in phase and one at the completion of the project. The Project Associate will arrange for these inspections to be completed.
2. A formal inspection by a representative of a mortgage company in order to verify completion. There are usually two inspections: one at the rough-in phase and one at the completion of the project. The Project Associate will arrange for these inspections to be completed.

Mechanicals: Any "system" in the home that facilitates the operation of the home.
1. Electrical
2. Plumbing
3. HVAC; Heating, Ventilation, and Air Conditioning
4. Low Voltage; Central Vacuum, Intercom, Phone & Cable

Overhead & Profit (O&P): Typically this is 10% and 10% which is added to the end of the estimate. This amount represents the additional costs incurred by a licensed professional contractor when performing the repairs. A $10,000.00 loss would have an additional 20% added for Overhead and Profit. The total cost of repairs would be $12,000.00.

Policy Limits: The maximum amount that an insurer agrees to pay in the case of loss under the policy contract.

Replacement Cost: The cost to replace structural components at today's value. There is no depreciation. Replacement cost policies allow for the full cost of the replacement to be paid. It is possible for an ACV payment to be made once the repairs have been defined. Once the repairs have been completed, the depreciated amount would be paid. The ACV payment plus the Depreciation payment equals the Replacement cost.

Structure: Anything permanently attached to the property.
Example: A dishwasher is structure and a refrigerator is contents. Wall to wall carpet is structure and an area rug is contents.

Supplement: This is an estimate that is prepared in addition to the original estimate. Items in a Supplement would include hidden damage, additional work required, code upgrades, or changes to the original estimate. A Supplement must be approved by the insurance company. It is vital for the contractor to communicate to the insurance company during the process. The insurance company pays the Supplement, providing the communication took place.

Total Loss: Loss of the entire value of the property insured, or a loss entailing the payment of the full face amount of an insurance contract.

Utility Payments: Monthly bills for the damaged property will continue to be paid by the owner of the property. Items such as temporary power and service calls fall under the scope of work for the contractor. Utility bills can be paid by the insurance company in the event that the property owner is paying for utilities at the temporary housing location.