To understand the insurance claim process, you have to understand some of the terminology. As it is within any industry, there are certain abbreviations and jargon used that can be confusing. Let’s clear up some of the confusion:
A public insurance adjuster is licensed by the state to represent the insured. They act as an advocate for the insured and become the primary contact with the insurance company in negotiating and settling the insurance claim. The best public adjusters understand how to leverage insurance code to hold the insurance company accountable. They also help to protect the insured by establishing housing budgets, limiting contractor expenses if coverage limits are tight and can negotiating creative settlements that might better fit the needs of the insured.
An appraisal is similar to arbitration or mediation used in other forms of business disputes. To resolve insurance claim disputes, in an insurance appraisal, the insured‘s representatives and the insurance company each pick (and pay for) an independent or “disinterested” appraiser to review the entire claim and come to an independent decision on an overall settlement. If these two representatives, or appraisers, cannot come to an agreement, they will then agree on a neutral third-party, often referred to as an umpire. If any two of these three representatives can come to an agreement that is the settlement, in most instances it’s binding. See California Insurance code section 2071. In Texas, chapter 2210 of insurance code and 28 Texas administrative code chapter 5. However, much more pro homeowner legislation is about to come into effect in TX as of January 1, 2026. This legislation includes chapter 1813 of the Texas insurance code requiring all policies in Texas involving residential claims to adhere to the appraisal process.
A scope of work and estimate can be used interchangeably. Both mean a detailed estimate, listing and detailing the cost of all labor and materials to address all the damages for a specific aspect of the claim. As far as your Public Adjuster is concerned, the more detail the better. Estimates are written for the dwelling/structure, the labor, and materials to pack out personal property or in the form of sub bids, to justify specific trade work such as tile work, removal and reinstall of solar panels, roofing work, framing work, etc. There’s no free money with insurance companies; everything must be justified down to the penny. Therefore, the estimate should include everything necessary, from prep work for painting, to the porta potty outside, and the daily cleanup of the job site to get a true cost for the project.
ALE stands for additional living expense. It is often also referred to incorrectly as housing reimbursement or rental reimbursement. It’s true that ALE pays for alternative housing, but it also pays for several other additional living expenses in addition to the housing for being displaced. For example, ALE coverage could also include financial reimbursement for the additional expense of extra miles driven for temporarily living somewhere further away from your work, doctor's office or place of worship.
ACV is the value of the property at the time of the loss. This takes into account the depreciation of items due to age and condition prior to the damage. RCV is without depreciation. It covers the cost to repair or replace the damaged item of like kind and quality. This is almost always the best form of coverage and most dwelling coverages use RCV.
This is the maximum amount of money an insurance company will pay for each portion of the policy. These limits are often found on the declaration page of the insurance policy. For instance, on many residential policies, coverage C on a declaration page is coverage for personal property. If the amount listed is $150,000 on the declaration page, this is the maximum amount of coverage available to the insured for a covered loss. On Coverage A, for many residential policies this is the dwelling or structure, the policy limit can be much more complex. It probably also includes additional money for debris removal; there may also be money for ERC and code & ordinance that could greatly increase the actual policy limit.
An independent adjuster is an independent contractor to the insurance company doing adjusting duties. They are often licensed adjusters, depending on the state. They are often used during catastrophes to give the insurance company extra capacity or are used by insurance companies in areas where they don’t have enough claims to justify having a staff adjuster.
A staff or company adjuster is a claims representative employed directly by the insurance company. Unlike most independent or Public Adjusters, they are often not licensed adjusters, therefore referred to as claims representatives, claims specialist, etc.
A Public Adjuster is the only one of the three that works for the insured, not the insurance company. Almost always, they must be both licensed and bonded to do work in almost any state. Please see a further definition above.
An endorsement is an amendment or an addition to an existing insurance policy that changes the conditions, terms, or scope of coverage. Endorsements often add expense, but also additional specific insurance coverage. As an example, your wife may have a very expensive wedding ring. A good insurance broker would educate you that the value of the ring exceeds the policy limit for jewelry in the homeowner’s policy. In order to correctly cover the ring, the policy would have to include an endorsement specific to this piece of jewelry to give it extra coverage.
Subrogation is the legal right of the insurance company to seek reimbursement from a third-party for its total costs in an insurance claim AND reimbursement for the insured deductible. If the insurance company, often initially by using a cause in origin investigator, can prove that a third-party was responsible to the damages it can seek reimbursement through litigation or the threat of litigation from the negligent third-party.
A C&O investigator is hired by the insurance company to determine if arson, fraud, or subrogation could be involved in the insurance claim. In most claims over $100,000, the insurance company will require an investigation by a C&O investigator prior to assuming any liability in the claim. If the C&O investigator can prove arson or fraud by the named insured, they could deny the claim. Additionally, subrogation could mean that the insurance company doesn’t actually end up paying for the damages. Either way, a good C&O Investigator could save an insurance carrier significant money in the course of their work.
A holdback is money held back by the insurance company until the insured can prove that the structure was built with like kind and quality. This is usually the last money paid by insurance carrier near the end of a project for structure/dwelling coverage. As an example, some homeowners may select to repair damage to their home themselves. It’s safe for the insurance company to assume when the structure was originally built, it was built by a licensed contractor. If the unlicensed homeowner now attempts the repairs, it is not of like kind and quality. Therefore, the insurance company doesn’t have to pay the same amount as they would if a licensed contractor did the repairs. The insurance company will not release the hold back/depreciation, thereby paying less.