Claims Glossary · Insurance

Advance charges: towing, storage and impound fees a salvage auction pays to release a total loss vehicle and recovers from the sale (Subrogation, Salvage & Recovery).
Anti-subrogation rule: an insurer may not subrogate against a person insured under the same policy (Subrogation, Salvage & Recovery).
A&O (adjusting and other): loss adjustment expense not tied to a specific claim's defense, chiefly the cost of the claims operation (Exposures, Reserves & Payments).
Appraisal clause: the policy provision under which each side names an appraiser, the appraisers pick an umpire, and a written award by any two fixes the amount of loss (Property Claims).
Assignment of benefits (AOB): a policyholder signing insurance proceeds over to a contractor; Florida voided it for policies issued on or after January 1, 2023 (Property Claims).
Case reserve (case outstanding): the adjuster's estimate of what remains to be paid on a known claim, by exposure and cost type (Exposures, Reserves & Payments).
Civil remedy notice: Florida's 60-day presuit notice of an insurer's alleged bad faith, which the insurer can cure (Bad Faith & Litigation).
Claim diary: the claim's tasks with due dates, generated from cited claim clock rules and the events that trigger them (Claim Handling Law & Clocks).
Comparable vehicle: a vehicle of the same make, same or newer year, similar body, options and mileage, available locally within 90 days, used to value a total loss (Auto Claims & Total Loss).
Coverage position: the insurer's recorded stance on a coverage issue for an exposure (covered, reserved, partially denied, denied), with its deadline and the letter that carried it (First Notice, Coverage & Triage).
Credible referral: in California, an SIU referral with at least one red flag, which the SIU must investigate (Fraud & SIU).
DCC (defense and cost containment): loss adjustment expense tied to specific claims, such as defense counsel and experts (Exposures, Reserves & Payments).
Deductible recovery: the insured's share of a subrogation recovery, shared proportionately under the model regulation (Subrogation, Salvage & Recovery).
Direct repair program (DRP): a network of repair shops that accept an insurer's rates and guidelines in exchange for referrals; the claimant still chooses the shop (Auto Claims & Total Loss).
Excess exposure: the risk that a liability verdict exceeds the policy limits, which makes a demand within limits a bad faith decision point (Bad Faith & Litigation).
Exposure (claims): one claimant against one coverage on a claim, the unit reserves and payments attach to (Exposures, Reserves & Payments).
First notice of loss (FNOL): the first report of a claim to the insurer or its agent, which starts the claim clocks (First Notice, Coverage & Triage).
First-party bad faith: an insurer's unreasonable denial or delay of its own insured's claim, a tort in California and Texas (Bad Faith & Litigation).
General business practice: the frequency standard under which repeated claim handling failures become an unfair claims practice (Claim Handling Law & Clocks).
Incident: what was damaged or hurt on a claim (a vehicle, a property, an injury), to which exposures attach (First Notice, Coverage & Triage).
Independent adjuster (IA): a licensed adjuster from an outside firm retained by an insurer, paid as adjusting expense (First Notice, Coverage & Triage).
Inter-company arbitration: resolution of subrogation disputes between insurers through Arbitration Forums programs instead of court (Subrogation, Salvage & Recovery).
LAE (loss adjustment expense): the cost of investigating, defending and settling claims, split into DCC and A&O (Exposures, Reserves & Payments).
LEDES: the Legal Electronic Data Exchange Standard formats for invoices, budgets and timekeeper data, maintained by the LEDES Oversight Committee; insurers take them from defense counsel (Bad Faith & Litigation).
Matching: the rule extending a repair to undamaged items so replacements conform to a reasonably uniform appearance (Property Claims).
Model 900 (Unfair Claims Settlement Practices Act): NAIC's 1990 model listing fourteen unfair claims practices, enforced against flagrant violations or a general business practice (Claim Handling Law & Clocks).
Model 902: NAIC's property and casualty claims model regulation setting 15, 21, 30 and 45-day clocks, total loss valuation and deductible sharing (Claim Handling Law & Clocks).
Proof of loss: the insured's documentation of a claim, often sworn, from which many decision clocks run (Claim Handling Law & Clocks).
Public adjuster: a licensed adjuster hired by the policyholder for a fee, capped at 10% in Texas and after declared emergencies in Florida (Property Claims).
Recovery allocation: the split of a recovery among insurer, insured, reinsurers and fees, summing to the amount received (Subrogation, Salvage & Recovery).
Red flag: a written, line-specific indicator of possible fraud that supports an SIU referral (Fraud & SIU).
Reopened claim: a closed claim reopened for more costs on a loss already disclosed; in Florida noticed within one year of the loss (Exposures, Reserves & Payments).
Reported claims (case incurred): cumulative paid plus case outstanding at a date (Exposures, Reserves & Payments).
Reservation of rights: a letter telling the insured the insurer is investigating or defending while reserving the right to deny on stated grounds; in Florida due within 30 days of learning the defense (First Notice, Coverage & Triage).
Right of recourse: the insured's 35-day window to show a comparable can't be bought for the total loss value, which reopens the valuation (Auto Claims & Total Loss).
Safe harbor (Florida bad faith): no third-party bad faith action if the insurer tenders the lesser of limits or the demand within 90 days of notice (Bad Faith & Litigation).
Salvage: the damaged property an insurer takes and sells after paying a total loss; its net proceeds reduce the loss (Subrogation, Salvage & Recovery).
Salvage title: a title brand for a vehicle damaged beyond a state's threshold or paid as a total loss (Auto Claims & Total Loss).
Segmentation: sorting a claim or exposure into a handling path (fast track, injury, total loss, complex, catastrophe, suspicious) at submission (First Notice, Coverage & Triage).
Social inflation: claim costs rising faster than economic inflation because of larger verdicts, more litigation and litigation funding, as insurers' filings describe it (Bad Faith & Litigation).
Special investigations unit (SIU): an insurer's unit, in-house or contracted, that investigates suspected fraud and reports it to the state (Fraud & SIU).
Subrogation: the insurer's right, after paying its insured, to recover from the party responsible for the loss (Subrogation, Salvage & Recovery).
Supplemental claim: a claim for additional loss from the same peril already adjusted; in Florida noticed within 18 months of the loss (Exposures, Reserves & Payments).
Third-party bad faith: a liability insurer's failure to settle within limits when a prudent insurer would have, exposing it to the excess verdict (Bad Faith & Litigation).
Time-limited demand: an offer to settle a liability claim, usually for the limits, if accepted by a deadline; regulated in California and Georgia (Bad Faith & Litigation).
Total loss: a vehicle whose repair cost plus salvage exceeds its value, or that a state's title rule brands; settled at actual cash value with taxes and fees (Auto Claims & Total Loss).
UTBMS: the Uniform Task-Based Management System of task, activity and expense codes used on legal invoices (Bad Faith & Litigation).
Verified policy: a policy resolved from the policy system at FNOL, as against an unverified one captured from the reporter, which typically can't be paid on (First Notice, Coverage & Triage).