Insurance decisions, explained by the life event that caused them.

Actual cash value, often shortened to ACV, is a method of valuing a covered loss that pays the replacement cost of the damaged item minus depreciation for its age, wear, and condition at the time of the loss. ACV is common in property coverage and is also commonly used to value totaled vehicles. Replacement cost coverage is widely used for homes and personal property, while standard auto policies generally do not promise to replace an older vehicle with a new equivalent unless special coverage applies. ACV generally pays less than replacement cost because it accounts for value the item had already lost before the loss.

An aggregate limit is the most a policy will pay in total for all covered claims during the policy period, regardless of how many claims there are. The NAIC glossary defines it as "the maximum dollar amount or total amount of coverage payable for a single loss, or multiple losses, during a policy period, or on a single project." It's common on business liability policies, alongside a per-occurrence limit that caps any single claim.

An appraisal clause is a policy provision for settling disagreements about the amount of a covered loss. Each side hires an appraiser, the appraisers choose an umpire, and the umpire decides any difference. Appraisal resolves how much, not whether the policy covers the loss.

A binder is a temporary insurance agreement that provides coverage until the insurer writes or delivers the full policy. It is commonly used when coverage needs to start right away, such as at a home closing or when buying a car, and it lasts for a specified period.

Bodily injury refers to physical harm, sickness, or death suffered by another person as a result of an accident or incident for which a policyholder may be held legally responsible. In liability insurance, bodily injury coverage typically pays for the injured party's medical expenses, lost income, pain and suffering, and related legal costs, up to the policy's stated limit. Auto policies commonly express this as a bodily injury liability limit, often shown as two numbers, such as $100,000 per person and $300,000 per accident.

Cash value is the savings component of some permanent life insurance policies, such as whole life. Part of each premium goes into an account that grows over time at a fixed or variable rate. The policyholder may be able to borrow against it, withdraw from it, or receive it, less loans and fees, if they surrender the policy.

Usually your own auto policy's comprehensive coverage, if you carry it, because damage from falling objects is a comprehensive claim, less your deductible. Homeowners policies typically don't cover cars. If the neighbor was negligent, such as ignoring a dead tree, your insurer may seek repayment from them, which can return your deductible.

A flooded basement is one of the more confusing claims in home insurance because coverage depends heavily on the cause. Water that backs up through a sewer or drain may be covered if you added a water backup endorsement, while groundwater or surface water entering from outside during a storm is typically excluded from standard homeowners policies and instead falls under separate flood insurance. Even then, NFIP coverage below grade is substantially restricted: finished basement walls, floors, ceilings and many personal belongings may not be covered even when the flood itself qualifies. Whether you have any coverage at all often comes down to the exact source of the water.

Damage to the structure itself from a sudden pipe burst is typically covered under the landlord's own dwelling coverage, similar to how it would work for an owner-occupied home. The tenant's personal belongings, however, are generally not covered by the landlord's policy at all, which is one of the main reasons landlords often require tenants to carry their own renters insurance.

Injuries to customers on your premises are typically what general liability insurance is designed to address, often covering medical costs and legal defense if the customer pursues a claim or lawsuit. How the claim plays out usually depends on whether the hazard was reasonably addressed beforehand, such as posting a wet floor sign, and how quickly the business documented and responded to the incident.

If the grace period has passed, the policy has likely lapsed and coverage has ended. Most life policies have a 31-day grace period after a missed premium. You can usually reinstate a lapsed policy by paying the overdue premium with interest, often within five years, though the insurer may ask about your health again.

Each roommate's own renters policy generally covers their own belongings, since one person's policy usually doesn't cover an unrelated roommate unless they're named. The roommate who caused the fire may face a liability claim for damage to the landlord's property, which his renters liability coverage may pay. Without renters insurance, each person generally bears their own losses.