AZ Public Adjuster key terms

A settlement method that pays replacement cost minus depreciation for damaged property. It reflects the property's used value at the time of loss rather than the price of buying new items.

The amount needed to repair or rebuild damaged property with new materials of like kind and quality, without deducting for age or wear. Many policies require insurance to at least 80 percent of this figure.

The reduction in a property's value caused by age, wear and tear, or obsolescence. Adjusters subtract it from replacement cost to calculate actual cash value settlements.

A property policy provision that penalizes insureds who carry limits below a stated percentage of the property's value. Payment is reduced in proportion to the shortfall when a loss occurs.

The relationship between the amount of insurance carried and the true cost to replace the property. Adequate insurance to value avoids coinsurance penalties and reduces the risk of an uninsured loss.

A property policy option in which the insurer waives coinsurance because the limit was set by agreement at inception. The insured must still report values accurately and accept periodic review.

The amount of a covered loss the insured must absorb before the insurer pays. It may be a flat dollar figure or a percentage of the dwelling limit, common for wind and hail claims.

A property form designed for residential structures that are not owner-occupied, such as rental houses or homes under construction. It covers the building, and optionally personal property, on a named-peril basis.

A packaged residential policy combining property coverage on the dwelling and personal property with personal liability and medical payments. It is written for owner-occupied dwellings and comes in numbered forms.

The most common homeowners form, covering the dwelling against risks of direct physical loss except those excluded, while personal property is covered only for listed perils. It offers broad protection at moderate cost.

A homeowners form that insures both the dwelling and personal property on an open-peril basis, subject to exclusions. It provides broader coverage than the HO-3 and is often used for higher-value homes.

The homeowners coverage that protects the residence structure itself, including attached additions such as garages and permanently installed fixtures. The limit is usually the basis for other policy limits.

Homeowners coverage for detached structures on the residence premises, such as fences, sheds, and detached garages. The limit is typically 10 percent of the dwelling limit unless increased.

Homeowners coverage for the insured's household contents and personal belongings, both on and away from the residence premises. Special sublimits apply to categories such as jewelry, cash, and silverware.

Coverage that pays additional living expenses when a covered loss makes the residence uninhabitable, or reimburses fair rental value if the home was rented out. Payments are limited by time and dollar amount.

Homeowners coverage that pays sums the insured becomes legally obligated to pay because of bodily injury or property damage to others, plus defense costs. It applies on and off the residence premises.

Coverage that pays reasonable medical expenses for third parties injured on the insured premises or by the insured's activities, regardless of fault. Payment is subject to a per-person limit.

An insurance approach that covers only the specific causes of loss listed in the policy, such as fire, lightning, windstorm, or theft. The insured bears the burden of proving the loss resulted from a listed peril.

An insurance approach covering all risks of direct physical loss except those expressly excluded. The insurer bears the burden of showing an exclusion applies to deny coverage.

An endorsement that adds perils such as windstorm, hail, explosion, riot, and civil commotion to a fire policy. It broadens protection while keeping the original named-peril structure.

Coverage that pays extra costs to rebuild to current building codes, including demolition and undamaged portion replacement. Standard policies otherwise exclude these code-related expenses.

Coverage that pays to clear and haul away debris after a covered loss. It often carries its own limit or a percentage of the loss amount, separate from the building limit.

A floater or endorsement listing specific valuable items, such as jewelry or art, with agreed values and broader perils. Listed items are insured without a deductible and often worldwide.

Commercial coverage that replaces lost net income and continuing expenses when a covered property loss suspends operations. It typically applies during the period of restoration.

A modular commercial policy that combines two or more coverage parts, such as commercial property, general liability, or crime. Each part is selected and rated separately under one policy number.

Coverage for structures under construction, including materials, supplies, and equipment on site. It typically covers fire, wind, vandalism, and theft during the project period.

Coverage for sudden and accidental breakdown of equipment such as boilers, HVAC systems, and electrical apparatus. It pays for repairs and resulting damage to other property, which standard policies exclude.

The policy section that explains how claim payments are calculated, including whether actual cash value or replacement cost applies. It also sets conditions such as repair or replacement before payment.

A financial stake in property such that the person benefits from its continued existence and suffers loss if it is damaged. It must exist at the time of loss for a claim to be paid.

The concept that insurance should restore the insured to approximately the same financial position as before the loss, not create profit. It underlies actual cash value and replacement cost settlements.

The principle requiring both insurer and insured to deal honestly and disclose material facts. Misrepresentation or concealment of relevant information can void coverage.

The intentional withholding of material information from an insurer during underwriting or claims handling. It may give the insurer grounds to rescind the policy or deny a claim.

A false or misleading statement of a material fact made by an insured or applicant. Depending on intent and materiality, it can result in policy rescission or denial of a claim.

A licensed professional who represents the insured in preparing, presenting, and negotiating a property claim in exchange for a fee based on the claim amount. The adjuster owes duties to the policyholder, not the insurer.

The legal obligation to act in the client's best interest and handle client funds honestly. Public adjusters must not commingle claim payments with personal or business funds.

A sworn statement from the insured detailing the amount, cause, and circumstances of a loss, usually submitted within a policy-specified deadline. It supports the claim and is often required before payment.

The state agency that licenses adjusters and insurers and enforces Arizona insurance law. It investigates consumer complaints and may impose fines or revoke licenses for violations.

Prohibited insurer conduct such as misrepresenting policy provisions, failing to investigate promptly, or offering unreasonably low settlements. Arizona law treats these acts as unfair trade practices subject to penalties.

The process of investigating a loss, determining coverage, and paying the amount owed under the policy. It includes inspection, valuation, negotiation, and documentation of the final payment.