Insurance claims and fraud glossary

Actual cash value (ACV) is what a damaged item was worth in the moment immediately before the loss, normally calculated as replacement cost less depreciation. It is the figure most motor and property policies settle on, and it is what the majority of settlement disputes are really about.

An adjuster is the insurance professional who investigates a claim, establishes the facts of the loss, applies the policy terms, and agrees what the insurer will pay. The title is standard in North America and covers staff, independent and public adjusters working from a desk or in the field.

Anti money laundering, abbreviated AML, is the body of law, regulation and internal controls requiring businesses to prevent, detect and report the movement of criminal proceeds through the financial system. It is a legal obligation, not a best practice.

Application fraud is the deliberate misrepresentation or concealment of material information when a policy is bought or renewed, so that cover is issued cheaper or issued at all. It happens at the point of quote, before any incident and before any claim exists.

An approved repairer is a body shop or garage an insurer has vetted and contracted to carry out repairs on claims it handles, working to agreed rates, methods, parts policy and quality standards. Approval is a commercial relationship, not a public certification.

Automated decision making is a decision taken about a person by automated processing alone, including profiling, with no meaningful human involvement in the outcome that person receives. Article 22 GDPR restricts it wherever the decision produces legal effects or similarly significant effects for that person.

Betterment is the improvement a policyholder gains when a repair replaces a worn item with a new one, and the deduction an insurer applies to offset it. It exists because indemnity restores the pre-loss position, and a brand new part fitted to an ageing asset goes past that line.

A catastrophe claim, or CAT claim, is a claim arising from a single large event that damages many insured risks at once, such as a hurricane, wildfire or hailstorm. Insurers code these claims to one catastrophe event number so the cost of that event can be measured and reinsured separately.

Claim frequency is the rate at which claims arise across a book of business, normally expressed as claims per 100 earned exposure units over a defined period. In motor insurance the exposure unit is the earned car year, so frequency is read as claims per 100 earned car years.

Claims automation is the use of software to carry out steps in the claims process that a handler would otherwise do by hand, from intake and validation through triage, decisioning and payment. The aim is straight-through handling of simple claims and faster routing of complex ones.

Claims cycle time is the elapsed time between the first notification of loss and the closure of a claim, usually counted in calendar days. It is the headline operational metric in claims, and most of the time inside it is spent waiting for information, not working the file.

Claim severity is the average cost of a claim, calculated by dividing the total amount paid over a period by the number of claims in that same period. It answers how expensive claims are, while claim frequency answers how often they happen.

A claims examiner is the desk-based insurance professional who reviews a claim file, checks coverage, evidence and reserve against policy terms and company guidelines, and authorises or declines payment. In UK and Irish usage the closest role is the claims handler.

A claims handler is the person who owns an insurance claim from notification to closure: validating cover, gathering evidence, instructing suppliers and experts, negotiating settlement, and keeping the customer informed. The title is standard in the UK, Ireland and most of Europe.

Claims inspection software is software that collects, organises and verifies the visual evidence of a loss so an adjuster or claims handler can assess it without, or before, a site visit. It covers field adjuster apps, live video sessions and guided self-capture by the policyholder.

Claims leakage is the difference between what a claim actually cost the insurer and what it should have cost if every step had been handled correctly. It is money lost to process failure rather than fraud, and it is found only by re-auditing closed files.

A claims portal is the online interface where a claimant or their representative notifies a claim and tracks it through to settlement, holding the claim record, collecting evidence, showing status, and passing structured data into the insurer's claims system rather than into a shared inbox.

A claims reserve is the money an insurer sets aside to pay the remaining cost of a claim that has been reported but not yet settled. It sits on the balance sheet as a liability, and it is revised up or down every time better information about the claim arrives.

Claims triage is the process of sorting incoming claims by what each one actually needs, complexity, value, urgency and risk, then routing each to the right handler, channel and level of investigation before substantive work begins. It happens at or just after FNOL.

Claims validation is the set of checks an insurer runs to confirm that a reported loss is covered by the policy, that the account given matches the evidence supplied, and that the amount claimed is right, before payment is authorised. It runs on every claim, not only the ones that look wrong.

A contents claim is a claim made under the contents section of a household policy for movable possessions at an insured address that are damaged, destroyed, or stolen. It is settled item by item rather than as a single repair, which makes proof of ownership and value the part that decides how long it takes.

Crash for cash is organised motor insurance fraud in which a collision is deliberately caused, invented or exaggerated so claims can be made against an insurer. The money comes less from the damage itself than from the personal injury, credit hire, storage and recovery costs bundled around it.

A damage waiver is a contractual promise by a rental or hire company not to pursue the customer for some or all of the cost of damage to the asset, in exchange for a daily fee. It is usually not insurance. It is the owner limiting its own claim against the hirer, subject to an excess and a list of exclusions.

A deductible is the fixed amount a policyholder absorbs on a covered loss before the insurer pays anything, subtracted from the settlement on each claim. It is set at underwriting, applies per claim rather than per year, and is the same mechanism UK policies call a policy excess.

A deposit dispute is a formal disagreement between a landlord or agent and a tenant over deductions from a protected tenancy deposit, resolved by the deposit protection scheme's free adjudication service or by a court. The adjudicator decides on written and photographic evidence alone, never by visiting the property.

A desk adjuster is a claims adjuster who handles claims from an office or remotely, working from documents, photographs, video and phone calls rather than travelling to inspect the loss in person. The role is also called an inside adjuster or a telephone adjuster.

A digital claims journey is the end-to-end path a claim takes from first notification to settlement when every step is designed to be completed through digital channels. It describes the whole sequence rather than a single portal or app, and it is usually judged by how few times the customer has to leave it.

An engineer report is the written assessment a qualified motor engineer produces after examining a damaged vehicle, setting out the damage found, the cost and method of repair, and whether repairing it makes sense against the vehicle's value. Most total loss decisions rest on it.

An exaggerated claim is a genuine insurance claim whose value or extent has been deliberately inflated beyond the actual loss. The incident is real, the damage is real, and the dishonesty sits only in the size of what is being asked for.

A field adjuster is a claims adjuster who travels to the loss location, inspects the damage in person, and writes the estimate from what they see and measure on site. The role is also called an outside adjuster, or a field appraiser in motor claims.

A first party claim is a claim a policyholder makes against their own insurance policy for their own loss, settled by their own insurer under the contract between them. Collision, comprehensive, buildings, contents and health claims are all first party claims.

First Notification of Loss (FNOL) is the first report a policyholder or third party makes to an insurer after an incident. It is the point at which a claim file is opened, a reserve is set, and the claims clock starts running.

A fraud indicator is an observable feature of a claim, an application or a claimant's behaviour that is statistically associated with fraud and is used to decide how much scrutiny a file gets. It is a reason to look more closely, never a finding of dishonesty.

Ghost broking is the fraudulent sale of motor insurance by someone posing as a legitimate broker, where the victim pays for cover that is either wholly fake or genuine but obtained on falsified details, and usually discovers the problem only at a police stop or a declined claim.

A home insurance claim is a request for repair, replacement, or payment under a household policy after damage, loss, or theft at an insured address. It covers two distinct sections, buildings and contents, and which section responds decides the evidence, the supplier, and the timescale.

Indemnity is the principle that an insurance payment restores the policyholder to the financial position they were in immediately before the loss, and no better. It is the rule that almost every settlement mechanic, from actual cash value to betterment to salvage, exists to enforce.

An independent adjuster is a licensed adjuster who handles claims on an insurer's behalf under contract rather than as an employee, usually through an independent adjusting firm and usually paid per assignment. Insurers use them for surge, coverage gaps and specialist work.

Insurance telematics is the use of driving data recorded by a vehicle, a plug-in device, or a smartphone app, covering speed, braking, cornering, mileage, time of day, and impact forces, to price motor cover and to support claims decisions. It is also sold as usage-based insurance or black box insurance.

Know your customer, usually shortened to KYC, is the set of checks a regulated business runs to establish who its customer is, who ultimately owns or controls them, and what the relationship is for. The detail of what is required differs by country.

A loss adjuster is an independent claims professional appointed and paid by the insurer to investigate a larger or more complex claim, establish its cause and extent, test it against the policy, and recommend a settlement. The title is standard in the UK, Ireland and much of the Commonwealth.

Loss ratio is the share of earned premium an insurer pays out in claims, calculated as incurred losses divided by earned premium and shown as a percentage. It is the clearest single measure of whether a book of business is priced correctly for the risk it carries.

A motor claim is a request for repair, replacement, or payment made under a motor insurance policy after a vehicle is damaged, stolen, or involved in an incident causing injury or third party loss. The process scales with severity, from a windscreen chip settled in a day to a total loss taking weeks.

Notice of loss is the policyholder's first formal communication telling the insurer that an event which may be covered has occurred. It triggers the insurer's duty to investigate, opens the claim file, and starts almost every clock a claims operation runs on.

Opportunistic fraud is when a policyholder with a real incident and no prior intent to defraud inflates, adds to, or invents part of a claim once the loss has already happened. It is the larger half of the standard counter-fraud split between opportunistic and organised fraud.

Organised insurance fraud is premeditated fraud committed by a network of people acting together, where the incident is staged, induced or invented and the policy often exists only to be claimed on. It is the second half of the standard opportunistic and organised split.

A photo estimate is a repair cost assessment produced from photographs of a damaged vehicle instead of a physical inspection, written by an estimator or generated by an estimating system and signed off by a person. It is now one of the most common appraisal routes in motor claims.

A policy excess is the amount an insured bears on each claim before the insurer's liability begins, usually a compulsory excess set by the insurer plus any voluntary excess the customer chose. It is the UK and Commonwealth term for what US policies call a deductible.

Proof of loss is the formal, usually sworn statement in which a policyholder sets out what was lost or damaged, when and how it happened, and the amount claimed, with documentation the insurer can verify. It is a condition of the policy, not a courtesy.

A property damage claim is a claim for physical damage to tangible property, covering the cost to repair or replace it rather than injury to a person. It can be first party or third party depending on whose property was damaged and whose policy responds.

A red flag indicator is a single observable characteristic of a customer, a transaction or a claim that experience associates with financial crime, and that tells a reviewer to ask a further question. It raises scrutiny on a file. On its own it proves nothing.

Remote adjusting is the handling and settlement of a claim without the adjuster physically attending the loss, working instead from images, video, measurements and documentation captured at the scene. It is remote-first rather than remote-only: complex and disputed losses still get a visit.

Remote claim inspection is the assessment of damage from video, photos and structured answers submitted by the claimant, instead of an in-person visit by an appraiser. It covers both live video sessions and asynchronous guided capture the claimant completes alone.

A repair network is the managed panel of approved repairers an insurer or claims organisation uses to carry out vehicle or property repairs, operating under one set of commercial terms, technical standards and performance measures instead of being appointed claim by claim.

Risk scoring is the practice of turning observable facts about a customer, a transaction or a claim into a single graded rating that decides how much scrutiny the case receives. It ranks work for human attention. It does not decide the outcome of the case.

Salvage is the damaged property an insurer takes ownership of after settling a total loss claim, and also the value recovered by selling it on. It is the closing step in a write-off, and the systems that classify salvage vehicles differ sharply from one country to the next.

Self-service claims is the model in which the policyholder reports a loss and supplies the supporting evidence themselves, through a web page, portal or link, without a call to a handler or a visit from an assessor. The insurer reviews what arrives and decides.

An SIU, or Special Investigation Unit, is the team inside an insurer that investigates claims and applications suspected of fraud. Handlers refer a file when indicators appear, and the unit gathers evidence so a decision can be made on facts rather than suspicion.

A staged accident is a collision deliberately arranged by the people taking part so that an insurance claim can be made, with every vehicle and occupant under the fraudsters' control. That last point separates it from an induced accident, where a genuine innocent motorist is manoeuvred into the crash.

Straight through processing, or STP, is the handling of a claim from notification to payment entirely by automated rules, with no manual intervention by a handler. A claim either qualifies at intake and flows through, or it falls out into a manual queue for a person to work.

Subrogation is the right of an insurer that has paid a claim to step into the policyholder's legal position and recover that payment from whoever caused the loss. The insured's rights against the responsible party transfer to the insurer, up to the amount it paid out.

A third party claim is a claim brought by someone outside the policy against the insurer of the person who caused their loss, so claimant and paying insurer have no contract. Liability has to be established before the value of the loss is settled.

A total loss is a claim that an insurer settles by paying out the pre-loss value of the damaged item instead of paying for it to be repaired. The test is economic rather than mechanical: most written-off vehicles could physically be rebuilt, the cost has simply passed the point where rebuilding makes sense.

A touchless claim is a claim settled without a human visiting the loss. In the stricter sense used by insurers, it is a claim handled from notification to payment without a handler touching it at all, with the policyholder's own submitted evidence and automated rules doing the work a person used to do.

A third party administrator, or TPA, is a company that handles claims and related administration on behalf of an organisation that carries the risk, such as an insurer, a self-insured employer or a scheme. A TPA is paid a fee to administer, and never carries the risk itself.

Video claims are insurance claims in which the damage is assessed from video recorded by the policyholder or a third party on their own phone, either during a live call with the handler or asynchronously through a guided link, instead of from a site visit. The video, its narration and its metadata become the primary evidence in the file.

A virtual property inspection is an inspection of a home or commercial unit carried out through video and photos instead of a visit by the inspector. It covers two models: a live video call led by the inspector, and a self-inspection where the tenant or occupier records guided footage in their own time.

Water damage is physical damage to a building, its services, or its contents caused by water reaching somewhere it should not, whether from a burst pipe, a failed appliance, a defect in the envelope, or a flood. In insurance terms most of it is handled under the escape of water peril rather than as flood.

Write-off categories are the salvage classifications an insurer assigns to a vehicle it has declared a total loss, recording how badly the vehicle is damaged and what may lawfully happen to it afterwards. The UK uses Categories A, B, S and N. Other markets use different systems entirely.