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Class 1 construction
Frame construction built of wood, most likely to catch fire.
Class 2 construction
Jointed masonry, constructed of concrete or brick.
Class 3 construction
Non combustible construction primarily made of metal.
Class 4 construction
Masonry non combustible, meaning the roof and floor do not contain wood.
Class 5 construction
Modified fire resistive class, rated at 2 hours or less.
Class 6 construction
Fire resistive class, rated at 2 hours or more.
Actual Cash Value (ACV)
Replacement cost minus depreciation based on today's costs.
Replacement Cost
Cost to replace an item without depreciation.
Functional Replacement Cost
Replaces damaged items with alternatives that serve the same function but are not identical.
Market Value
Price based on free market conditions, influenced by supply and demand.
Agreed Value
Value agreed upon by the insured and insurance company before the policy is issued.
Stated Value
Value used to determine premiums, not the amount the insured will receive.
Pair or Set Clause
Valuation of a loss based on a fair proportion of the total value of the set.
Appraisal
Process used to resolve disagreements on the amount of a loss.
Arbitration
Process used to resolve disagreements on areas other than the loss amount.
Coinsurance
Clause requiring property to be insured for a specified percentage of its value, commonly 80%.
Vacancy
No property or people present at the time of loss.
Unoccupancy
No people present at the time of loss, but property may still be there.
No Benefit to Bailee
Policy clause stating that no insurance coverage applies while property is in the temporary possession of a bailee.
