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Insurance
Glossary
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Actual Cash Value (ACV): It is usually considered to be the
cost of replacing or restoring property at prices prevailing at the time
and place of the loss, less depreciation. However, it has been defined
by courts in a variety of ways depending on circumstances.
Adjuster: A person who investigates and settles losses, usually
for an insurance carrier.
Agent: An agent is an individual who sells insurance products
for ONLY ONE COMPANY and generally sells only its products. *(see the
definition for Broker below)
All Risks Policy: Coverage by an insurance contract that promises
to cover all risks of direct physical loss or damage except those specifically
excluded in the policy.
Amendment: A formal document changing the provisions of an
insurance policy signed jointly by the insurance company officer and the
policy holder or his authorized representative.
An Act of God: An act of God is a flood, earthquake or any
other accident or event arising purely from natural causes and without
human intervention, of such a nature of magnitude that it could not have
been foreseen or prevented by reasonable care or foresight. Contrary to
popular belief, acts of God are sometimes insured against.
Automobile Liability Insurance: Protection for the insured
against financial loss because of legal liability for car-related injuries
to others or damage to their property.
Automobile physical damage Insurance: Coverage to pay for damage
to or loss of an insured automobile resulting from collision, fire, theft,
or other covered perils.
Bailee: A bailee is a person or business which for a consideration,
takes care, custody and control of the public’s goods for some reason.
The bailee must under law assume a high degree of responsibility to the
public for the safekeeping of its property.
Broker: A broker is someone who sells insurance products for
many different insurance companies. This allows them to compare price
and coverages to best suit individual clients.
Canadian Loss Experience Automobile Rating (CLEAR Rating):
A rating system that groups cars based on their claims experiences, such
as repairs, injury claims, frequency of theft. Your premium may vary depending
on whether or not your insurer uses CLEAR rating. For example, if your
car’s repair costs are fairly economical, an insurer that uses CLEAR rating
might be able to give you a lower rate. About 50% of insurers use CLEAR
rating to establish their rates.
Constructive Total Loss: Constructive Total Loss is suffered
when the cost of repair is more than the property is worth.
Deductible: The deductible is the portion of a claim that you
pay. For example, if vandals cause $1000 damage to your car, you pay the
amount of your comprehensive coverage deductible (ex. $300 ) and your
insurance company pays the rest (up to the limit of your policy).
Driving Record: Your driving record is used to describe your
driving history, including any accidents or traffic convictions.
Effective Date: The date on which the insurance under a policy
begins.
Endorsements: Endorsements are used to make changes (i.e. by
adding or deleting coverage in an auto policy). Endorsements in Quebec
are known as Quebec Policy Change Forms and are referred to as QEF. Endorsements
in Ontario are known as Ontario Policy Change Forms and are referred to
as OPCF.
Errors and Omissions Insurance: Liability insurance policy
that provides protection against loss incurred by a client because of
some negligent act, error, or omission by the insured. The insured is
normally a professional or consultant.
Exclusion: An exclusion is a policy provision referring to
Perils or property the Policy does not insure.
Exposure Loss: An exposure loss is one where the damage to
the insured’s premises results from a fire or other insured Peril which
originates elsewhere and has spread to the insured premises.
Facility: A pooling mechanism for insureds not able to obtain
automobile insurance in the voluntary market. Insurers write and issue
policies but cede premium and losses on those policies to a central pool
in which all insurers share
Family Expense Policy: A policy which insures both the policyholder
and his/her immediate dependents (usually spouse and children).
Floater Policy: A Floater Policy is one whose protection follows
moveable property within the territory specified in the policy.
Group Discount or Rate: A discount or rate provided to a member
of an eligible group. An eligible group may include employees of the same
employer, a member of a union, professional or occupational association.
Hazard: Condition that creates or increases the chance of loss.
Indemnity: A Policy must be a contract of indemnity, that is,
it must indemnify the Insured for the loss, and no more than the loss.
The principle of indemnity is to try to put the Insured back as closely
as possible into the same financial position that existed immediately
before the loss occurred - no more and no less.
Lapse: The termination or discontinuance of an insurance policy.
Marine Franchise Clause: A Marine Franchise Clause is a type
of deductible clause that says that if a loss exceeds a stated amount,
the loss is paid in full. Below that amount the entire loss is assumed
by the Insured.
Misrepresentation: Usually refers to an attempt by the Insured
to secure a lower rate from the underwriter by deliberately misrepresenting
his Risk as lesser than it actually is. The consequences of misrepresentation
can be extreme - it could result in your insurance contract being deemed
void.
Named Insured: A person named in an insurance policy and for
whom the policy is primarily written. It is distinguishable from the simple
word "insured" in that an insured includes both named and unnamed insureds.
It is distinguishable from unnamed insured in that it identifies the specific
party in the policy.
Named Perils Policies: Policies which specifically state the
perils against which protection is given, and no others. This is distinct
from the All Risk Policy, which covers all risks of direct physical loss
or damage except those specifically excluded in the policy.
Obligee: A person or corporation under a fidelity or surety
bond who is protected from loss.
Partial Loss: A partial loss is one which neither totally destroys
and renders worthless the insured property, nor exhausts the amount of
insurance, as opposed to Total Loss.
Peril: A peril insured against is a specific event causing
loss or damage - such as the damage to building caused by fire or windstorm,
or damage in a collision between two autos.
Renewal:An extension of a policy for an additional policy period
as the current policy is about to expire, is known as a renewal.
Subrogation: is the legal process by which the insurer seeks
to recover from the third party who caused the loss, the amount the insurer
has paid its Policyholder.
Specified Perils: Covers your automobile against losses caused
by fire, theft, attempted theft, lightning, windstorm, hail or rising
water, earthquake, explosion, riot or civil disturbance, the forced landing
of aircraft, the stranding, sinking, burning, derailment or collision
of any kind of transport on which your automobile is being transported.
Tenant: One who holds property, houses or land, owned by another,
by payment of rent.
Underwriter:The insurance company or group that underwrites
or insures a particular risk.
Valued Policy:A policy wherein the parties agree at the time
of issuance on
the value of the property insured.
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