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The definitions appearing in this Glossary are provided solely for general informational purposes. They are not intended to be complete descriptions of all terms, conditions and exclusions applicable to the products and services defined. As well, in the case of any inconsistency between the definitions in this Glossary and the definitions appearing in the actual policy, the definitions contained in the actual policy shall govern.
[ A ]
ACCIDENT - An unexpected event, which happens by chance and is not expected in the normal course of events.
ACT OF GOD - A sudden and violent act of nature, which could not have been foreseen or prevented. Examples: flood, earthquake
ACTUAL CASH VALUE - The current cost of replacing an article with a similar one in the same condition. Any item has three basic values: original cost, actual cash value, and replacement value. For example, if you originally paid $400 for your living room couch; its actual cash value might be $175. But if it's destroyed in a fire, replacing it will cost you $800.
ADDITIONAL INTEREST INSURED - Another person or company who may be liable for an accident involving an insured or an insured vehicle and who has been named as an Additional Interest Insured under the policy.
ADDITIONAL PREMIUM - An extra charge for an alteration, during the policy period, which increases the hazard or the Company's liability.
ADJUSTER - A person who investigates a loss and negotiates settlement with the claimant on the Company's behalf.
ALL PERILS - An optional coverage designed to provide protection for your vehicle for all types of losses except those specifically excluded in your policy. All perils coverage is the most complete coverage you can select to protect yourself from loss or damage to your own vehicle. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.
ALL RISK - Coverage against loss or damage from all perils except those specifically excluded.
AMOUNT OF RISK - The Company's total liability at a specific location
APPLICATION (APP) - A form on which the prospective insured states facts requested by the insurance company and on the basis of which (together with any information from other sources) the insurance company decides whether or not to accept the risk, modify the coverage offered, or decline the risk.
APPRAISAL - A valuation of property made for determining its insurable value or the amount of loss sustained.
ARSON - The willful and malicious burning of property.
ASSUMED LIABILITY - Liability, which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.
ASSURANCE - Same as "insurance".
ASSURED - Same as "insured".
ASSURER - Same as "insurer" (insurance company).
AUTHORIZATION - The power or right to act on behalf of another.
AUTOMOBILE INSURANCE - Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.
AVOIDANCE OF RISK - Taking steps to remove a hazard, engage in an alternative activity, or otherwise end a specific exposure.
[ B ]
BASIC RATE - The standard charge for a given type of risk.
BI/PD - Bodily Injury / Property Damage Liability Coverage.
BINDER - A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.
BODILY INJURY - Term used in Auto and Casualty policies meaning physical injury, including sickness, disease, mental injury, shock or death.
BODILY INJURY LIABILITY - Pays when an insured person is legally liable for bodily injury or death caused by your vehicle or your operation of most non-owned vehicles. This coverage also pays for your legal defense if you are sued.
BROAD FORM - Any of the commercial or personal lines property forms which provide coverage on a named perils basis. This form normally adds the Extended Coverage and Vandalism and Malicious Mischief coverages. This form is generally used for coverages on a Homeowners Policy.
BROKER - An independent person or firm who acts on behalf of the insured in placing business with the insurance company. Responsible for the collection of premiums but having no authority to give coverage on the insurance company's behalf without their specific agreement. Compensation is on a commission basis.
BURGLARY - Unlawful removal of property from premises involving visible forcible entry.
BUSINESS INTERRUPTION - Insurance against business expenses and loss of income resulting from fire or other insured peril.
[ C ]
CANCELLATION - Termination of an insurance coverage during the policy period by the voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.
CATASTROPHE - A sudden, great disaster.
CIVIL LIABILITY - Liability to other motorists, pedestrians and property owners that you assume when operating your automobile on a public roadway. CLAIM - Notice to an insurer that under the terms of a policy, a loss may be covered.
CLAUSE - A term used to identify a particular part of a policy or endorsement.
COINSURANCE - In property insurance, a clause under which the insured shares in losses to the extent that he is underinsured at the time of loss.
COLLISION COVERAGE - An optional coverage designed to provide protection for your vehicle when damage occurs as a result of a collision with another object. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.
COMPREHENSIVE INSURANCE - Comprehensive insurance reimburses you for damage to your own car from causes other than collision or overturning. The comprehensive portion of your policy pays for loss due to perils like hail, flood, theft, fire, glass breakage, falling objects, missiles, explosions, earthquakes, windstorms, vandalism or malicious mischief, riot or civil commotion, and collision with a bird or an animal.
When you look at a policy's comprehensive coverage, check for exclusions or limitations. If you have a special audio system installed in your car, for example, you should make sure your policy would cover the cost of the equipment if it were damaged or stolen.
It's also important to know if the policy pays for the actual cash value of damaged or stolen property (its current value after depreciation has been subtracted or the full amount required to replace it today.)
COMPULSORY INSURANCE - Any form of insurance, which is required by law.
CONSEQUENTIAL DAMAGE - A loss, which is an indirect result of an accident or fire, e.g. food spoiled through breakdown of a refrigerator.
COVER - To insure.
COVERAGE - Insurance.
[ D ]
DECLARATIONS (DEC SHEET)- A term used in insurance for the portion of the contract which contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured.
- the types of coverage you have elected;
- the limit for each coverage;
- the cost for each coverage;
- the specified vehicles covered by the policy;
- the types of coverage for each vehicle covered by the policy; and
- other information applicable to the policy.
DEDUCTIBLE - The portion of a loss that you are required to pay before your insurance coverage will respond. Deductibles can be used to reduce your physical damage premiums. For example, if you owned a policy with a $200 deductible and you suffered a covered loss totaling $1,000, you would pay the first $200 and the insurance company would pay the remaining $800. If the loss were only $200, you would pay the entire amount and the insurance company would pay nothing.
DEPRECIATION - Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence. For example, if you paid $500 for a television set five years ago, its current value minus depreciation might be only $125, for example.
DIRECT LOSS (OR DAMAGE) - A loss, which is a direct consequence of a particular peril. Fire damage to a refrigerator would be a direct loss. Spoiling of food in the refrigerator as a result of the fire damage would be an indirect loss.
DIRECT WRITER - An insurance company, which sells its policies through salaried employees (licensed agents) who represent it exclusively, rather than through independent local agents, who represent several insurance companies.
[ E ]
EARTHQUAKE INSURANCE - Insurance covering damage caused by an earthquake as defined in the contract.
EFFECTIVE DATE - The date on which an insurance policy or bond goes into effect, and from which protection is furnished.
EMBEZZLEMENT - The fraudulent use of money or property, which has been entrusted to one's care.
EMPLOYERS LIABILITY INSURANCE - Coverage against common law liability of an employer for accidents to employees, as distinguished from liability imposed by a workers' compensation law.
ENDORSEMENT - Amendment to the policy used to add or delete coverage. Also referred to as a "rider."
EXCLUSIONS - Certain causes and conditions, listed in the policy, which are not covered.
EXPIRATION - The date upon which a policy will end.
EXPOSURE - Degree of hazard threatening a risk because of external or internal physical conditions.
EXTENDED COVERAGE (EC) - A common extension of property insurance beyond coverage for fire and lightning. Extended coverage adds insurance against loss by the perils of windstorm, hail, explosion, riot and riot attending a strike (civil commotion), aircraft damage, vehicle damage, smoke damage and volcanic eruption.
[ F ]
FAIR MARKET VALUE - The price that a willing buyer would pay a willing seller, neither being under any compulsion to sell or buy.
FIRE - Combustion sufficient to produce a spark, flame, or glow and which is hostile (as opposed to friendly - i.e., not in the place where it is intended to be, such as in a furnace.)
FIRE INSURANCE - Coverage for loss of or damage to a building and/or contents due to fire.
FIRE RESISTIVE CONSTRUCTION - A building, which has exterior walls, floors, and roof constructed of masonry or other fire-resistive materials.
FLOATER POLICY - A policy under the terms of which protection follows moveable property, covering it wherever it may be.
FLOOD INSURANCE - A form of insurance designed to reimburse property owners from loss due to the defined peril of flood. Usually sold in connection with a government Flood Insurance plan.
FORGERY - In general, any false writing with intent to defraud.
FORM - An insurance policy itself or riders and endorsements attached to it.
FORTUITOUS EVENT - An unforeseen accident.
[ G ]
GARAGING LOCATION - The postal code where your vehicle is parked or garaged when not in use. This is usually your primary residence.
GRACE PERIOD - A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.
[ H ]
HAZARD - A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss. For example, accident, sickness, fire, flood, liability, burglary, and explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, and uninspected boilers are also hazards.
HOMEOWNER INSURANCE - An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.
HOUSEKEEPING - The general care, cleanliness and maintenance of an insured property.
[ I ]
IMPROVEMENTS AND BETTERMENTS - Additions or changes made by a lessee at his own cost to a building that he is occupying, which enhance its value. These become part of the realty and require special insurance consideration.
INDEMNIFY - To restore the victim of a loss, in whole or in part, by payment, repair, or replacement.
INDIRECT LOSS (OR DAMAGE) - Loss resulting from a peril, but not caused directly and immediately thereby. For example: Loss of property due to fire is a direct loss, while the loss of rental income as the result of the fire would be an indirect loss.
IN-FORCE - Insurance on which the premiums are being paid or have been fully paid. In life insurance, usually refers to insurance by face amount. In health, usually refers to premium volume being paid to insurance company or insurance companies in aggregate.
INLAND MARINE INSURANCE - A branch of the insurance business which developed from the insuring of shipments which did not involve ocean voyages. Exposures eligible for this form of protection are described in the nation-wide definition of Marine Insurance. Such diverse properties as bridges tunnels, jewellery and furs can now be written under Inland Marine forms.
INSPECTION - Independent checking on facts about an applicant or claimant, usually by a commercial inspection agency.
INSURABILITY - Acceptability of an applicant for insurance to the insurance company.
INSURANCE - A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the insured.
INSURANCE POLICY - Legal document issued to the insured setting out the terms of the contract of insurance.
INSURANCE TO VALUE - Insurance written in an amount approximating the value of the property insured.
INSURED - The person (or persons) whose risk of financial loss from an insured peril is protected by the policy. Sometimes call the "policyholder".
INSURER - The Insurance Company.
[ J ]
JOINT TENANCY - Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This is different from a tenancy in common where the heirs of a deceased party to the tenancy inherit his or her share.
[ K ]
[ L ]
LAPSE - Termination of a policy because of failure to pay the premium.
LESSEE - The person, to whom a lease is granted, commonly called the tenant.
LESSOR - The person granting a lease, also known as the landlord.
LIABILITY INSURANCE - In an accident where you are charged with injuring another person or damaging his or her property, liability insurance pays the cost of your legal defense, as well as the cost of any damages for which you are found legally responsible. Liability, Collision and Comprehensive.
These are the three main types of coverage available in an auto insurance policy. Liability pays other people if you've injured them or damaged their property. Collision pays to repair damage to your car caused by (what else?) collisions. Comprehensive pays you for your losses due to theft and other calamities that are unrelated to collisions - like damage from hail, fire, vandalism, floods, etc.
LIABILITY LIMITS - The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy.
LIBEL - A written statement about someone, which is personally injurious to that individual.
LIMIT OF LIABILITY - The maximum amount, which an insurance company agrees to pay in case of loss.