Glossary of insurance terms

Date on which a transaction comes into force.

An amendment added to a written document, particularly an agreement between parties, such as an insurance policy, altering its provisions.

Value of a property in excess of claims or liens against it.

Professional, semi-professional and the serviced type of work may place an obligation on the part of the individual to see that the task is properly performed and any error or omission in the performance of a particular duty may make the individual responsible in damages. Errors and omissions insurance is designed to protect the individual in such a situation.

Risks, perils or properties defined in the policy as not covered.

Material used to build the outer walls of a dwelling. Also referred to as Exterior cladding.

The first-in, first-out accounting method of valuing inventory. It assumes that the first units in are the first to be sold and the units sold are costed at the initial price.

A pooling agreement between all automobile insurers (now replace in most provinces by the Facility Association) in which a market is guaranteed for all licensed drivers and registered owners. The results of the total industry pool are shared by all members of the agreement.

An agreement (not an insurance contract although Fidelity is getting to have more insurance features) whereby the surety, or insurance company agrees to reimburse an employer (obligee) for a loss growing out of a dishonest act by an employee (the principal).

A relationship between two persons where one is required to perform in good faith certain acts for the benefit of another e.g. a relationship between an executor of the estate and the beneficiaries of that estate. It is common in relationship of certain types of bonds issued by insurance companies.

A bond guaranteeing the fidelity of persons handling the money or affairs of another, e.g. trustees, receivers, executors, etc.

A provision in a fire insurance policy agreeing to pay the cost of bringing a fire department to the location of the property insured in event of a fire. It is valuable where the insured's property is not in a built up area with their own fire department or where the risk is sufficiently large to require the possible need of fire department services.

Pipe, on the side of a street or wall of a building, with a valve for drawing water, used by firefighters.

Coverage for losses from fire and lightning and also the resultant damage caused by smoke and water. Usually supplemented by Extended Coverage Insurance.

Building housing firefighting equipment and firefighters.

Type of heating used in some dwellings.

A commercial enterprise may own a great many motor vehicles with an appropriate premium adjustment on each occasion. More often, however, the policy provides automatic coverage on newly purchased vehicles and the premium either adjusted on a reporting basis or one of the other methods used to avoid frequent computations for each change.

A policy covering the same risk at a number of perhaps unspecified locations over a wide area (even world wide); usually includes suggestions of goods being frequently moved from one location to another. E.g. Fur Floater, Jewelry Floater, Contractors Equipment Floater, etc.

A provision in an insurance policy whereby the insured pays all claims up to the amount set in the franchise. If, however, any loss exceeds that amount the insurance company assumes full responsibility for the full amount of the loss including the e franchise amount.

1. Methods used to deceive to cause unwarranted favourable decision for one's own benefit.

2. Deliberate misrepresentation or misstatement.

3. Concealment of facts which should at the time be made known.

The submission of a claim through the act of wilful deception and dishonesty carried out with a view to securing some advantage, profit, etc. to which one is not entitled, at the expense of another.

portion of an insurance policy that specifies the obligations of the insurer and insured.

Insurance against breakage of windows in an automobile or building.

The degree of negligence somewhat greater than ordinary negligence. It may be reckless wanton and willful misconduct causing bodily injury and/or property damage.

Total premiums received from all sources including reinsurance assumed from other companies.

Insurance policies that have a considerable number of persons under one contract. It is most frequently found in life and accident and health insurance policies. Simcoe Erie does underwrite Habitational and Auto group insurance.

An active portfolio management style that seeks out stocks with future investment opportunities with anticipated rates of return greater than other stocks.

A type of insurance generally purchased by farmers to protect against loss of their crops because of damage to the crop by hail. E.g. Hail Insurance on tobacco crops.

Hazard arising from character, interest, habits and lack of integrity of the insured or person concerned.

Hazard arising from physical condition or characteristics of the object that is insured, e.g., using and storing volatile materials and substances on the premises.

Type of heating in a dwelling.

The failure of the driver of a any kind of vehicle to stop knowing that he or she is the direct or indirect cause of an accident.

The taking of money or property from another by putting the victim in fear of personal violence. The case of a man with a gun threatening the life of an individual if he does not surrender his cash is a typical hold-up, however, a knife or some other instrument which might threaten an individual would still leave the act as a hold-up. In fact, it is quite possible that no instrument at all may be used and if the victim is afraid that the man either has something concealed or may use his fists or anything else to cause him concern for his physical welfare, the act is still considered a hold-up.

A policy designed to cover the various risks of a home owner in one policy. It is very flexible and may cover little more than fire and extended coverage plus some additional living expenses, theft, vandalism and malicious mischief. It is designed, however, to also extend, if required by the insured to cover seasonal residence, a broad form of personal liability, voluntary property damage, outboard motor and boat, etc.

A single policy designed to cover the various risks of owning a home.

A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplace becomes uncontrollable and ignites something externally.

A fire risk may be written for one or three years. During that time, many changes may take place and an insured may himself improve or enlarge the building, change the roof, install new flooring or a tenant may install a new air conditioned office space which would eventually accrue to the benefit of the real property owner. These are known as improvements or betterments and the amount of insurance should be adjusted accordingly.

Circumstances causing greater peril.

Charging of a higher premium following alterations to a contract or renewal of a policy.

Total of losses paid and loss reserves. The "incurred losses" are calculated by adding the paid losses (less recoveries by subrogation or salvage) to the reserve for unpaid claims at the end of the period, and subtracting the reserve for unpaid claims at the beginning of the period.

Insurance companies are required to put up reserves on all claims. This even includes claims that have not yet been reported to the company. It is the sum added to the total of claims reserve and is usually determined by means of an estimate based upon the actual claims reported late one year earlier, two years earlier, etc., with proper adjustment made for increase in premium income and inflation.

An indemnity is a contract, express or implied, to keep a person who has entered into or who is about to enter into a contract, or incur any other liability, indemnified against loss, independently of the question whether a third person makes default. An indemnity is a valuable consideration.

Damage which is not the immediate direct consequence of the peril against which insurance has been taken but flows nevertheless, somewhat remotely from that peril. E.g. a fire may damage a business premises and somewhat more indirectly interrupt the business. The business interruption claim is indirect damage. Similar situations occur where a property is rented and the income for the rent is required in order to meet a mortgage or where the property is rented from another and is destroyed by fire. The loss of rent is indirect damage.

Marine underwriters generally divide their general class of risks into "ocean marine" and "inland marine." Inland marine insurance is insurance developed by the marine underwriters other than ocean marine insurance. It affords transportation for goods and materials in the inland waters, or by train, bus, truck or plane and extends to cover other moveable property under such policies as jewelry and fur floaters, personal effects and personal property floaters and similar policies.

"To make insurance policies legal and valid, the insured must possess such an interest in the subject of the insurance as may be sufficient to involve him in a monetary loss, should the subject be damaged or destroyed." In other words, if he has a direct monetary interest in the property to be insured, he has insurable interest. This interest may be of various character; it may be that of an owner, of a lessee, of a guardian, a bailee, an executor, administrator, bailiff or sheriff, a creditor. As long as there is a real monetary interest, there is an insurable interest.

Document issued by an insurance company or broker attesting that a particular piece of property is insured.

Amount of indemnity limited to a fixed amount according to category of property.

A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject caused by specified hazards or perils.

The person receiving the agreement of indemnity from an insurance company (or person) affording them indemnity from loss from perils as set out therein.

Perils identified in the insurance contract as being covered.

The insurance company or the individual who has agreed to supply the indemnity to an insured against loss by certain perils.

Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits.

Date on which an insurance contract comes into force.

Watch, ring, necklace, chain, bracelet, brooch, etc.

The last-in, first-out accounting method of valuing a company's inventory. It assumes that the most recent additions to inventory are the first ones to be sold and values them at current market prices.