Glossary of insurance terms

Where a policy has been allowed to run for its determined time and has not been renewed, the policy is said to have Lapsed.

Physical improvements beyond simple maintenance or repairs that increase the value of a property.

Liability imposed by law to pay for harm (material damage or physical injuries) done to others.

Corporate or private individual who leases property.

Insurance which warrants the insured against the monetary consequences of the obligation to indemnify the third party as a result of an act of negligence.

The limit to which you are protected should you be sued as a result of your personal actions and/or your ownership or use of dwellings and land. This limit also applies to the cost of any legal representation you may require, subject to the limitations, conditions and exclusions as stated within your policy of insurance.

A London market for insurance and reinsurance. Lloyd’s is not a company but an association of members, or names, grouped in syndicates, each syndicate being headed by an underwriter.

Number of consecutive losses.

Losses incurred expressed as a percentage of premiums. Also referred to as Claims ratio.

For every claim that is made against an insurance company that company must estimate the probable ultimate cost of that claim and set the sum of money aside in a "Loss Reserve."

Inability to use property that has destroyed or damaged by an insured peril.

All losses which happened within the period under study, including both those that have been paid and the others which have not yet been paid, but will become payable.

Losses which took place but which have not yet been paid. These are usually recorded in two ways; either (1) the number of incidents of losses in the various classes of business, and (2) the amount of money involved in these classes, which would appear as a "Loss Reserve."

A bond guaranteeing the performance of a contractor in a maintenance contract. e.g. a contractor builds a building and guarantees it against defect in workmanship and material for a period of one year. The bond guarantees that the contractor will remain financially sound and will properly perform the maintenance understanding on the building during the required period.

Offences under any act governing highway traffic related to the ownership, use and operation of an automobile. Examples include:

• failing to report an accident
  
• failing, in the event of an accident, to give your name and licence number to police or anyone else
  
• entitled to that information
  
• improper passing of school buses
  
• improper passing/speeding in a school or playground zone
  
• any of the above-listed offences committed outside Canada
  

Manufacturer and model names of a motor vehicle.

A performance by a professional which is deficient in skill from what might ordinarily be expected of a professional person. The standard of performance to which a professional person will be held is necessarily higher than the standard which an unskilled person would be expected to display.

Name of the manufacturer of a make of automobile.

Marine Insurance is a form of insurance generally related to the transportation of goods. Originally most goods were transported by ship and across seas or oceans (Ocean marine) but this was gradually extended to include the transportation by train, motor transport, (inland marine) and now extends to include inland water ways, shipping and shipping by air. Marine insurance is therefore, divided into two general classes; (1) ocean marine and (2) inland marine.

The value of assets (stocks, bonds, debentures, real-estate, etc.) cased on a current market valuation.

The current price in a fair market of financial instruments.

Any information used in your insurance application that would have changed your eligibility for coverage, price of coverage or conditions for acceptance

Reduction of premium payable according to the age of the insured.

A premium specified on an individual policy which will be the minimum amount retained by the insurer in the event that the policy is canceled midterm by the insured.

Examples of minor convictions include:

• driving off roadway - including shoulder/sidewalk/median - any type
  
• following too closely (including tailgating)
  
• failing to wear a seat belt
  
• disobeying legal traffic signs, with the exception of parking signs
  
• speeding - any type, except when listed as major or criminal code
  
• making an unsafe move
  
• failing to yield - any type
  

An incorrect statement made about a material fact. Misrepresentation can be innocent, e.g., arising from an oversight; fraudulent (in other words, a deliberate untruth with intent to deceive) or the result of extreme carelessness where a statement is made without regard to whether it is true or false. When a misrepresentation is discovered, the insurer may either continue the contract or treat the contract as void with a full return of any premiums paid. In order for the insurer to successfully treat a policy as void, the misrepresented fact must be material to the risk.

A person to whom property is mortgaged.

Component of an alarm system.

Property owned or used by an insured which does not qualified as real estate.

An insurance company which is owned by its policyholders who formed an association for the purposes of insuring one another against the possibility of fortuitous loss. Each policyholder pays a premium for his or her own policy. If at the end of the fiscal year the mutual insurance company declares a profit, the profit is shared amongst all the policy holders. If the company declares a loss there is also a provision for the policy holders to be assessed a levy to make up for this shortfall.

A policy in which the perils insured against are listed, as opposed to one which insurers against "all risks."

Failure to use the degree of care expected from a reasonable and prudent person.

New insurance policy covering a particular risk.

Cash value equivalent to what it would cost to purchase a new item similar to one lost if it were new. In this case the insurer applies no deduction for depreciation.

A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material which are necessary to underwrite a policy. I f the applicant does not disclose all these facts, he/she is guilty of non-disclosure and may risk having coverage voided from inception.

A policy which protects the insured against Third Party claims arising out of some other person using their cars in the business of the insured.

Number of units in a building.

An infrequently used term usually intended to meant the "principal" in a bond, e.g., and employer arranges for a bond on his various employees to protect the employer against the infidelity of employees. The employer is the obligee under the bond, and the employee is the principal or the obligor. Since the obligor may also mean the surety company, it is generally better to express specifically the intent by indicating either the insurance company or the principal, and not use the phrase obligor.

An operator, who is not the principal operator but will occasionally operate the vehicle (such as a son or daughter of the insured).

Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy, and no other. Vacating a building by removing the furniture and not using it for the general purposes of dwelling, would for example, bring about unoccupancy, which if not assented to by the company, may void the policy. The same applies to mercantile premises.

A type of insurance coverage on cargo and ships on the high seas.

Coverage not included in your basic insurance package and for which an additional premium may be charged.

Motor attached to the outside of a boat.

Other private buildings located on the same property as your residence. For example, a pool house.

Insurance amount that is greater than the full value of the insured property. Also referred to as Pyramiding.

Overturning of a motor vehicle.

Person who owns property.

Person who owns a dwelling and resides there permanently.

Total payments made by an insurance company to discharge obligations made under policies issued within the particular period.

A term used to describe any short-term debt instrument.

A bond guaranteeing the payment of labour and material used in the construction of the particular structure identified in the bond.

A bond guaranteeing the performance of a contract but not covering labour and material. If coverage is required for labour and material, a separate labour and material bond will be required, or a contract bond which would cover both.

The event that caused a loss covered by the policy and which could imply the intervention of the insurance company.

All injuries to the person, including non-physical or neo physical injuries such as false arrest, libel, slander, etc., as well as the physical injuries set out under "Bodily Injuries". Personal Property - Most commonly used personal property is property in which a person has an interest and which is personal, moveable, or separable from real property. E.g. tables, chairs, desks, clothing, jewelry, etc. are personal property. It does extend, however, to include a building standing on leased ground. Such as a building would be personal of the lessee (if the land and building on the land are owned by the same person, it is real property or realty).

A form of liability insurance for individuals in the event that they become liable to pay money for damage or injury caused to others. This form does not include automobile liability.