Glossary of insurance terms

Property-e.g. tables, chairs, desks, clothing, jewellery, etc.--in which a person has an interest and which is personal, moveable, or separable from real property.

Coverage outside your home for personal items that you normally carry with you or wear. This coverage applies worldwide.

System of pipes for the conveyance of water or gas in a building. Also, the work performed to install such a system.

Contract between the insured and the insurer setting out the terms and conditions of the insurance and specifying the rights and obligations to which each party has agreed.

Flat amount added to the basic premium rate to reflect the cost of issuing a policy, establishing records and other expenses.

Person in whose name an insurance policy is written and who pays the premiums. Not necessarily synonymous with "insured."

The period of duration in which your insurance policy is in force. Usually one year.

Roofed gallery attached to the exterior of a building and used for sitting out of doors.

The entire set of stocks, bonds, real estate, and other assets an individual possesses.

Generally speaking, legal say over the affairs of another person's assets and the ability to execute legal documents on their behalf.

Location and/or building insured.

A sum of money paid by an Insured in consideration of the protection afforded by the insurance policy.

In law, a limitation of time within which legal action can be taken by a claimant. In insurance, the period of time in which a claim may be brought by the policyholder. Also Proscription.

A dwelling occupied year round and not vacant for more than 30 days.

The person who drives the vehicle the most, usually the named insured.

A vehicle that is operated by an individual or family for personal use and is not used for any commercial purposes, such as a taxi or a delivery vehicle.

Policies which indemnify a manufacturer, wholesaler, distributor or merchant against suits brought by persons who are injured or who have suffered damages by reason of the product sold. A chair leg may give way when someone sits on the chair; hair dye may cause damage to the skin of a customer in a beauty parlour; a foreign substance may be found in a bottle of ginger ale; a pen may leak and ruin a lady's expensive dress; or dye in a new hat may drip in heavy rain all over an expensive raincoat. All such cases subject the manufacturer and the various persons handling the article to a possible claim or suit and protection against such a risk is found in the Products Liability Insurance Policy.

Insurance designed to indemnify the insured for loss incurred through legal liability resulting from actions performed as part of the practice of a profession.

A statement made tot he insurance company under oath setting out the basis of the insured's claim under an insurance policy. A form of Proof of Loss is supplied by Insurance Companies and is usually found convenient for the purpose. The Proof of Loss, however, does to have to be on the insurance company's form. Details as to what information is required to appear on the Proof of Loss are printed in the policy.

A thing owned. Also, the right of ownership.

Insurance covering property (e.g. home, car). Also called General insurance, Damage insurance, Non-life insurance.

Insurance against liability which arises because of some secondary cause, such as the act of o a subcontractor or agent.

The immediate and effective cause of the loss - not necessarily the last event before the occurrence which, in a chain of circumstances leads naturally and directly in the ordinary course of events t the loss. Note difference from "causa causans". The well known firecracker case perhaps best illustrates the difference between proximate cause and causa causans. It will be recalled that a boy lighted a firecracker and threw it to another boy in the group. The recipient fearing an explosion, quickly tossed the firecracker to another and so on until it eventually exploded and a boy was injured. The causa causans is the last boy who threw the firecracker to the boy who was injured. The proximate cause, however, is the boy who started the unbroken chain of events that resulted in the injury.

Legal obligation to pay for damages caused to other individuals or firms.

Fixed price for a certain coverage amount for a given period. May be expressed in dollars, cents or as a percentage.

Appraisal enabling determination of the replacement cost of a dwelling.

Repayment of a portion of the insurance premium.

Restoration of insurance following lay-up.

The placing of part of insurance company with another insurer. Thus where an insurance company has a larger portion of the particular risk that they feel wise to carry themselves, they may buy insurance from another insurer thus "reinsuring" part of their risk. The common types of reinsurance are as follows: Assumed Reinsurance - Risks or part of risks accepted from other companies. Ceded Reinsurance - Risks or part of risks given to other companies. Surplus Reinsurance - Reinsurance of a portion of a risk or risks. Excess Reinsurance - Reinsurance arrangements to recover losses over a specified amount, or over the limit of certain policy or policies. Facultative Reinsurance - Reinsurance arranged on an individual risk basis. Treaty Reinsurance - Reinsurance arrangement for the continuous systematic placing of risks with another company or group of companies. The reinsurer automatically accepts reinsurance on all risks of nature described in the agreement as soon as they are written by the prime company.

A certificate which attests to the fact that an insurance policy has been extended for another term.

Value of rental amounts lost following loss.

The cost to replace or repair an item without deduction for depreciation.

Claim settlement without deduction for depreciation, but not exceeding the vehicle purchase price.

Refers to an obligation to replace damaged property on a 'new for old' basis, if repairing the damaged property is not practical.

Cash value established for the replacement of an item according to its current cost, without depreciation.

Insurance companies are required to put up sums of money which are identified for particular purposes. Such monies are known as "reserves." A reserve is required for unearned premiums and the reserve is required for all unpaid claims. The object of these reserves is to protect the insuring public against any possible financial loss.

This is the amount of premium returned to the insured, usually because of the early termination of a policy. It may be a pro-rata return premium or short rate return premium, depending upon the circumstances involved.

A rider is a separate policy attached to an extending another policy. Extensions of a policy within the general terms of the policy are normally made by endorsements. Where however, this extends to additional form of coverage it is performed by the addition of a "Rider" to the policy. Note the difference between "Rider" and "Endorsement."

Disturbance of the peace by a crowd of people.

The chance of loss. Specifically the possible loss or destruction of property or the possible incurring of a liability. Sometimes refers to the subject of an insurance contract.

Additional rate of return offered by assets that are risky (the return is uncertain) in nature. The higher the risk, the higher the risk premium. Historically the risk premium on T-Bills is less than bonds, which is less than the risk premium on stocks.

The degree of risk an investor is willing to bear.

Analysis, as part of an insurability evaluation, of the circumstances surrounding a risk for the purpose of assessing its chances of being realized.

Covering and supporting framework on top of a building.

The value of property after a fire or other peril which value is used to reduce the total loss. Some of the property may be undamaged and quite salable, some may be partially damaged and repairable and then salable. It is also used to mean the removal of goods during the course of a fire to prevent damages or the removal of the goods after the fire to prevent further damage. In marine insurance, it also means the cost of avoiding the loss of the property by the particular peril insured. In bond or suretyship, it is the amount of money paid back to the principle to reduce the loss before payment by the bonding company and the amount paid after the payment of the loss to the insurance company reducing their loss with respect to that claim.

An addition to a homeowner's policy to provide extra coverage of listed items such as jewellery, furs, stamp and coin collections, bicycles and cameras.

Generally, a dwelling occupied by the insured for a portion of the year only. For a dwelling periodically used throughout the year, see "secondary dwelling."

Generally, a dwelling that is not your primary dwelling but that you never leave unoccupied for more than 60 consecutive days at any one time in the course of any one year.

The term describes the assuming of one's own risk instead of buying conventional insurance.

An agreement between concerned parties. In insurance, the agreement is usually on the money changing hands to discharge an insurance claim.

A loss much larger than anticipated, usually large enough to have an impact on a company's underwriting results in any given territory.

The cancellation by the insured of a policy before its intended expiration. The insurance company pays a return premium that is less than the amount that actually remains unearned. In this way the policyholder has paid a penalty for a mid-term cancellation.

Means of heating a dwelling. Sometimes referred to as Slow burning stove or simply Stove.

Specific criteria of a policy applicable to the specific situation or needs of the insured and that determine, as the case may be, the purpose of the insurance, the coverage conditions, and the premium payable. Also known as Particular conditions, Particulars, Schedule.

Refers to limits on your coverage for items such as jewellery, furs, and coin collections. Be sure to review your policy's special limits to make certain that your property is adequately covered. Higher limits may be purchase for items requiring them.