Do you think that insurance terminology is a foreign language? We've put together the following definitions of common terms to assist you with your insurance decisions.
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Accident An unplanned event, unexpected and undesigned, which occurs suddenly and at definite place.
Accident Benefits If you are injured in a car accident, whether you were at fault or not, Accident Benefit coverage will pay for medical, rehabilitation and attendant care expenses, caregiver and dependant care benefits, death benefits and funeral expenses.
Act of God An event arising out of natural causes with no human intervention which could not have been prevented by reasonable care or foresight. Example flood, earthquake
Actual Cash Value The actual or current value at the time of the loss. This may be the cost of replacing the article with a similar model and in similar condition. It may however involve the price of the article plus any appreciation since its purchase and less depreciation.
Adjuster A representative of the insurer who seeks to determine the extent of the firm's liability for loss when a claim is submitted.
Agent An agent sells insurance for only one particular insurance company.
All Risk All risks of direct physical loss or damage are covered, except those specifically excluded in the insurance policy.
Appraisal An evaluation of property made to ascertain either the appropriate amount of insurance to be written or the amount of loss to be paid.
At-Fault In the event of a car accident, "fault" – whether partially or fully – is always allocated to one or more of the drivers involved in the accident.
Authorization The granting of authority i.e. to proceed with repairs.
Betterment Where the results of repairs or replacement as a result of the loss results in receiving something better than had previous to the loss the difference is known as betterment
Claim A demand made by the Insured, or the Insured's beneficiary, for payment of benefits provided by the contract.
Claimant The person making demand for the payment of benefits.
Collision Reporting Centre In some cities i.e. Toronto it is a requirement to visit a collision reporting centre rather than call the police if the damages are minor and the vehicles are drivable. The reporting centers are staffed by police officers. All particulars are recorded by both drivers and photos taken of the vehicles. The occurrence report is then retained on file.
Collision Coverage Covers damage to your car when it is involved in a collision with another car or object. Collision coverage also covers single-vehicle accidents including rolling over.
Comprehensive Coverage Covers damage to your vehicle caused by vandalism, theft, fire, glass breakage, falling or flying objects, extreme weather conditions and all specified perils.
Computer Assisted Appraisal Computer software utilized by many auto body shops and property contractors to complete damage estimates.
Constructive Total Loss A partial loss but where the damage is so extensive that repairs would cost as much or more than the property is worth or the limit of insurance.
Coverage The scope of the protection provided under the contract of insurance.
Deductible The portion of an insured loss to be borne by the insured before he is entitled to recovery from the insurer.
Deductible Clause A contract provision that sets forth the deductible.
Depreciation The decrease in the value of any type of tangible property over a period of time resulting from use, wear and tear, or obsolescence.
Disability A condition that curtails to some degree a person's ability to carry on his normal pursuits. A disability may be partial or total, and temporary or permanent.
Downtime The period of time between damage and repair where an economic loss occurs.
Driving Convictions Any offenses under the Highway Traffic Act or the Criminal Code of Canada. Offenses are categorized into minor, major and serious convictions.
DRP Direct Repair Program.
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Estimate Estimated cost of damage repair
Facility Association The Facility Association offers coverage to high-risk drivers who might otherwise find it difficult to buy car insurance. The association is an insurance pool that all car insurance companies belong to.
Fault Determination Rules Insurance companies use the "Fault Determination Rules", which are set out in a regulation under the Insurance Act, to assign percentage of fault for each of the involved drivers in a car accident. The Fault Determination Rules were created to allow insurance companies to deal with accident claims quickly, consistently, and economically.
Group Rates Some insurance companies offer a discount off of their regular rates to members of an eligible organized group. Eligible groups may include employees of the same employer, union members or members of a professional or occupational association.
Highway Traffic Act Laws governing the obligations of the Provincial Government and users of the road.
Hit and Run Collision between a motor vehicle another motor vehicle, object or pedestrian, where the driver of the vehicle leaves the scene of the accident without identifying himself/herself.
Hold Up The taking of money or property from another by putting the victim in fear of personal violence.
Indemnity A contract expressed or implied to repay in the event of a loss.
Indemnify To restore the victim of a loss to the same position as before the loss occurred.
Independent Adjuster An adjuster who works as an independent contractor, hiring himself out to insurance companies or other organizations for the investigation and settlement of claims.
Insurable Interest A direct monetary interest in the insured property sufficient to result in monetary loss should the property be damaged or destroyed.
Insurance to value Insurance written in an amount approximating the value of the property insured.
Insured The party to an insurance arrangement whom the insurer agrees to indemnify for losses, provide benefits for, or render services to.
Insurer The party to an insurance arrangement who undertakes to indemnify for losses, provide pecuniary benefits, or render services.
Lessee One to whom a lease is granted.
Lessor One who grants a lease.
Liability A responsibility of one person to another enforceable in law.
Lien A word that indicates an encumbrance on property, either for discharge of a duty or the payment of a debt. When a lien exists, the conditions attaching to the issue of an insurance contract require that it be disclosed to the Company.
Loss of Use Insurance protection against loss due to the inability to use property because of its damage or destruction.
Loss Payable clause Claus inserted in an insurance policy to specifically identify interested parties i.e Insured and other interests such as mortgagees trustees etc.
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Major Traffic Violation Includes speeding over 50 km/hour, failure to report an accident, improper passing of a school bus, driving without a valid license, negligent driving.
Market Value The value of an asset based on a current market value.
Material fact Something affecting a contract of insurance significant enough to change the agreement between the Company and the Policyholder.
Minor Traffic Violation Includes speeding under 50 km/hour, not wearing a seat-belt, failure to yield, failure to stop or signal, headlight offenses and other less serious convictions.
Misrepresentation An incorrect statement made about a material fact. If the statement is made deliberately with intent to deceive the contract could become null and void.
Mitigate To make less severe. i.e. steps to eliminate further damage after a loss occurs.
Mortgagee The person who has loaned his money to another and taken the security of the property in exchange.
Mysterious Disappearance This disappearance of property in an unexplained manner.
Named Perils Physical loss or damage coverage is limited to perils that are specifically stated in the insurance policy.
Negligence Failure to use the degree of care expected from a reasonable and prudent person.
Notice of Loss Written notice of the loss to the Insurance Company as outlined in the conditions of the Insurance policy.
Preinspection Legal requirement in Ontario arising out of Bill 59 for inspection of certain qualifying vehicles when being added to an existing policy or submitted as new business.
Partial loss A loss covered by an insurance policy which does not completely destroy or render worthless the insured property.
Payee The person receiving money.
Peril The cause of a possible loss.
Policy The written statement of a contract effecting insurance, or certificates thereof, by whatever name called, and including all clauses, riders, endorsements and papers attached thereto and made part thereof.
Policy period The period during which the policy contract affords protection.
Premises The particular location of a property or a portion thereof as designated in a policy.
Premium The annual amount of money you pay for each insurance policy.
Principal Driver The person who drives the car most often.
Prior Damage Preexisting damage that occurred prior to the loss in question.
Private Passenger Automobile Usage of a vehicle by an individual or a family for personal purposes. This does not include use of a vehicle for commercial purposes, such as a taxi or delivery service.
Proof of Loss A statement made to the insurance company under oath setting out the basis of the insured's claim under the insurance policy.
Proscription Outside of the time period in which a legal action can be commenced.
Proximate cause 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 cause of events to the loss.
Public Adjuster An insurance adjuster who represents an Insured on a fee basis in claim settlement.
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Replacement Cost The cash value representing what it would cost to replace the particular article which is the subject of the insurance.
Robbery The taking of another's' property by force or threat of personal violence.
Salvage The value of property after fire or other peril which value is used to reduce the total loss.
Schedule of loss Notice completed by Insured documenting loss or damage to contents, personal property and stock.
Serious Traffic Violation Includes careless or dangerous driving, impaired or drunk driving, failure or refusal to submit to a breath or blood test, failure to stop or remain at the scene of an accident.
Specified Perils Coverage for losses caused by the following: fire, theft or 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.
Subrogation The right of the Insurance Company after payment of a loss to recover from the responsible party.
Suit A legal proceeding by one person against another.
Tear Down Dismantle certain parts of a car in order to determine if there is hidden damage.
Total Loss Cost of damage repair exceeds the value of the property.
Waive To forego. In case of insurance deductible to refrain from insisting upon application under specific conditions.
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