Many of the definitions below are provided courtesy of the Insurance Institute of Canada. Some definitions are provided by Insurance Bureau of Canada (these are indicated with an asterisk *). The language of insurance can be quite complex and confusing. Below are some commonly used insurance terms and their meanings. If you do not understand any part of your insurance policy, please contact us.
This information is only for general education in order to understand insurance terms in a general sense, and should not be relied upon to form professional opinions on coverage issues. Each insurance policy will contain its own specific definitions, which will supersede the general terms provided below.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Actual Cash Value: The fair market value of property taking into account factors that might reduce the value of the property in question (eg. the cost of the item as of brand new, less some amount for depreciation).
Additional Living Expense Insurance: This is sometimes referred to as Loss of Use on a habitational policy, where an insured's dwelling is damaged by an insured peril to such an extent that one cannot live in it until repaired. This insurance pays the extra amount it costs to live elsewhere until repairs are made, such as the cost of living in a hotel.
Adjuster*: An adjuster reviews and settles claims on behalf of an insurance company. The adjuster could be an employee of the insurance company or an independent contractor hired by the company.
Agreed Value Policy: A policy which provides that a predetermined amount shall be paid in the event of a total loss of the property. This is superior to an Actual Cash Value policy, since the insurer and the insured agree to the value of the property in case of a total loss at the time the policy is issued, as opposed to waiting until after the loss to determine value.
All-Risk (All-Perils) Policy*: Sometimes referred to as "Comprehensive" in habitational insurance. Covers all risks of direct physical loss or damage, except for the specific exclusions detailed in the insurance policy. This type of policy offers superior coverage over a Broad or Basic Form policy.
Applicant: The person or firm requesting insurance.
Application: A request for insurance. This may be done verbally, in writing, or by using a printed form.
B
Basic Form (or Named Perils) Insurance Policy* Covers only those perils that are specifically named in the insurance policy (e.g. fire or theft).
Binder*: A temporary or preliminary agreement that provides coverage until a policy can be written or delivered.
Broad coverage*: This provides comprehensive insurance coverage for buildings and named perils coverage for contents.
Broker*: An insurance broker sells insurance for more than one company.
Burglar Alarms: Devices of various types which give warning of entry into premises by unauthorized persons.
Burglary: Unlawful removal of property from premises involving visible forcible entry. Burglary has a different meaning than "Robbery" or "Theft".
Business Insurance*: Insurance purchased by businesses, also called "commercial insurance". Includes several types: property, boiler and machinery, liability (professional liability, product liability, directors and officers liability), commercial auto, business interruption, etc.
Business Interruption Insurance*: Various types of insurance against business expenses and loss of income resulting from a fire or other insured peril.
By-law Endorsement: An endorsement explaining how a particular insurance company deals with a claim which is affected by a local by law.
C
Canadian Accredited Insurance Broker (CAIB): A professional designation earned by examination following study courses.
Cancellation*: During the policy period, either the insurer or the customer may terminate coverage according to provisions in the contract.
Certificate of Insurance: Written document stating that insurance is in effect. Includes general statement of policy's coverage.
CGL*: See Commercial General Liability Policy
Claim*: The exercising of a policyholder's right under a policy to be paid by his or her insurance company for certain financial losses suffered. A claim can be any notification of a possible loss under an insurance policy, whether or not any payment follows. For every claim that is reported, the insurance company must set aside money ("reserves") sufficient to cover its anticipated cost.
Claimant: One who makes a claim.
Claims Examiner: An employee of an insurer who handles and is responsible for incoming claims.
Co-insurance Clause: A clause in an insurance policy requiring an insured to carry a certain percentage, usually 80, 90 or 100 per cent of insurance in relation to the value of the property insured. If the insured fails to do this, then he agrees to be a self insurer of all losses large or small in the same ratio as his failure to comply with the percentage required, is related to the insurance required. For example, a building valued at $100,000 with an 80 per cent co insurance clause would require insurance coverage of $80,000. If coverage is carried for only $40,000 then the insured is a self insurer or co insurer for $40,000 of the $80,000, and the insurance company would be responsible for the same amount. This ratio would apply even if a loss were only $5,000. Then the insurance company would pay $2,500 and the balance or co insurance penalty of $2,500 would be borne by the insured.
Co-insurer: Two or more persons or companies who may be sharing a loss. A company whose policy covers the same risk as that of one or more other companies, is a co insurer whether the policies are written separately or together.
Collision: A vehicle or a ship collides when it strikes another object or another vehicle or ship. Collision insurance insures against loss so caused.
Collision Coverage*: An optional type of automobile insurance coverage that pays for the cost of repairing the insured vehicle if it is damaged in a collision or upset. In some parts of the country, this is referred to as "Section C."
Commercial Auto Insurance*: This policy is designed to protect a business in the event of accident, theft, injury and/or other damages involving business vehicles and business staff while driving those insured company vehicles, or their own vehicles or rented vehicles for business purposes. There are a variety of coverages for commercial autos, depending on the business being operated and who owns the vehicles being used.
Commercial General Liability policy (CGL)*: A standard form of liability insurance developed for use in the business sector. It is usually contained in a broader mercantile policy also covering property loss and business interruption. (Synonymous with Comprehensive General Liability).
Commercial lines*: Refers to insurance for businesses, organizations, institutions, volunteer groups, governmental agencies, and other commercial establishments.
Comprehensive Automobile Coverage: An item of coverage in an Automobile Physical Damage policy insuring against loss or damage resulting from numerous miscellaneous causes such as fire, theft, windstorm, falling object, vandalism, windshield damage, etc., but normally not including loss by collision or upset.
Comprehensive General Liability Policy: A policy particularly suited to a manufacturer, contractor, wholesaler or retailer providing broad coverage for claims made against him/her for bodily injury or damage to property of others for which he/she may become liable and which arise out of his/her entire business operation. (Synonymous with Commercial General Liability).
Conditions*: Conditions are terms of insurance contracts that impose obligations an insured person must satisfy in order to preserve coverage (sometimes referred to as Warranties).
Condominium: Is the individual ownership of a single unit in a multiple unit building or group of buildings, together with a percentage interest in that part of the total property owned jointly by all unit owners. In an apartment building, each apartment would be a unit and the stairways, pathways and parking areas would be in common ownership. Condominium property requires special insurance treatment.
Consequential Loss: The word "consequential" means something following as an effect or result. It is an indirect result of the occurrence that causes the loss. The difference between a direct loss and a consequential loss can be seen in the destruction of a power station by wind. The damage to the power station is a direct loss by wind. There is actual physical damage directly resulting. The destruction of the power station also interrupts the generation of power by the station. For example, a cold storage plant is without electrical power. Foodstuffs spoil as a result or as a consequence. This is a consequential loss, not a direct loss.
Continuation: Certificate A renewal or premium payment notice of a bond or policy.
Conversion: A form of theft. The taking over of property which belongs to another and using it as if it were property owned by the person doing the converting. For example, a car bought on a time payment plan may be taken by the purchaser to some far away place with the intent of trying to escape any further payments on the car; or the car may be sold or traded for another under the pretense that the car actually belongs to the purchaser. This is the conversion of the vehicle to the purchaser's own use. It applies to all property belonging to one person but which is in the hands of another, as for example, the bailee of goods, an employer who advances certain monies to an employee for specific purposes, etc.
Coverage*: What the insurance contract covers
D
Debris Removal: A provision in an insurance policy most commonly found in fire insurance providing indemnification for the cost of removal of the debris after a fire.
Declarations ("Dec" Sheet)*: The portion of the insurance contract that contains information such as the name and address of the insured, the property insured and its location and description, the policy period, the amount of insurance coverage, applicable premiums, and any other information provided by the insured.
Deductible: An agreed specified sum to be deducted from the amount of loss and assumed by the insured.
Depreciation: Reduction in value of property through use, ageing, deterioration and obsolescence.
Direct Loss*: Damage to or loss of the insured property itself. It does not include consequential loss or expenses incurred as an indirect result of the damage, such as the cost of renting replacement items while the originals are being repaired.
Direct Writer Insurance company selling direct to the public and not through independent agents or brokers
Directors' and Officers Liability' Insurance (D&O)* Insurance that provides coverage for members of boards of directors against "wrongful acts," which might include actual or alleged errors, omissions, misleading statements, and neglect or breach of duty on the part of the board of directors.
Dwelling: The living quarters occupied, or intended for occupancy, by a household.
Dwelling Coverage*: This applies to your home and "attached structures" such as a garage or carport. Permanently installed outdoor equipment on the premises, such as a swimming pool and the equipment attached to it, is usually included. Building materials for use in construction, alteration or repair of the insured dwelling or related structures on the premises are usually covered, too, if they are on the site or adjacent to it. Theft and vandalism losses during construction are usually not covered.
E
Earthquake Insurance*: Coverage for 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.
Endorsement: An amendment added to a written document, particularly an agreement between parties, altering its provisions.
Errors and Omissions Insurance: 1) Insurance covering the legal liability of professionals not usually involved with the care of the human body such as architects, engineers, accountants. 2) A type of insurance which will step in to take the place of insurance that has not been effected due to a mistake or forgetfulness on the part of the policyholder. Issued to risks such as mortgage concerns, professionals, semi professionals or others engaged in the routine insurance of many properties. 3) A clause in certain policies whereby the insurer agrees to waive its defences when an honest error has been committed, provided it is corrected when discovered. See also Malpractice Insurance and Professional Liability Insurance.
Exclusion: Risks, perils or properties defined in the policy as not covered.
Expiration*: The date upon which a policy will end.
Expiry: End of the policy period.
Exposure: The hazard threatening a risk because of external or internal physical conditions.
F
Fair Market Value: Price at which a buyer and seller, under no compulsion to buy or sell, will trade.
Fire-Resistive Construction*: A building that has its exterior walls, floors and roof constructed of masonry or other fire-resistive materials (this type of construction generally requires a fire resistive rating of not less than two hours to be considered "Fire-Resistive" for insurance rating).
Fixtures: Anything that is attached to real property is known as a "fixture." Fixtures when permanently attached to real property become part of the real property. Tenant's fixtures are fixtures of a removable nature and are the responsibility of the tenant for insurance purposes. Whether a fixture is a tenant's fixture and movable or a landlord's fixture and immovable is frequently determined by the purpose of the fixture. A more accurate guide is generally found, however, in the lease itself or in an agreement between the landlord and tenant at the time of installation of the fixture. The tenant may have an insurable interest in permanent fixtures particularly where the lease has some time to run during which the tenant would have the use of these fixtures.
Fleet Policy*: In automobile insurance, this is a policy insuring a number of cars for one owner.
Floater*: Additional coverage for movable items, like jewellery or antiques, beyond what's included in the basic homeowner policy. Also called a "rider" or "endorsement".
Form*: An insurance policy itself or riders and endorsements attached to it.
Fraudulent Misrepresentation: A false statement made knowing it to be false and intending another to act on it to his detriment, or made carelessly or recklessly without regard to whether it is true or false. In insurance it is most frequently found in the intentional misrepresentation of a risk to obtain insurance or in proof of loss after the loss occurs.
G
Garage Liability Insurance: Protection for an automobile dealer, repairer, service station etc. The coverage is for their legal liability for claims for bodily injury and property damage due to business operation.
General insurance*: See Property & Casualty Insurance
Guaranteed Replacement Cost (GRC) endorsement (building)*: Coverage that pays for replacement without reduction for depreciation (see also Actual cash value and Depreciation). A guaranteed replacement cost endorsement covers any shortfall in the event that the replacement cost of a building has been underestimated.
Habitation Dwelling place; residence.
H
Hard market*: The part of the insurance cycle in which premiums rise significantly. It is usually associated with a sharp decline incapacity. (See also Soft market).
Hazard: 1) A risk or probability that the event insured against might occur. 2) Condition which engenders or increases the chances of a loss.
Hazard, Moral: Hazard arising from character, interest, habits and lack of integrity of the insured or person concerned.
Hazard, Physical: 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.
Hit and Run Accident: Collision between motor vehicle and/or a motor vehicle and another object and/or a motor vehicle and a pedestrian where a driver leaves the scene of the accident without identifying him/herself. This is an offence under the Highway Traffic Act.
Homeowners insurance*: An elective combination of coverages for the risks of owning a home. It may include coverage for fire, burglary, vandalism, earthquake and other perils.
I
Improvements and Betterments: Additions or changes to a rented premises by a tenant at his own expense. Also called Tenant's Improvements.
Inception: The date and time on which coverage under an insurance policy takes effect.
Incident*: An event which, under different circumstances, could have resulted in harm to people, damage to property or equipment, or loss of process or productivity – for example, almost hitting a pedestrian with a car, or a slip and fall that does not result in an injury. Sometimes an incident is referred to as a “near miss.”
Indemnify*: To compensate the insured person for a loss, in whole or in part, by payment, repair, or replacement.
Indirect or Consequential Loss (or Damage)*: Loss resulting from a peril, but not caused directly or immediately by the peril. 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 policy which is in effect, and has not expired or been cancelled.
Inherent Vice: The quality that something has to deteriorate or damage itself without outside help, e.g., milk sours; coal combusts spontaneously.
Inland Marine Insurance: Coverage for movable property in transit, excluding ocean crossing; includes bridges and tunnels, because they are implements of transportation.
Insurable Interest: An interest which the insured must have in the subject matter of the insurance he buys so that if the event insured against occurs, the insured will suffer a pecuniary loss.
Insurance*: A contract between an insurance company and its customer for a specific period of time. It protects the customer financially against a loss. Insurance is also a mechanism for dispersing risk, because it shares the losses of the few among the many.
Insurance Brokers Association of Canada (IBAC)*: As the national voice of 25,000 home, car and business insurance brokers in Canada, IBAC represents their interests to the government of Canada. IBAC develops national licensing courses and professional development programs for brokers, for delivery through its 11 provincial/regional associations.
Insurance Bureau of Canada (IBC)*: The national trade association for the companies that insure the homes, cars and businesses of Canadians. IBC’s membership includes the companies that provide nearly 95% of the home, car and business insurance sold in Canada. IBC works on behalf of member companies to advocate for public policies that create and maintain a healthy insurance marketplace that serves insurers and consumers. IBC facilitates communications and seeks consensus among its members and, when possible, seeks out and implements solutions to common insurance concerns.
Insurance Corporation of British Columbia (ICBC)*: The government-run insurance company from whom all drivers in British Columbia must purchase mandatory or compulsory car insurance
Insured: The entity (individual or otherwise) whose risk of financial loss from an insured peril is protected by the insurance policy.
Insurer: The company providing the insurance coverage.
Insuring Clause: Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits.
J
Joint and Several Liability Clause: This exists when the situation is such that a creditor in the case can sue any one of the debtors individually, or any, several or all of them, at the creditor's option. This situation applies to tort feasors as well as to commercial debtors. Persons who together commit a tort and injure another person generally would be jointly and severally liable for the damage. An injured person has the option of suing the entire group or of suing the one having the greatest financial strength.
L
Lapse: An insurance policy which, having reached its expiry date, is not renewed or extended is said to have lapsed.
Legal Expense Insurance: A form of insurance to cover types of legal expenses incurred by individuals; often written on a group basis.
Legal Liability: Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law or customs which over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract.
Liability*: This is a legally enforceable obligation. Liability insurance pays for the damages or losses suffered by others for which the insured person is legally responsible.
Liability Insurance: Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property.
Liability Limits*: The amount or amounts beyond which an insurance company does not protect a person insured for liability coverage. For example, a common liability limit for an auto insurance policy is $1 million. If a policyholder is successfully sued for more than $1 million, the balance of the judgment would be paid out of the policyholder’s pocket.
Libel*: A written statement about someone that is personally injurious to that individual.
Limitation Period*: The period of time in which a claim may be brought by the policyholder.
Loss: A word often used in place of the word "claim." It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy, has happened.
Loss of Use Insurance: Optional coverage purchased to compensate for the loss of use of property, if it cannot be used because of a loss covered by the policy. This is most common in auto insurance. For example, loss of use insurance will have the insurance company pay for the use of a rental car while the insured car is being repaired.
M
Material Fact*: Information about the subject of insurance, insured risk, that, if known, would change the underwriting basis of the insurance, and which could cause the insurer to refuse the application or charge a higher rate.
Material Misrepresentation*: When a policyholder or applicant makes a false statement of material (important) fact on the application, he or she has committed a material misrepresentation, which may result in loss of coverage.
Moral Hazard*: A position taken by an insured that increases the chance of a loss or the seriousness of a loss.
Mutual Insurance Company: Mutual insurance companies are home, car and business insurance companies without stockholders. The owners are the policyholders. It is the policyholders (the owners) who elect the directors of the company.
Mysterious Disappearance: The disappearance of insured property in an unexplained manner. For example, if a ring is left in a public place and the owner returns later to find the ring gone, it is reasonable to assume that the ring has been stolen. However, there is no direct evidence that this is in fact what happened. This would be an example of mysterious disappearance.
N
Named Insured*: The person in whose name the policy is issued (see Insured or Policyholder). Technically, he or she would be the first party to the contract, the second party being the insurance company that issues the policy.
Natural Disaster: A disaster caused by the elements such as flood, earthquake, tornado, lightning, etc.
Negligence*: To fail to do what a reasonable and prudent person would do (or to do what such a person would not do); this can result in property damage, injury or death.
No-Fault*: This type of automobile insurance provides some compensation for personal injury and death arising out of a motor vehicle accident, with payments made regardless of who caused the loss. However, it does matter who caused the accident; if found to be at fault, a driver may experience an increase in future premiums.
Non-disclosure: A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/she is guilty of non disclosure and may risk having coverage voided from inception
Non-insurable Risk: A risk for which no insurance can be written. The chance of loss is very high or cannot be accurately measured.
Non owned Automobile Policy (Non-owner's Policy)*: A policy that gives you liability protection for when you are in at-fault accident and do not own a car.
O
Occupancy: 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. An occupied building has furnishings and/or people in it.
Occupiers' Liability*: An individual or organization in possession of property (i.e., the occupier) owes a duty of care to those who come onto the premises. The occupier must take reasonable care to protect others from harm that might result from programs on the premises or at the hands of a third party on the premises. For example, an occupier should ensure that the building is safe by shovelling sidewalks in the winter.
Occurrence: An event that results in an insured loss. In some lines of insurance, such as liability, an occurrence is not necessarily an accident (something sudden or unexpected); it can result from continuous or repeated exposure to a risk. Nonetheless, an occurrence results in bodily injury or property damage that was neither expected nor intended by the insured.
Optional coverage*: In automobile insurance, optional coverage is a commonly used term for insurance that is not required by law, such as coverage for collision or comprehensive claims (e.g., theft). For home insurance, optional coverage is that which is not normally included in standard home insurance policies, but which can be purchased separately, such as coverage for damage from earthquakes, furnace oil spills and sewer back-up.
Owner's, Landlord's And Tenant's Liability: Liability insurance coverage which gives protection because of liability arising out of ownership, use or occupancy; operation or maintenance of buildings or premises.
P
Partial Loss: A loss covered by an insurance policy where the property or the premises are not completely destroyed or rendered completely worthless.
Peril*: This is the cause of loss or damage. A homeowner’s policy, for example, insures against perils like windstorms, fire and theft.
Period of Indemnity: Used in business interruption and disability insurance to define the length of time for which indemnity is payable.
Personal Articles Floater*: A personal articles floater provides all-risk coverage, subject to reasonable exclusions, for valuable items such as furs, jewellery, cameras, silverware, etc. The items are generally listed by description and value. This should not be confused with a personal effects/property floater.
Personal Injury*: An injury, other than physical, arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation of a person's right to privacy.
Personal Liability: A form of liability insurance for individuals which insures the policyholder in the event he has become liable to pay money for damage or injury he has caused to others. This form does not include automobile liability, but does cover almost every activity of the policyholder except those which arise from the operations of a business. Hence "Personal" Liability.
Personal Lines Insurance*: Home or auto insurance for individuals, as distinguished from commercial lines insurance for businesses.
Personal Property*: Possessions owned by an individual other than real estate or buildings (not attached to the land). Often used to refer to property in a Homeowner's policy, and may also be referred to as "contents".
Personal Property Insurance*: Home insurance covers the contents of a home and other personal property that the named insured and members of the household own, wear or use (including clothing, cameras, furniture, etc.) while on the premises. It may even cover personal property of others (excluding roomers or boarders who are not related to the insured) that is not otherwise insured. There will normally be coverage for personal property while it is temporarily away from the home anywhere in the world (see also "Personal effects/property floater"). Personal property not normally kept at home is not covered. Personal property in a warehouse is usually covered against theft without time limit, but other perils may not be covered, or may be covered only up to 30 days.
Physical Damage Coverage (Automobile)*: The section of an automobile policy that provides cover for damage to the insured vehicle. It may cover all perils, collision or upset, all perils other than collision or upset (comprehensive) or specified perils.
Policy Fee*: An additional charge placed on the initial premium to reflect the cost of issuing a policy, establishing records and other expenses.
Policy Territory*: Geographic area in which the damage or injury must occur for coverage to apply.
Premises: Building including the land immediately surrounding it and belonging to it.
Premium*: An insurance premium is the money the policyholder pays to the insurer for financial protection against specific risks for a specific time-span. Unlike the premiums for many forms of life insurance, general insurance premiums are not intended to produce a reward other than financial peace of mind.
Prior Insurance: Insurance cover in force before the current insurance.
Professional Liability Insurance: Protects professionals against liability for damages and cost of defense based upon his/her alleged or real professional errors and omissions or mistakes, e.g., architects, engineers, medical malpractice, attorneys.
Proof of Loss*: A formal statement made by a policyholder to the insurance company regarding a claim, specifying its circumstances and the amount of loss, especially in property insurance.
Property and Casualty (or General) Insurance*: This is the branch of the insurance industry that covers home, car and business insurance. (The other branch of the industry is life and health insurance.)
Pro Rata Cancellation: Cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy.
Proximate Cause: Cause of loss or damage. Unbroken chain of cause and effect between the occurrence of an insured peril and damage to property.
Q
Quote: An estimate of the cost of insurance, based on information supplied to the insurance company.
R
Regular Insurance Market*: When the insurance business environment is operating effectively, low-risk consumers find that insurance is available to them from any insurance company and at a reasonable price.
Reinstatement: The reactivation of suspended or cancelled insurance.
Reinsurance*: Insurance purchased by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured. Essentially, insurance for insurance companies.
Renewal: A certificate which attests to the fact that an insurance policy has been extended for another term.
Replacement Cost*: The cost of replacing property without deduction for depreciation. (See also Actual cash value and Depreciation)
Return Premium A refund to the policyholder of part of the premium he has paid because of cancellation, rate reduction, reduction in amount of insurance, or some similar reason.
Rider (or Endorsement): An amendment to an insurance policy. It is used to add or remove coverage.
Risk*: A chance of loss or injury for which an insurance claim may be submitted. For a risk to be insurable, related events that could result in a claim must be unexpected (see Accident and Occurrence). For example, the possibility that a visitor to a policyholder’s home will injure himself or herself by falling on the steps is an insurable risk, because such a fall would be unexpected. Expected losses, such as the gradual wearing-out of clothes or the rotting of fruit, are not insurable risks.
Robbery: The taking of another's property by force or threat of force. Robbery has a different meaning than "Burglary" or "Theft".
S
Seasonal Risk: A risk occupied only part of the year, such as a summer dwelling.
Short Rate Cancellation: The cancellation by the insured of a policy before its natural expiration; the insurer pays a return premium which is less than the proportionate part that remains unearned.
Slander: The oral utterance or spreading of falsehood harmful to another's reputation. Libel is written; slander is spoken.
Soft Market*: The part of the insurance cycle in which there is insurance capacity and policies are sold at lower prices (see also Hard market).
Special Event*: Specific presentations, performances or celebrations that mark a special occasion or are used to achieve goals and objectives. Special events usually fall outside an organization’s scope of normal operation. When a person or group hosts a celebration over one or several days, they can obtain Special Event Liability insurance (with or without liquor liability) to protect themselves from legal action if an attendee or third party is injured.
Standard Rates: In home insurance, Standard Rates are higher than "Preferred Rates" to reflect the additional risk to the insurance company (sometimes due to the poor condition of the home or due to frequent claims by the insured).
Statutory Conditions: Special prescribed and standardized conditions that the Provincial Insurance Acts require to be included in fire, automobile and accident and sickness policies.
Storage Insurance (Automobile): This type of policy covers the vehicle when it is not plated, not in use, and parked off-road (on private property).
Subrogation: Once a company has paid a loss for which someone other than the policyholder is responsible, it may have the right to recover this loss from the guilty party. This right is called subrogation.
Substandard Insurance*: Insurance for those persons who do not qualify for insurance at standard rates or terms.
T
Tenant's Policy: A package policy specially designed to meet the normal insurance requirements of a private tenant covering personal belongings and liabilities.
Term: The period of time from the inception to the termination of an insurance policy or bond.
Theft: The wrongful taking of the property of another. It is a broad term and includes larceny, pilfering, hold up, robbery and pick pocketing. Because of its broad definition, it is preferable to obtain insurance coverage for the peril of "Theft" as opposed to obtaining coverage for "Burglary" or "Robbery".
Third Party: A claimant under a liability policy, so called because he is not one of the two parties (insured and insurer) who has entered into the insurance contract which pays his claim.
U
Umbrella Policy: A special form of liability policy designed to protect the insured for certain unknown contingencies over and above the normal coverages and to provide excess insurance.
Underinsured/Uninsured Motorist Protection (UMP) Coverage*: A form of insurance that pays for the bodily injury or property damage caused by the owner or operator of an inadequately insured automobile.
Underwriter*: An underwriter is an employee of an insurance company who looks at an insurance application and decides whether or not the insurance company can or should provide the applicant with insurance, based on the risk that person presents.
Unoccupied: Where the premises contain contents but no human beings, such persons being temporarily away from the premises (on vacation for example), the premises are said to be unoccupied. This is distinguishable from "Vacant" in that in vacancy, there is no intent to return to the home to reside in it again.
Unprotected: A property located in an area not regularly serviced by a fire department.
V
Vacant (Building): Most home insurance companies will have their own specific definition of the term "Vacant" or "Vacancy" in the policy, but generally this refers to the circumstance where, regardless of the presence of furnishings or how often the home is checked, the occupants of the building have moved out with no intention of returning to reside continuously in the dwelling, and/or no new occupant has yet taken up residence. Vacancy is a critical issue for insurance companies, and it is always advisable to notify your insurer of this situation immediately.
Valued Policy: A policy which provides that a special amount shall be paid in the event of a total loss of the property. The term "Vacant" is different from the term "Unoccupied".
Vandalism and Malicious Mischief: The wilful injury or destruction of property. Insured against by the extended coverage endorsement of a property insurance policy.
Void: 1) Invalid, not legally binding. 2) An insurance contract that is prohibited by law and thus cannot be held to be a valid contract.
W
Warranty*: A statement by the policyholder that certain conditions of the insured risk exist or will be met. If found to be false, it provides the basis for voidance of the policy.
Water Damage Clause: A portion of the policy affording coverage for certain specific causes of water damage.
Windstorm Insurance: Protection against damage done to property by unusually high winds, cyclones, tornadoes or hurricanes. This coverage is available under the extended coverage endorsement of property policy.
Write: To insure, to underwrite or to accept an application for insurance.