Glossary: A - D
Abandonment: Although usually forbidden by most types of insurance, this is the voluntary release of the insurer's rights and responsibilities for the property covered.
Accident: An unusual and unexpected result that occurs during the performance of an usual act, or an unexpected event which happens by chance and does not ordinarily take place during the normal course of things.
Act of God: An unforeseen and violent act of nature.
Actual Cash Value: This is the actual or current value of the property at the time of the loss. Depending on the policy, it also may be the cost of replacing the article with a similar model in similar condition, or it may be the price of the article plus any appreciation or depreciation since the time of its purchase.
Additional Insured: Some policies cover not only the named insured, but certain named or unnamed others, such as an automobile policy that insures specific individuals, but also cover anyone driving with that insured's consent.
Additional Living Expenses: A
provision to provide reimbursement for costs above the normal living
expenses that are incurred while the insured is forced to live away from
home during house repairs because of fire or other damage. It applies
to expenses such as restaurant meals, hotel rooms, and transportation,
and is usually pays only enough to maintain the insured's usual standard
of living.Additional insurance: Additional insurance
is insurance that is added to an already existing policy. Unless it is
agreed to by the company or its authorized agent, the insurance is voided.
Adjuster: This person investigates the loss and
negotiates the settlement with the claimant on the insurance company's
behalf. Some adjusters are independent, while others are employed by the
insurance company.
Adjustment: The "adjustment" is the process of arriving at the settlement amount. It can consist of a series of computations, or it may involve discussions of liability, quantum and other matters if the case is a liability claim. Adjustments may also contain both discussions and computations.
Agent: An insurance agent is the person who represents the insurer and also assists in arranging the insurance contract with the applicant. Agents who are usually bound by contract to represent one insurer are usually called "exclusive agents". The insurers they represent are known as "direct writers".
All Risk Policy: Coverage against loss or damage from all perils, except those specifically excluded.
Alterations: Buildings and other personal property may frequently be changed or modified which is otherwise known as an "alteration". If any change or modification affects an insurable risk, then the insurance company should be notified of the proposed change so the policy can properly describe the revised property. The change is usually confirmed by means of an "endorsement" or "rider".
Amount at Risk: This is the amount of insurance a company applies to any property. It doesn't matter if the amount is equal to the actual value of the property, or of lesser or greater value.
Application: This is a request for insurance or a preliminary declaration made by the property owner to the company that describes the characteristics of the risk, the amount required, and any other details essential to the proper writing of the risk. It is required to be made out and signed by the applicant.
Appraisal: The monetary valuation of property made by a competent and qualified person, known as an "appraiser".
Appraisers: Persons who, because of their special knowledge, are vested with authority in determining the real value of the property or damage.
Assignment: The transfer of rights or interest from one party to another. Insurance policies are personal contracts and are not transferable except by special consent of the insurance company.
Assumed Liability: This occurs when the liability of one person has been assumed by another. The assuming of the liability is usually done by a contract or by implication. Insurance policies have very little or no coverage for liability assumed by contract (with the exception of side-track agreements).
Automatic Coverage: A provision providing automatic coverage for increases in value of newly acquired or changing interests. In most instances, such additional coverage is only covered automatically for a certain set length of time, after which the change must be endorsed in the policy. Usually the policy must already contain coverage for similar items.
Automatic Reinstatement: After a loss, this is the immediate restoration of the sum insured to the original amount.
Automobile Insurance: Involves two basic types of coverage: liability insurance for losses caused by injuries to persons, and physical damage insurance for losses caused by the insured vehicle.
Betterment: "Betterment" occurs when the repairs or replacements for the loss result in the insured receiving something better than he or she had before the claim. In most instances, the difference in value is discussed before the repairs or replacement has been made, and after the insured has agreed to their appropriate contribution towards the "betterment". This is also referred to as "new for old."
Binder: This is
a temporary agreement that grants the newly insured certain coverages
or risks pending the issuance of the actual insuring policy.
Bodily Injury: Bodily injury is the physical injury
or damage to the body of an individual. It does not include inanimate injuries
such as hurt feelings, embarrassment, false arrest, libel, and slander.
Broker: A broker is an independent businessperson who acts on behalf of the insured. The broker may have business with a number of insurers and seeks out clients (insureds) to offer the most beneficial match to meet the client's insurance needs.
Budget Payment Plan: Payment of the premiums in installments through post-dated cheques or automatic withdrawal from a chequing or savings account.
Builder's Risk: Insurance covering property during the course of construction where there is risk and where the values are changing daily. In the case of residential property, a dwelling form may be used and permission granted to complete construction.
Burglary: The unlawful removal of property from premises involving visible forcible entry.
Cancellation: This is the termination of the policy before the end of the set period. Usually if the company cancels the policy, the insured is entitled to a pro-rata return for the unused portion. If the insured cancels, he or she is entitled to a short-rate return of the premium.
Captive Agent: Agents who place all their business with one insurance company are known as "captive agents." In some instances they may be salaried employees of the company. In others, they may be selling the insurance on a commission basis, but have a contract to write only business that would be acceptable to the one insurance company.
Catastrophe: A sudden, great disaster (e.g. hurricane) causing substantial damage, extended damage by flood or fire that consumes a large area.
Claim: When the insured exercises of their right to be indemnified by their insurance company, it's called a "claim". It is frequently used, however, to indicate the amount of claim the insured is making.
Clause: A term used to identify certain sections of a policy, such as a "co-insurance clause" that refers to the part of the policy dealing with co-insurance.
Co-insurance: A policy condition requiring the sum insured to be maintained for a specified minimum percentage of the actual cash value. If not maintained, the insured must bear a proportionate amount of any partial loss.
Co-insurer: One of two or more persons or companies who may be sharing a loss. When a policy contains a co-insurance clause where the insured has not properly complied, the insured also becomes a co-insurer in the loss.
Collision Coverage: This automobile insurance pays for damages on the vehicle when in a collision with another car or object, regardless whether or not the accident is the fault of the insured. Such payments are usually subject to a deductible amount.
Comprehensive: A word commonly used to describe the type of policy issued to imply that the particular policy is broader than most. The policy generally has an increase in the scope of the contract or an extension into additional perils.
Comprehensive Coverage (Automobile): This type of automobile insurance covers damages to the vehicle from causes other than collision - such as flood, hail, explosion, theft, and windstorm. Generally, it excludes "Collision and Upset", which is required to be insured separately.
Compulsory Insurance: Coverage required by statute or law.
Condition: A stipulation in an insurance policy defining, extending or reducing the rights and responsibilities of either the insurer or the insurance company.
Consequential Damage: Damage which is an indirect result of an accident or fire.
Construction: Type of materials used in constructing a building such as wood frame, brick, stone, brick veneer.
Constructive Total Loss: A partial loss, but one where the damage is so extensive that repairs would cost as much or more than the property is worth, or the limit of insurance of the policy.
Contents: Articles in a building other than the building itself.
Contract: A written or oral promissory agreement, such as an insurance policy, between two or more persons which is enforceable by law.
Contribution: Sharing of loss or liability between two or more insurance companies covering the same risk. Most insurance policies contain a contribution clause.
Cover Note: Same as "binder" - see definition.
Coverage: Protection by a particular policy that can be used interchangeably with the terms "insurance" or "protection" as "Homeowners Coverage" or "Tenants Protection" or "Condominium Insurance".
Damages: A sum of money claimed or awarded as compensation for loss or injury.
Date of Inception of the Policy: The actual date and hour of the liability should be embodied in every policy. It usually specifies the hour and date of commencement, and the hour and date of termination. Also called "effective date".
Debris Removal: A provision in an insurance policy most commonly found in fire insurance that provides indemnification for the cost of debris removal after a fire.
Declaration: Statement given by the insured, warranting that information given by him or her is true.
Deductible Clause: Small claims are expensive for an insurance company to handle in relation to the amount involved. In many insurance policies, a provision is made where the insured agrees to pay for small claims in return for a reduced premium. "Disappearing deductible" uses a formula where the deductible exists for small losses, but is gradually reduced as the size of the loss increases.
Deposit Premium: A premium based on an estimate. It is subject to adjustment based on the actual figures either at renewal or at some other agreed-to time.
Depreciation: Reduction in value of property through use, ageing, deterioration and obsolescence.
Detached: This means separate, such as detached buildings that are not connected in any way to other buildings or the insured premises.
Deterioration: Physical impairment.
Direct Writer: An insurance company selling directly to the public and not through independent agents or brokers.
Discount: Reduction in the rate or premium for features which improve the risk, or if several coverages are incorporated into one policy.
Duration of Risk: The period of time for which the risk is to run. The period should be distinctly stated in the policy.
