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The definitions appearing in the following Glossary are provided solely for general information purposes only. They are not intended to be complete descriptions of all terms, conditions, exclusions applicable to the products and services defined. As well, in the case of inconsistency between the definitions in this Glossary and the definitions appearing in the actual policy, the definitions contained in the actual policy shall govern.
A
Accident - An unexpected event, which happens by chance and is not expected in the normal course of events.
Act of God - A sudden and violent act of nature, which could not have been foreseen or prevented. Examples: flood, earthquake.
Actual Cash Value - The current cost of replacing an article with a similar one in the same condition. Any item has three basic values: original cost, actual cash value, and replacement value.
Additional Interest Insured – Another person or company who may be liable for an accident involving an insured who has been named as an
Additional Interest Insured under the policy.
Additional Premium – An extra charge for an alteration, during the policy period, which increases the hazard or the Company’s liability.
Adjuster – A person who investigates a loss and negotiates settlement with the claimant on the Company’s behalf.
Amount of Risk – The Company’s total liability at a specific location.
Application (APP) - A form on which the prospective insured states facts requested by the insurance company and on the basis of which (together with any
information from other sources) The insurance company decides whether or not to accept the risk, modify the coverage offered, or decline the risk.
Appraisal – A valuation of property made for determining its insurable value or the amount of loss sustained.
Arson - The willful and malicious burning of property.
Assumed Liability - Liability, which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.
Assurance – Same as "Insurance".
Assured - Same as "Insured".
Assurer - Same as "Insurer" (Insurance Company).
Authorization - The power or right to act on behalf of another.
Avoidance of Risk – Taking steps to remove a hazard, engage in an alternative activity, or otherwise end a specific exposure.
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B
Basic Rate - The standard charge for a given type of risk.
BI/PD – Bodily Injury/ Property Damage Liability Coverage.
Binder – A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.
Bodily Injury – Term used in Auto and Casualty policies meaning physical injury, including sickness, disease, mental injury, shock or death.
Broad Form – Any of the commercial or personal lines property forms which provide coverage on a named perils basis. This form normally adds the Extended Coverage and Vandalism and Malicious Mischief coverages. This form is generally used for coverages on a Homeowners Policy.
Broker - An independent person or firm who acts on behalf of the insured in placing business with the insurance company. Responsible for the collection of premiums but having no authority to give coverage on the insurance company’s behalf without their specific agreement. Compensation is on a commission basis.
Burglary - Unlawful removal of property from premises involving visible forcible entry.
Business Interruption - Insurance against business expenses and loss of income resulting from fire or other insured peril.
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C
Cancellation – Termination of an insurance coverage during the policy period by the voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.
Catastrophe – A sudden, great disaster.
Clause - A term used to identify a particular part of a policy or endorsement.
Coinsurance - In property insurance, a clause under which the insured shares in losses to the extent that he is underinsured at the time of loss.
Compulsory Insurance - Any form of insurance, which is required by law.
Consequential Damage – A loss, which is an indirect result of an accident or fire, e.g. food spoiled through breakdown of a refrigerator.
Cover – To Insure.
Coverage – Insurance
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D
Declarations (DEC Sheet) - A term used in insurance for the portion of the contract which contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured.
Deductible - The portion of a loss that you are required to pay before your insurance coverage will respond. Deductibles can be used to reduce your physical damage premiums. For example, if you owned a policy with a $200 deductible and you suffered a covered loss totaling $1,000, you would pay the first $200 and the insurance company would pay the remaining $800. If the loss were only $200, you would pay the entire amount and the insurance company would pay nothing.
Depreciation – Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence. For example, if you paid $1000 for a Stereo system five years ago, its current value minus depreciation might be only $225, for example.
Direct Loss (or Damage) - A loss, which is a direct consequence of a particular peril. Fire damage to a refrigerator would be a direct loss. Spoiling of food in the refrigerator as a result of the fire damage would be an indirect loss.
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E
Earthquake Insurance – Insurance covering 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.
Embezzlement – The fraudulent use of money or property, which has been entrusted to one’s care.
Employers Liability Insurance – Coverage against common law liability of an employer for accidents to employees, as distinguished from liability imposed by a worker’s compensation law.
Endorsement - Amendment to the policy used to add or delete coverage. Also referred to as a “rider.”
Exclusions – Certain causes and conditions, listed in the policy, which are not covered.
Expiration - The date upon which a policy will end.
Exposure - Degree of hazard threatening a risk because of external or internal physical conditions.
Extended Coverage (EC) - A common extension of property insurance beyond coverage for fire and lightning. Extended coverage adds insurance against loss by the perils of windstorm, hail, explosion, riot and riot attending a strike (civil commotion), aircraft damage, vehicle damage, smoke damage and volcanic eruption.
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