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Glossary of Insurance Terms

Abandonment

Relinquishment of ownership of property that has been lost or damaged and "abandoned" to the Insurance Company for the purpose of claiming a total loss.

Above Ground Swimming Pool

Swimming pool built above ground level.

Absolute Liability

Liability that occurs where one has a duty to fill no matter what the circumstances may be. Absolute Liability is often found in cases involving explosives and in many automobile laws an insured or insurance company may be responsible to a third party irrespective of any statutory faults, negligence or breaches on the part of the insured.

Accident

An unusual unexpected result, attending the performance of a usual, necessary act; and unexpected event which happens by chance or which does not take place according to the usual course of things. This definition is very simplified. Many pages have been written in judgments defining "Accident" if the matter is likely to become involved or complicated such definitions are readily available in juris-prudence. Generally however this definition broadly covers the interpretation of the word as given by the Courts today.

Accident Prevention

ethods insurers and their insureds use to reduce accidents, e.g., removing hazardous condition.

Accidental Means

Unintended, unexpected and unforeseeable cause of an injury. Accidental means requires that the cause of the injury be accidental as distinct from the result being accidental. For example, a man while painting his house falls because his ladder breaks.

Accounts Receivable Insurance

Coverage that protects business against their inability to collect their accounts receivable because of the loss of supporting records. See Credit Insurance

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.

Actual Cash vs. Replacement Cost

Property insurance is based on values and it is important for both parties of the insurance contract to have a complete understanding of the insured values, it facilitates a satisfactory settlement.

Basically, in the determination of insurable values, there are two methods of insuring property to be considered:-

Replacement Cost Basis 
The term "replacement cost" denotes the cost of replacing the property lost or destroyed without deduction for depreciation. 

Actual Cash Value Basis 
The term "actual cash value" denotes the cost of replacing the property lost or destroyed and then deducting factors for depreciation or betterment. 

Care should be taken not to utilize "book" or "depreciated" values, as these normally reflect the maximum depreciation allowable under tax schedule and other purposes and not the true insurable value. Please note that replacement cost and actual cash value are not the same as "market value" which is determined by other factors, e.g. location, desirability and land value.

Actual Damage

Damage that really exists in fact, as distinguished from potential or possible damage.

Additional Insured

An individual or a corporation other than the one named in the insurance policy who is protected by the terms of the policy. Most automobile policies, for example, insure a specific individual as an insured, but also insure anyone driving with the insured's consent. The additional insured may be

"named" or "unnamed" in the insurance policy.
Additional Living Expense Insurance

A provision in many policies to provide reimbursement for costs above the normal living expenses, incurred because the insured is forced to live away from home while the home is being repaired because of fire or other damage. It applied to such expenses as restaurant meals, hotel rooms, transportation, etc. The company however is bound only to pay to maintain the insured's usual standard of living.

Additional Premium

An extra charge, during the policy period, for an alteration which increases the hazard of the insurer's liability.

Adjuster

An individual who represents an insurer on investigations and dealings with respect to settlement of claims. This may be a salaried employee of an insurer or one who operates as an independent adjuster.

Adjustment

The process of arriving at an amount of settlement in a claim. It may consist of a series of computations to arrive at the amount of a loss as for example, in an uncomplicated fire loss or it may involve discussions of liability, quantum and other such matters as might be the case in a problem liability claim. It may contain both.

Adjustment Expenses

Expenses paid in connection with the settlement of claims, both internal (company) and external (consultants).

Aggregate

Total sum of insurance payable during the term of the policy.

Alarm System

System guarding against theft and/or fire.

Alarm Valve

A valve in automatic sprinkler systems, which automatically operates an alarm; sometimes a loud gong, and sometimes a signal directly to the fire department. This is an alarm valve. It operates if and when a sprinkler head has opened.

All-Risk Policy

A name given to an insurance policy which covers against the loss caused by all perils except those which are specifically excluded by the terms of the policy. Frequently, a policy if insurance is written to insure damage to property caused by specific "named perils," which are listed on the policy. However, policies may be issued in certain cases to insure against "all risks of loss or damage" and are then called "all risks" policies. The term excludes insurance against certain hazards.

Amortization

The paying back of a debt by spreading the payments (which include a portion of both principal and interest) over a period of time.

Amount of Insurance

The limit of payment for which an insurer is liable under a policy.

Amount Subject

The amount of exposure in any one loss from the peril against which insurance is issued. Underwriters and company inspectors are responsible to see that the amount subject is in order. For example, in the case of fire insurance it is necessary to know the construction of the building, the fire protection afforded, whether a fire is likely to be confined to a small area or destroy the entire building, and if confined just what are the relative values in the areas most likely to be subject to fire. Attached and adjoining buildings and property must also be considered, both with respect to any possibility of there being a fire hazard to the insured premises and conversely whether insurance is carried by the same company on such property so that in the event of a fire at the insured's premises an adjoining or nearby building also insured in the same company may also be a loss thus increasing the amount of potential loss from a fire at that particular location.

Applicant

The person or firm requesting insurance.

Appraisal

The monetary valuation on a property.

Appraise

To set and state in writing the true value of property.

Appraisers

Are persons who because of their special knowledge are vested with authority in determining the real value of the property or damage.

Arbitration

An arrangement for reaching agreement between two sides by which both sides submit their case to a committee or a person who generally is vested with the authority of giving a final answer to the dispute. In fire policies this is now commonly referred to as "appraisal". The arbitration may be voluntary between any two persons who make up their own terms of reference and generally decide beforehand, whether or not they will be bound by the ultimate ruling. Where arbitration exists because of an agreement, the terms of reference for arbitration appear in the agreement.

Arbitration Clause

A clause in an insurance policy, reinsurance contract, or other contract that provides arbitration in the event of a disagreement.

Architects' and Engineers' Professional Liability Insurance

Coverage provides compensation on behalf of architects and engineers for claims arising out of their professional services caused by error, omission or negligent acts.

Arson

In common law, the deliberate and intentional burning of property by its owner or by another person.

As Their Interest May Appear

Phrase commonly used in the loss payable section of an insurance policy where the insurable interest in a property is either unknown or presently unascertainable, e.g. "Loss payable to A and B as their interest may appear" This leaves the whole question of title to the insurance monies to be settled between the insured and the person whose name appears in the loss payable portion of the policy.

Assets

Property of all kinds, real or financial, that belongs to a person or corporation or to the estate of a decedent.

Assignment

Legal transference; the transfer of an entire interest from one party to another. Insurance policies are personal contracts and are not transferable except to spouse unless special consent of the insurance company is granted.

Assume

1. To undertake or promise. In insurance, a company or an underwriter "assumes" a risk when he agrees to insure it. That is when insurance attaches.

2. Common usage pertains to acceptance of a risk by a reinsurer from an insurer.

Assumption of Risk

1. The legal doctrine of assumption of risk, also know as "volenti non fit injuria," where a person knows of the facts and existence of a dangerous condition and voluntarily exposes himself to it.

2. The accepting of a risk by an insurance company.

Assured

The entity which the insurance company has undertaken to indemnify and protect against loss from certain perils. It is interchangeable with the word "insured".

Attach

A policy "attaches" when it comes into force, e.g., when its term starts.

Attorney-in-Fact

A private person who has been given legal power to act in one's stead. The power of attorney may be in general, namely to act in all matters, or may be specific authorizing the individual to act on behalf of another only in a specfic matter.

Attractive Nuisance

The leaving of something attractive to children but dangerous to them, such as a piece of contractor's equipment, supplies, etc., near the road, even though on private property is known as an "Attractive Nuisance." Property owners are liable when they knowingly leave a dangerous instrument or create a dangerous situation in a place apt to be frequented by children who do not realize their peril and are attracted to the situation probably to play, but are injured.

Automatic Reinstatement

Most insurance policies insure against loss of property up to a certain amount. If half that amount has been paid in one loss, during the policy year, then only the other half remains as the amount of the insurance for the balance of the year. The policy, however, may be brought up to the full amount by paying an additional premium. In some policies, however, the amount of insurance is automatically reinstated immediately after the loss so that the amount quoted for insurance remains the same even though the insured, in a series of losses, may have collected an amount totally in excess of the principal amount named in the policy.

Automatic Sprinklers

A device to protect property from damage by fire in which water is piped to devices called "sprinkler heads," which melt with heat and release water to extinguish a fire.

Automobile Fleet

A group of automobiles under the same ownership and management which may, because of the number, justify a discount in the insurance premium. Usually five or more vehicles.

Automobile Insurance

Insurance coverage that provides indemnity and/or compensation for injury or physical damage which ensues from the ownership, use or operation of an automobile.

Average Clauses

Clauses which estimate the proportion of actual compensation for the loss which is to be paid, having regard to the total amount of the loss, and the relation of this amount to the value.

Bad Faith

1. Design to deceive or mislead another.

2. Conscious wrongdoing.

3. Constructive fraud.

Bailee

A person to whom goods are entrusted. Also called a Depository. A gratuitous bailee is one who has the property of another without consideration. e.g., a neighbour stores a wheelbarrow in the winter without payment and merely for convenience of the owner (bailor). A bailee for hire is one who makes a profit or charge for his services in storing the goods of the bailor (customer). e.g., a furrier (bailee) storing a fur coat for a customer (bailor). A greater degree of care is required in the case of the bailee for hire.

Bailor

Person to whom goods or property are entrusted for a stated purpose, whether in exchange for payment (consideration) or not. (Bailee)

Bid

Proposal made by the prospective policyholder to an insurance company to obtain the cost of a premium for a specific period.

Bid Bond

A bond insuring a contractor submitting a bid on a job will, if the bid is accepted, enter into a contract to do the job and if required to do so, to supply a contract bond (or performance bond).

Binder

Temporary proof of insurance of property, pending issuance of a policy. The binder has the same value as the policy, and must be terminated in the same manner as an issued policy would be.

Bodily Injury

Bodily injury is the injury or damage to the physical body of an individual or the destroying of it. It does not include the inanimate injury such as hurt feelings, embarrassment, false arrest libel, slander, etc. (see also personal injuries which includes these further perils).

Bonds

A guarantee or surety bond is not necessarily carried by an insurance company, although many insurance companies do use their corporate structure and strength in the value of becoming surety to another even though strictly it is not insurance. A bond issued by an insurance company generally protects an individual or corporation known as an obligee from loss arising out of the act or failure of another known as the principal. A fidelity bond is one in which the obligee is usually an employer and the principal an employee and protects against the principal's fraudulent acts, such as embezzlement, conversion, theft, etc. A surety bond - the surety, which may be an insurance company, protects a company or individual known as the obligee against failure of performance of another individual or corporation known as the principal. e.g., a municipality is building a building and lets a contract to a general contractor. The municipality would probably require a bond on the contractor to establish the ability to complete the contract. There are, of course, many other applications. A penalty bond is one in which, in the event of default of the person bonded (principal) the entire amount of the limited bond is due tot he obligee to protect from this and other losses.

Break-and-enter theft, “ B&E”

Wrongful taking of property, without the consent of its owner, following forced entry into a building or property.

Broad Form

Insurance coverage that protects you from all risks to the building and named perils only to the contents

Broker

An insurance broker is one, generally acting as an independent business person and on behalf of prospective insured's and places insurance with the insurance companies. In difference to the "Agent" the broker acts on behalf of the customers but is paid commission by the company.

Builders Risk Insurance

Insurance coverage on property under construction, including loss to buildings, machinery and equipment. Materials incidental to construction may also be covered.

Burglary

The breaking and entering into a premises. Insurance policies usually require that physical signs of such forcible entry are required - e.g. broken window, forced lock or the like.

Business Interruption

A policy that protects against loss of earning and pays certain continuing expenses, for an insured who has suffered a loss form the peril insured, e.g. a factory may be shut down for several months as the result of a fire. Business interruption insurance as applicable to the risk would pay for the loss of profits during that period (and sometimes the depletion of profits for a period after resumption of operation) and pay the cost of keeping certain key personnel. Also known as "Use and Occupancy" insurance, although the coverage is slightly different.

By-Laws

Laws made by Corporations, Trading Companies, County Councils, Railway Companies, Public Libraries, etc,. under powers granted by Act of Parliament. By-laws are binding unless they are contrary to the law or unreasonable.

Cancellation

The termination of the policy before the end of a policy period. Also known as Termination, Dissolution. Usually if the company cancels the policy, the insured is entitled to a pro rata return of premium for the unused portion of the policy. If the insured cancels the policy, they are entitled to a short rate (as set out on the policy) return of premium.

Capacity

The limit of the amount of insurance set by a company as to what it will write on a single risk.

Cargo Insurance

Protection against loss to merchandise in transportation.

Casualty Insurance

Loosely used to describe an area of insurance not particularly or directly concerned with life insurance or fire insurance. It is applicable particularly to personal injury forms of insurance but generally also includes crime insurance, robbery, burglary, aviation, and in many instances the surety business.

Catastrophe

A catastrophe as related to insurance is a large and multiple series of losses beyond the normal expectation or reasonable anticipation of loss by that particular peril. e.g. hurricanes causing very substantial damage, extended damage by flood, fire involving large areas, etc.

Catastrophe Cover

Some major medical expense policies are referred to as Catastrophe Policies. They bear no relation to Catastrophe Hazard. They are policies to protect the individual against the contingency of suddenly being required to pay a portion of the remaining amount, usually in the form of a percentage. The policy, however, does protect from extremely large losses at a very modest price.

Catastrophe Hazard

A risk which might involve a large number of insureds at one time. For example, a tornado may damage many homes in a certain area. If one insurer carried that type peril insurance, they might carefully underwrite their business so that they carried only one or two in each block, but in total might have a very substantial loss.

Central Vacuuming System

Vacuum-cleaning system integrated into a building's structure.

Certification

Compliance with criteria defined by safe standards.

Certification of Insurance

Legal evidence of insurance coverage, stating such details as the policy period, the limitations of coverage, deductibles, premiums, etc.

Chimney

Shaft for conveying gases outside, connected to a dwelling via either the exterior or the interior.

Claim

Strictly speaking, claims are the exercising of the rights of insureds to be indemnified by their insurance company, It is frequently used, however, to indicate the amount of claim they are making. In practice, it is any notification of a possible loss under an insurance policy whether any payment is likely to follow or not. For every claim that is reported, the insurance company must set aside in a reserve a sum equal to the figure which it is anticipated the claim will cost. This monetary figure or combinations of them are often referred to as "claims," e.g. "that is a $50,000.00 claim" or "We have $2,000,000.00 in automobile claims."

Claim Expense

Claims expenses for work on a particular file are commonly charged to that file, thus the cost of an independent adjuster, the lawyer's fees, expert fees, etc. may be allocated tot he particular claim.

Claimant

One who makes a claim. It is most commonly used in identifying a third party who is making a claim against the insured. Technically, however, it also applies to an insured who is making a claim against the insurance company.

Co-insurace

A Clause in an insurance policy requiring the policyholder to maintain insurance at least equal to a specified minimum percentage of the actual cash value, failing which the policyholder must bear, in addition to the deductible amount, a proportionate amount of any partial loss. Also known as Guaranteed amount clause, Average clause, Rule of apportionment.

Collateral

An asset that is pledged as insurance against the default of payment of a debt.

Collision

Accident involving impact of a vehicle against another vehicle or an object of some kind.

Combination Furnace

A furnace which can burn more than one type of fuel

Commercial Occupancy

The portion of a building used for the transaction of business.

Commercial Property Policy

A combination policy designed for mercantile risks and covering fire risks with burglary and other similar risks.

Common Law

American, Canadian and British law derives its force and authority from the universal consent and practice of the people over the years. Certain aspects of the law are written into statutes. The underlying principles and usage's and rules of action which do not rest for the authority on this statutory or legislative law are to be found in principles set forth by decisions of the courts over the years.

Completed Operations

Where a contractor has work to perform at various locations and has liability insurance, that liability insurance normally would have application to the work at that particular job during the currency of the job. It protects against liability as the result of accidents in the performance of the work on that job resulting in third party damage. Coverage normally ceases on the completion of the job or the abandonment of the job. If insurance is required beyond that time, the policy may be endorsed to cover

"completed operations".
Comprehensive

For property, this term is synonymous with 'All Risk Coverage' (see definition under that heading). For automobile insurance, comprehensive coverage refers to insurance against physical damage that can occur to your vehicle from causes other than a collision (e.g. fire, theft, vandalism, hail and lightning).

Conditions

The general terms or requirements upon which the insurance is based, the conditions will commonly include such matters as to the mutual understanding of the parties as to how the policy can be canceled or renewed, provisions with respect to change of the insured's interest, provisions as to what an insured should do in event of a loss, and conditions as to what he should do subsequent to a loss. A condition precedent is a condition that must be fulfilled prior to the general fact at stake. The insured for example is required to give notice of a claim and fulfill certain other obligations as a condition precedent to his receiving a settlement. Conditions subsequent are conditions which are applicable subsequent to the event, as for example, the insured is required to co-operate in the disposition of the claim and to co-operate other than in the monetary way, to assist to recover from anyone who is responsible for the loss.

Consequential Loss

The word "consequential" means something following as an effect of result. It is an indirect result of the occurrence that causes the loss. The difference between a direct loss and a consequential loss can b 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.

Contributory Negligence

Where there is some negligence on the part of each of two or more persons resulting in an accident, each is known to be contributarily negligent or the accident occurred as a result of the contributory negligence of both. The degree of negligence for each is usually apportioned on a percentage basis thus, where one person is 25 per cent contributarily negligent and the other 75 per cent contributarily negligent, between the two, there is a total of 100 per cent of the negligence causing the accident.

Conviction

Conviction under the Highway Safety Code or any other legislation governing vehicular traffic, for an infraction such as, for example, failure in the duties of a driver involved in an accident; violation of the traffic rules pertaining to school buses.

Corporation, Legal Entity, Corporate Body, Corporate Person

Corporation that does not include a partnership and is considered a separate legal entity, empowered to enter into and be bound by agreements.

Cost

Dollar value.

Coverage

1. The nature of protection afforded by a particular policy.

2. Amount of insurance applicable to a person or property.

At times, interchangeable with the terms Insurance and Protection.

Criminal Code Conviction

Some criminal Code convictions that relate to the ownership, use or operation of an automobile include:

  • driving while your licence is under suspension
  • racing
  • careless driving
  • impaired driving
  • failure or refusal to submit to a breath or blood test
  • failure to stop for a police officer, resulting in an extended suspension of licence (for example, three years)
Damage

Any material or bodily loss or harm.

Death Benefit

Amount stated in policy to be paid to a survivor upon proof of death of the insured.

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 loss.

Deck

Roofless platform, generally made of wood and equipped with a rail, adjoining a house, either overhanging or supported by pillars.

Deductible Clause

A clause defining the amount of loss for which the insured is liable; defines insurer's and insured's contributions to cover losses.

Degree of Responsibility

Driver's share of responsibility for an accident.

Dependencies

In civil law, constructions and installations that are accessory to a dwelling but separated from it by a completely free space, or connected to it only by a fence or electrical or other connection.

Deposit Premium

This is often called "advance premium" and is a premium paid at the inception of a policy in which there is likely to be a substantial variation in values from time to time. At the end of the term, the actual premium is calculated and adjustment made with the insured by either charging the insured for the additional premium required to make up the proper premium or refunding the difference to the insured.

Depreciation

The decline in value of property from any cause - such as use, wearing out, obsolescence, etc. Depreciation should be taken into account in all consideration of value, when arriving at the proper amount to be insured, or the amount of loss to be paid, unless insurance is on a valued or replacement cost form.

Disability

Loss of income - usually associated with Accident Health policies. Workmen's Compensation or Employer's Liability policies. Certain benefits are payable for the period of disability. Total Temporary Disability is where the disability is such as to make the party unable to carry out any part of their normal work, but for which recovery is expected. Partial Temporary Disability is where the party is unable to put in a full time job but in a full time job is nevertheless able to perform one or more of their normal work obligations. Full recovery in due course is to be expected. Total Permanent Disability is a disability that permanently disables the party from resuming their normal gainful employment. Partial Permanent Disability is the impairment of the use of some function of the body as for example the loss of a finger which lessens the efficiency of the individual but nevertheless does not preclude them entirely from earning a living.

Dismemberment

Accidental loss of (or of the use of) a body part.

Distribution Clause

Used in a property policy for the distribution of the insurance amount over the several locations of objects covered, in proportion to their value.

Driver’s Licence, Driver’s Permit

Official written authorization permitting the bearer to operate a motor vehicle.

Driving Class

A term used when rating automobile insurance. Driving class indicates age of the operator, and/or sex and/or vehicle use.

Driving Record

A driving record is given to each driver. The record is determined by the experience, prior accidents, traffic tickets (speeding) and driver training. The better the driving record, the lower the risk.

Dwelling Building

The premises where you reside.

Earned Income

Any wages, salary, and income from employment.

Earned Premium

The premium for the amount of insurance used. The amount of premium which would pay for insurance from the inception date of the policy until the particular date at which it is desired to calculate the earned premium. It is the expired portion of a premium.

Earthquake

Rare phenomenon involving movements of the earth's crust that may be violent enough to cause damage to property or dwellings.

Effective Date

Date on which a transaction comes into force.

Endorsement

An amendment added to a written document, particularly an agreement between parties, such as an insurance policy, altering its provisions.

Equity

Value of a property in excess of claims or liens against it.

Errors & Omissions Insurance (E&O)

Professional, semi-professional and the serviced type of work may place an obligation on the part of the individual to see that the task is properly performed and any error or omission in the performance of a particular duty may make the individual responsible in damages. Errors and omissions insurance is designed to protect the individual in such a situation.

Exclusions

Risks, perils or properties defined in the policy as not covered.

Exterior Finish

Material used to build the outer walls of a dwelling. Also referred to as Exterior cladding.

Facility

A pooling agreement between all automobile insurers (now replace in most provinces by the Facility Association) in which a market is guaranteed for all licensed drivers and registered owners. The results of the total industry pool are shared by all members of the agreement.

Fidelity Bond

An agreement (not an insurance contract although Fidelity is getting to have more insurance features) whereby the surety, or insurance company agrees to reimburse an employer (obligee) for a loss growing out of a dishonest act by an employee (the principal).

Fiduciary

A relationship between two persons where one is required to perform in good faith certain acts for the benefit of another e.g. a relationship between an executor of the estate and the beneficiaries of that estate. It is common in relationship of certain types of bonds issued by insurance companies.

Fiduciary Bond

A bond guaranteeing the fidelity of persons handling the money or affairs of another, e.g. trustees, receivers, executors, etc.

FIFO

The first-in, first-out accounting method of valuing inventory. It assumes that the first units in are the first to be sold and the units sold are costed at the initial price.

Fire Department Service Clause

A provision in a fire insurance policy agreeing to pay the cost of bringing a fire department to the location of the property insured in event of a fire. It is valuable where the insured's property is not in a built up area with their own fire department or where the risk is sufficiently large to require the possible need of fire department services.

Fire Hydrant

Pipe, on the side of a street or wall of a building, with a valve for drawing water, used by firefighters.

Fire Insurance

Coverage for losses from fire and lightning and also the resultant damage caused by smoke and water. Usually supplemented by Extended Coverage Insurance.

Fire Station, Fire Hall

Building housing firefighting equipment and firefighters.

Fireplace

Type of heating used in some dwellings.

Fleet Policies

A commercial enterprise may own a great many motor vehicles with an appropriate premium adjustment on each occasion. More often, however, the policy provides automatic coverage on newly purchased vehicles and the premium either adjusted on a reporting basis or one of the other methods used to avoid frequent computations for each change.

Floater Policy

A policy covering the same risk at a number of perhaps unspecified locations over a wide area (even world wide); usually includes suggestions of goods being frequently moved from one location to another. E.g. Fur Floater, Jewelry Floater, Contractors Equipment Floater, etc.

Franchise

A provision in an insurance policy whereby the insured pays all claims up to the amount set in the franchise. If, however, any loss exceeds that amount the insurance company assumes full responsibility for the full amount of the loss including the e franchise amount.

Fraud

1. Methods used to deceive to cause unwarranted favourable decision for one's own benefit.

2. Deliberate misrepresentation or misstatement.

3. Concealment of facts which should at the time be made known.

Fraudulent Claim

The submission of a claim through the act of wilful deception and dishonesty carried out with a view to securing some advantage, profit, etc. to which one is not entitled, at the expense of another.

General Provisions

portion of an insurance policy that specifies the obligations of the insurer and insured.

Glass Insurance

Insurance against breakage of windows in an automobile or building.

Gross Negligence

The degree of negligence somewhat greater than ordinary negligence. It may be reckless wanton and willful misconduct causing bodily injury and/or property damage.

Gross Premiums Written

Total premiums received from all sources including reinsurance assumed from other companies.

Group Insurance

Insurance policies that have a considerable number of persons under one contract. It is most frequently found in life and accident and health insurance policies. Simcoe Erie does underwrite Habitational and Auto group insurance.

Growth Strategy

An active portfolio management style that seeks out stocks with future investment opportunities with anticipated rates of return greater than other stocks.

Hail Insurance

A type of insurance generally purchased by farmers to protect against loss of their crops because of damage to the crop by hail. E.g. Hail Insurance on tobacco crops.

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.

Heating

Type of heating in a dwelling.

Hit and Run

The failure of the driver of a any kind of vehicle to stop knowing that he or she is the direct or indirect cause of an accident.

Hold-up

The taking of money or property from another by putting the victim in fear of personal violence. The case of a man with a gun threatening the life of an individual if he does not surrender his cash is a typical hold-up, however, a knife or some other instrument which might threaten an individual would still leave the act as a hold-up. In fact, it is quite possible that no instrument at all may be used and if the victim is afraid that the man either has something concealed or may use his fists or anything else to cause him concern for his physical welfare, the act is still considered a hold-up.

Home Owner’s Policy

A policy designed to cover the various risks of a home owner in one policy. It is very flexible and may cover little more than fire and extended coverage plus some additional living expenses, theft, vandalism and malicious mischief. It is designed, however, to also extend, if required by the insured to cover seasonal residence, a broad form of personal liability, voluntary property damage, outboard motor and boat, etc.

Homeowner's Policy

A single policy designed to cover the various risks of owning a home.

Hostile Fire

A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplace becomes uncontrollable and ignites something externally.

Improvements or Betterments

A fire risk may be written for one or three years. During that time, many changes may take place and an insured may himself improve or enlarge the building, change the roof, install new flooring or a tenant may install a new air conditioned office space which would eventually accrue to the benefit of the real property owner. These are known as improvements or betterments and the amount of insurance should be adjusted accordingly.

Increase in peril, increase in hazard

Circumstances causing greater peril.

Increase in premium

Charging of a higher premium following alterations to a contract or renewal of a policy.

Incurred but not Reported Claims

Insurance companies are required to put up reserves on all claims. This even includes claims that have not yet been reported to the company. It is the sum added to the total of claims reserve and is usually determined by means of an estimate based upon the actual claims reported late one year earlier, two years earlier, etc., with proper adjustment made for increase in premium income and inflation.

Incurred Losses

Total of losses paid and loss reserves. The "incurred losses" are calculated by adding the paid losses (less recoveries by subrogation or salvage) to the reserve for unpaid claims at the end of the period, and subtracting the reserve for unpaid claims at the beginning of the period.

Indemnity

An indemnity is a contract, express or implied, to keep a person who has entered into or who is about to enter into a contract, or incur any other liability, indemnified against loss, independently of the question whether a third person makes default. An indemnity is a valuable consideration.

Indirect Damage

Damage which is not the immediate direct consequence of the peril against which insurance has been taken but flows nevertheless, somewhat remotely from that peril. E.g. a fire may damage a business premises and somewhat more indirectly interrupt the business. The business interruption claim is indirect damage. Similar situations occur where a property is rented and the income for the rent is required in order to meet a mortgage or where the property is rented from another and is destroyed by fire. The loss of rent is indirect damage.

Inland Marine Insurance

Marine underwriters generally divide their general class of risks into "ocean marine" and "inland marine." Inland marine insurance is insurance developed by the marine underwriters other than ocean marine insurance. It affords transportation for goods and materials in the inland waters, or by train, bus, truck or plane and extends to cover other moveable property under such policies as jewelry and fur floaters, personal effects and personal property floaters and similar policies.

Insurable Interest

"To make insurance policies legal and valid, the insured must possess such an interest in the subject of the insurance as may be sufficient to involve him in a monetary loss, should the subject be damaged or destroyed." In other words, if he has a direct monetary interest in the property to be insured, he has insurable interest. This interest may be of various character; it may be that of an owner, of a lessee, of a guardian, a bailee, an executor, administrator, bailiff or sheriff, a creditor. As long as there is a real monetary interest, there is an insurable interest.

Insurance Certificate

Document issued by an insurance company or broker attesting that a particular piece of property is insured.

Insurance Limits

Amount of indemnity limited to a fixed amount according to category of property.

Insurance:

A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject caused by specified hazards or perils.

Insured

The person receiving the agreement of indemnity from an insurance company (or person) affording them indemnity from loss from perils as set out therein.

Insured Perils, Risks Covered

Perils identified in the insurance contract as being covered.

Insurer

The insurance company or the individual who has agreed to supply the indemnity to an insured against loss by certain perils.

Insuring Clause

Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits.

Issue Date

Date on which an insurance contract comes into force.

Jewellery

Watch, ring, necklace, chain, bracelet, brooch, etc.

Lapse

Where a policy has been allowed to run for its determined time and has not been renewed, the policy is said to have Lapsed.

Leasehold Improvements

Physical improvements beyond simple maintenance or repairs that increase the value of a property.

Legal Liability

Liability imposed by law to pay for harm (material damage or physical injuries) done to others.

Lessor, Landlord

Corporate or private individual who leases property.

Liability Insurance

Insurance which warrants the insured against the monetary consequences of the obligation to indemnify the third party as a result of an act of negligence.

Liability Limit

The limit to which you are protected should you be sued as a result of your personal actions and/or your ownership or use of dwellings and land. This limit also applies to the cost of any legal representation you may require, subject to the limitations, conditions and exclusions as stated within your policy of insurance.

LIFO

The last-in, first-out accounting method of valuing a company's inventory. It assumes that the most recent additions to inventory are the first ones to be sold and values them at current market prices.

Lloyd’s

A London market for insurance and reinsurance. Lloyd’s is not a company but an association of members, or names, grouped in syndicates, each syndicate being headed by an underwriter.

Loss Frequency

Number of consecutive losses.

Loss of Use

Inability to use property that has destroyed or damaged by an insured peril.

Loss Ratio

Losses incurred expressed as a percentage of premiums. Also referred to as Claims ratio.

Loss Reserve

For every claim that is made against an insurance company that company must estimate the probable ultimate cost of that claim and set the sum of money aside in a "Loss Reserve."

Losses Incurred

All losses which happened within the period under study, including both those that have been paid and the others which have not yet been paid, but will become payable.

Losses Outstanding

Losses which took place but which have not yet been paid. These are usually recorded in two ways; either (1) the number of incidents of losses in the various classes of business, and (2) the amount of money involved in these classes, which would appear as a "Loss Reserve."

Maintenance Bond

A bond guaranteeing the performance of a contractor in a maintenance contract. e.g. a contractor builds a building and guarantees it against defect in workmanship and material for a period of one year. The bond guarantees that the contractor will remain financially sound and will properly perform the maintenance understanding on the building during the required period.

Major Conviction

Offences under any act governing highway traffic related to the ownership, use and operation of an automobile. Examples include:

  • failing to report an accident
  • failing, in the event of an accident, to give your name and licence number to police or anyone else
  • entitled to that information
  • improper passing of school buses
  • improper passing/speeding in a school or playground zone
  • any of the above-listed offences committed outside Canada
Make and Model

Manufacturer and model names of a motor vehicle.

Malpractice

A performance by a professional which is deficient in skill from what might ordinarily be expected of a professional person. The standard of performance to which a professional person will be held is necessarily higher than the standard which an unskilled person would be expected to display.

Manufacturer (vehicle)

Name of the manufacturer of a make of automobile.

Marine Insurance

Marine Insurance is a form of insurance generally related to the transportation of goods. Originally most goods were transported by ship and across seas or oceans (Ocean marine) but this was gradually extended to include the transportation by train, motor transport, (inland marine) and now extends to include inland water ways, shipping and shipping by air. Marine insurance is therefore, divided into two general classes; (1) ocean marine and (2) inland marine.

Market Value

The current price in a fair market of financial instruments.

Market Value

The value of assets (stocks, bonds, debentures, real-estate, etc.) cased on a current market valuation.

Material Fact

Any information used in your insurance application that would have changed your eligibility for coverage, price of coverage or conditions for acceptance

Mature Age Discount

Reduction of premium payable according to the age of the insured.

Minimum Retained Premium

A premium specified on an individual policy which will be the minimum amount retained by the insurer in the event that the policy is canceled midterm by the insured.

Minor Conviction

Examples of minor convictions include:

  • driving off roadway - including shoulder/sidewalk/median - any type
  • following too closely (including tailgating)
  • failing to wear a seat belt
  • disobeying legal traffic signs, with the exception of parking signs
  • speeding - any type, except when listed as major or criminal code
  • making an unsafe move
  • failing to yield - any type
Misrepresentation

An incorrect statement made about a material fact. Misrepresentation can be innocent, e.g., arising from an oversight; fraudulent (in other words, a deliberate untruth with intent to deceive) or the result of extreme carelessness where a statement is made without regard to whether it is true or false. When a misrepresentation is discovered, the insurer may either continue the contract or treat the contract as void with a full return of any premiums paid. In order for the insurer to successfully treat a policy as void, the misrepresented fact must be material to the risk.

Mortgagee

A person to whom property is mortgaged.

Motion Sensor

Component of an alarm system.

Movable Property

Property owned or used by an insured which does not qualified as real estate.

Mutual Insurance Company

An insurance company which is owned by its policyholders who formed an association for the purposes of insuring one another against the possibility of fortuitous loss. Each policyholder pays a premium for his or her own policy. If at the end of the fiscal year the mutual insurance company declares a profit, the profit is shared amongst all the policy holders. If the company declares a loss there is also a provision for the policy holders to be assessed a levy to make up for this shortfall.

Named Perils Policy

A policy in which the perils insured against are listed, as opposed to one which insurers against "all risks."

Negligence

Failure to use the degree of care expected from a reasonable and prudent person.

New Business

New insurance policy covering a particular risk.

New Value, Replacement Value

Cash value equivalent to what it would cost to purchase a new item similar to one lost if it were new. In this case the insurer applies no deduction for depreciation.

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 which are necessary to underwrite a policy. I f the applicant does not disclose all these facts, he/she is guilty of non-disclosure and may risk having coverage voided from inception.

Non-Owned Automobile Policy

A policy which protects the insured against Third Party claims arising out of some other person using their cars in the business of the insured.

Number of Units, Number of Apartments

Number of units in a building.

Obligor

An infrequently used term usually intended to meant the "principal" in a bond, e.g., and employer arranges for a bond on his various employees to protect the employer against the infidelity of employees. The employer is the obligee under the bond, and the employee is the principal or the obligor. Since the obligor may also mean the surety company, it is generally better to express specifically the intent by indicating either the insurance company or the principal, and not use the phrase obligor.

Occasional Driver

An operator, who is not the principal operator but will occasionally operate the vehicle (such as a son or daughter of the insured).

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. Vacating a building by removing the furniture and not using it for the general purposes of dwelling, would for example, bring about unoccupancy, which if not assented to by the company, may void the policy. The same applies to mercantile premises.

Ocean Marine

A type of insurance coverage on cargo and ships on the high seas.

Optional Coverage

Coverage not included in your basic insurance package and for which an additional premium may be charged.

Outboard Motor

Motor attached to the outside of a boat.

Outbuildings

Other private buildings located on the same property as your residence. For example, a pool house.

Over insurance

Insurance amount that is greater than the full value of the insured property. Also referred to as Pyramiding.

Overturning

Overturning of a motor vehicle.

Owner

Person who owns property.

Owner Occupant, Homeowner

Person who owns a dwelling and resides there permanently.

Paid Losses

Total payments made by an insurance company to discharge obligations made under policies issued within the particular period.

Paper

A term used to describe any short-term debt instrument.

Payment Bond

A bond guaranteeing the payment of labour and material used in the construction of the particular structure identified in the bond.

Performance Bond

A bond guaranteeing the performance of a contract but not covering labour and material. If coverage is required for labour and material, a separate labour and material bond will be required, or a contract bond which would cover both.

Peril

The event that caused a loss covered by the policy and which could imply the intervention of the insurance company.

Personal Injuries

All injuries to the person, including non-physical or neo physical injuries such as false arrest, libel, slander, etc., as well as the physical injuries set out under "Bodily Injuries". Personal Property - Most commonly used personal property is property in which a person has an interest and which is personal, moveable, or separable from real property. E.g. tables, chairs, desks, clothing, jewelry, etc. are personal property. It does extend, however, to include a building standing on leased ground. Such as a building would be personal of the lessee (if the land and building on the land are owned by the same person, it is real property or realty).

Personal Liability

A form of liability insurance for individuals in the event that they become liable to pay money for damage or injury caused to others. This form does not include automobile liability.

Personal Property

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.

Personal Property Insurance

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

Plumbing

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

Policy

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.

Policy Fee

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

Policy Holder

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

Policy Term

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

Porch, Veranda

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

Portfolio

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

Power of Attorney

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

Premises

Location and/or building insured.

Premium

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

Prescription

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.

Principal Dwelling

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

Principal Operator

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

Private Passenger Automobile

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.

Products Liability Policies

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.

Professional Third Party Liability Insurance

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

Proof of Loss

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.

Property

A thing owned. Also, the right of ownership.

Property & Casualty (P & C) Insurance

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

Protection Liability Insurance

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

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 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.

Public Liability

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

Rate

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

Reconstruction Cost

Appraisal enabling determination of the replacement cost of a dwelling.

Refund

Repayment of a portion of the insurance premium.

Reinstatement

Restoration of insurance following lay-up.

Reinsurance

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.

Renewal

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

Rental Value, Leasing Value

Value of rental amounts lost following loss.

Replacement Cost

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

Replacement Cost (Auto)

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

Replacement Cost on Contents

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

Replacement Value

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

Reserve

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.

Return Premium

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.

Rider

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."

Riot

Disturbance of the peace by a crowd of people.

Risk

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.

Risk Premium

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.

Risk Tolerance

The degree of risk an investor is willing to bear.

Risk Underwriting

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

Roof Assembly

Covering and supporting framework on top of a building.

Salvage

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.

Scheduled Articles

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.

Seasonal Dwelling

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."

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.

Self-Insurance

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

Settlement

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

Shock Loss

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

Short Rate Cancellation

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.

Slow Combustion Stove

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

Special Conditions

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.

Special Limits

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.

Specific Insurance

Refers to a policy covering items that are individually or specifically described.

Sprinkler

A fire protection system in which sprinkler heads are installed at the ceiling level of the building and at certain regular intervals. A fire automatically activates the sprinkler in the particular area involved.

Standard Homeowner's

A named-perils homeowner's policy which can be issued in cases where you might not qualify for regular homeowner's insurance. Some coverages, limits and features are reduced, changed or deleted from the regular homeowner's package.

Starter Kill

Device that prevents a vehicle engine from being started.

Statement of Claim

A written statement by a plaintiff detailing the facts that support the claim against the defendant and the compensation sought.

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

Safekeeping of property in a warehouse.

Subrogation

The substitution of one person or company, for another so that the rights and duties of the original person or company becomes operable by the other. In insurance, it applies more particularly to indemnity policies. Where an insured is fully indemnified by an insurance company for a loss, the company so indemnifying the insured will, in some instances, have the right to benefit financially from any claim made against a third party who was responsible for the damages in the first place.

Subscription Policy

A policy usually in a fire insurance field in which two or more insurance companies may all subscribe to the one policy and indicating on the policy, the apportionment to be borne by each company. The advantages to an insured are mainly that all companies offer exactly the same wording and he has only one policy instead of many.

Subsidiary Coverage

Coverage consisting of accessory elements that support other, more important elements.

Substandard Risks

Insurance risks that are more hazardous than the standard risks and accordingly require somewhat higher rates.

Surcharge

Increase in premium amount according to perils.

Surety

A person (or generally an insurance company) who undertakes to agree to be responsible for certain acts or performances of one party to another party.

Surety Bond

An agreement (not an insurance policy) by which the person or insurance company (known as the Surety) guarantees or agrees to be responsible for certain acts or performances which one party is undertaking to perform for another. the person for whom the work is being done is known as the obligee and the person who is required to perform the work is the principal. E.g. A contract bond in which an insurance company as surety guarantees owners of the building under construction (the obligee) that the contractor (Principal) will have sufficient money etc. to perform their undertaking under the contract.

Tenant, Lessee

Individual or corporation who leases property from a lessor.

Term

The period of time from the inception to the termination of an insurance policy or bond.

Territory

Underwriting element of an insurance premium relative to a specific geographical area.

Theft

Wrongful taking of property without the consent of its owner.

Third – Party Liability Automobile Insurance

Third-party liability automobile insurance is designed to indemnify the insured for financial loss incurred through legal liability for bodily injury and damage to property of others caused by an accident arising out of ownership or operation of an automobile.

Third Party

The first person referred to outside the particular transaction involved. In an Insurance Liability policy the third party is a person who may be injured or whose property may be damaged other than the insured or the insurance company. There maybe many parties in one case.

Tort

A wrong ,or a breach of duty, committed by some person as regards some other person, which gives rise to a cause of action at the hands of the injured party. Some of the forms of Torts are as follows: Trespass on Land - The act of entering on the property of another without permission on or invitation from the owner. Trespass of Goods - The improper retention of the property of another. Trespass of Person -Assault, battery, false imprisonment, malicious prosecution, etc. Some forms of Pleading in Tort actions are as follows: Dentiue - An action asking for the return of the plaintiff's property or its value. Replevin -Sometimes an article in itself is virtually irreplaceable and an action in replevin demands the return of that particular article. Again if it is not possible to return the article then judgment is given on its value. Distress - Sometimes the goods of another might be held as security even without the actual owner's consent. e.g., Personal property of a tenant may be seized to secure rent. At one time this could only be held as security but it is now possible that in event of the rent due not being paid goods may be sold and the proceeds credited toward the rent. If such goods are improperly held it is said to be wrongful distress. Conversion -The wrongful changing of property to which one is entrusted to one's own personal uses. e.g. A company automobile is taken by the employee and sold and the proceeds used in the personal affairs of the employee. Negligence - Doing something a prudent man would not do or not doing something a prudent man would do, the result of which results in loss by damage or injury. Nuisance - An act unlawfully interfering with the person's use or enjoyment of land including the interference of easements and allowing or causing the escape of obnoxious things on the land of another. Some of the defenses to a Tort action are:(1) The denial or dispute of the alleged torts. (2) Volenti non fit injuria or Scienti non fit injuria. (3) An inevitable accident or an act of God. (4) An act authorized by statue. (5) An act of necessity. (6) An act in defense of one's own property.

Total Disability

Complete loss of physical capacities.

Total Loss

Loss value greater than replacement value of the property.

Trailer

Motorless vehicle designed to be pulled.

Transported Goods

Goods transported in any type of vehicle.

Umbrella Policy

A special form of liability policy designed to protect the policyholder for certain unknown contingencies over and above normal coverage and to provide a higher limit of insurance.

Underinsurance

Insurance amount that is less than the full value of the property insured.

Underwriter

The insurance company or group that underwrites or insures a particular risk. It is also used as the identification of the identification of the individuals within the company whose responsibility it is to accept or reject business in the particular line in which they specialize and in this way choose risks their principals are prepared to underwrite.

Underwriting Profit (or Loss)

The excess of earned premiums over incurred losses and expenses shows the underwriting profit. The reverse would show an underwriting loss.

Unoccupied

Where the premises is complete with its content except for the human beings, such persons being temporarily away from the premises, as for example on vacation or any other reason, the premises are said to be unoccupied. Premises that are unoccupied or vacant, present a greater hazard and standard fire insurance policies permit unoccupancy of the premises for only a certain period of tie. I f the unoccupancy is going to extend beyond that time, it is necessary to have and endorsement added to the policy. In protected areas, it is not usually difficult to obtain such an endorsement and an additional charge can be expected. It is distinguishable form "vacant" in that in vacancy, the contents have been moved out leaving nothing but the building whereas in unoccupancy, only the persons occupying the premises are not there.

Utmost Good Faith

A basic principle of any insurance contract. Both parties to the contract are bound to exercise good faith and do so by a full disclosure of all information relevant to the proposed contract. Also known by its Latin equivalent Uberrimae fidei.

Vacant

Status of a dwelling whose occupants have left it with no intention of returning; also, status of any newly built dwelling between the time the work is completed and the time the first occupants move in.

Vacant Building

A building with no occupants or furnishings.

Valuables

Articles of personal property having great worth.

Vandalism

Intentional destruction or damaging of property motivated by malice or revenge, referred to as Malicious mischief.

Vehicle Registration Number

Number appearing on a vehicle licence plate.

Vicarious Liability

Liability imposed upon a person even though he is not a party to the particular occurrence, e.g. the owner of a motor vehicle is vicariously responsible for injuries even though he is not driving the car at the time of the occurrence.

Violation, Infraction

Breach of a law or of a regulation.

Voluntary Medical Payments

Coverage in the second part of the home insurance contract providing for voluntary payment to the insured, for bodily injury suffered by a person other than the insured and for which medical expenses are incurred.

Voluntary Property Damage Payment

Coverage in the second part of the home insurance contract providing for voluntary reimbursement to the insured, for repair/replacement of property other than the insured's.

Waiver

The intentional relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.

Warranty

A guarantee or assurance. A stipulation I n a contract, the breach of which nullifies the contract, such as certain warranties in an insurance policy. Also, used as a guarantee of condition, such as, "warranty of fitness." Warranty is essentially a guarantee. Warranty of the contents of a formula guarantees that the formula contained in the bottle conforms with the statement on the outside. A warranty against defects in workmanship and material is a guarantee that if the product is defective, the manufacturer will replace the part or perhaps the product itself. In insurance, a warranty is the general atmosphere of facts upon which the policy is rated and written.

Watercraft, Boat

Craft designed for navigation on water.

Windstorm

Weather phenomenon characterized by very strong winds capable of damaging property or dwellings.

Without Prejudice

An action taken during claims negotiations designated as "without prejudice" is intended to be without detriment to the existing rights of the parties.

Wood Stove

Means of heating a dwelling.

Wrap-Up Policy

One policy covering all involved interests of a big construction project, e.g., the owner, contractor, sub-contractor, suppliers, etc.

Written Premium

The total amount of premium collected on the class of business or on all classes of business or on all classes of business.

End of Items