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Clover Insurance Brokers
3800 Steeles Ave West, Suite 201E,
Woodbridge, Ontario L4L 4G9
A Division of Wood & Kirkpatrick LTD, 
Canada's Oldest Broker Since 1821 
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Glossary of insurance terms

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.