Glossary

Insurance terminology can be confusing. At Mitchell and Abbott Insurance Brokers, we try to eliminate any insurance "jargon" from our communication material but occasionally it is necessary to include an insurance term in our wording. If you're having trouble understanding the meaning of a word, please check this glossary for clarification. It may come in handy as a reference when reading your policy or any other insurance communication material. If the word or term isn't listed in our glossary, please feel free to contact our staff ( mail@mitchellabbottgroup.ca ) who will be pleased to provide you with a definition.

Some of these words/terms have been based on definitions and explanations provided in communication material from insurance organizations such as the Insurance Bureau of Canada, the Ontario Insurance Commission, and the Insurance Institute.

Adjuster
One who investigates and tries to arrange settlements of claims.

Adjustment
The process of arriving at an amount of settlement in a claim.

Agent
An agent is a person who is employed to act on behalf of another. An insurance agent usually has a contract with the insurance company to sell the insurance company's policies to the public, on behalf of the insurance company and is paid a commission on such business.

Accident Benefits
Also known as Statutory Accident Benefits, these are benefits you may receive if you are injured in a car accident, or what your family will receive if you are killed in a vehicle accident. They are paid no matter who is at fault for the accident. (Some exceptions apply in cases, for example, when a driver has no insurance). These benefits include replacement for lost income, medical benefits, death benefits, and funeral expenses to name a few.

Actual Cash Value
Actual Cash Value is the actual or current value of an item at the time of the loss.

All Perils
This combines Collision and Comprehensive coverage. In addition, it covers loss or damage caused if a person who lives in your home steals the vehicle that is covered by your insurance policy or if an employee who drives, uses, services or repairs that car, steals it.

At-Fault
If you are involved in a vehicle accident and your car is damaged, your insurance company is required, by law, to assign the percentage of fault for each driver involved in the accident. This is done by using Fault Determination Rules, which are set out in a regulation under the Insurance Act. The rules help insurance companies deal with accidents quickly and economically.

Broker
Typically, a broker sells insurance for a number of different insurance companies, and can give you quotes for each of those companies. If requested, a broker must provide you with the names of all the insurance companies he or she sells car insurance for, and all of the quotes he or she has calculated for you.

Canadian Loss Experience Automobile Rating (CLEAR)
CLEAR is a rating system that groups vehicles based on claims experience, such as the cost of repairs and injury claims, as well as how often the vehicles have been stolen or involved in an accident. Your premium may vary depending on whether or not your insurer uses CLEAR. For example, if your car's repair costs are fairly economical, based on the history of the cost of repairs to the make and model of your car, then an insurer that uses CLEAR might be able to give you a lower rate.

Carrier
An insurance company that assumes a risk is known as the carrier.

Cash Value
The sum of money required to replace a damaged article with another of like kind or quality.

Catastrophe
A catastrophe (as related to insurance) is a large and multiple series of losses beyond normal expectation or reasonable anticipation of loss by that particular cause of loss. For example, hurricanes causing very substantial damage, extended damage by flood, fire involving large areas, etc.

Claim
A claim is the exercising of the right on an insured to be indemnified by his/her insurance company.

Collision or Upset Coverage
This type of automobile insurance pays for damage to the vehicle caused by the upset or the collision of the car with another car or object - regardless if the accident is the fault of the insured.

Collision Coverage
Protects your vehicle in case of accidents that are considered your fault, or partially at-fault. Hit and run accidents are only covered if you purchased collision coverage. This coverage will always be subject to a deductible.

Comprehensive Coverage
Protects your vehicle against loss due to fire, theft, vandalism, falling objects, lightning, windstorm, hail, rising water, earthquake, explosion. Windshield damage is one of the most common comprehensive claims. This coverage will always be subject to a deductible.

Contents
Articles in the building, but not the building itself.

Direct Marketing Insurer
This is an insurance company from which you can buy insurance over the telephone or the Internet. In each case, the person you will deal with must be a licensed insurance broker or agent.

Death Benefit
An amount set out in the policy representing the amount that would be paid in the event of a death. It is also referred to as the "principal sum".

Deductible
A deductible is the amount of a claim the insured must pay. For example, if you get in a fender bender and cause $500 damage to your car, and have a $300 deductible, then the insurance company must pay for the damage over $300 which would be $200. Typically, the higher the deductible, the lower the premium.

Direct Compensation
This coverage is mandatory and required by law in Ontario. It protects your vehicle in accidents that are not your fault.

Exclusion
Exclusion is a type of loss that the policy specifically sets out as not being covered.

Facility Association
All auto insurance companies belong to the Facility Association, which is an insurance pool. It is an insurer of last resort that ensures car insurance is made available to high-risk drivers who might otherwise find it difficult to buy car insurance.

Family Protection Endorsement
This coverage is included in all policies. It protects you if you are involved in an accident with an under-insured third party. For example, if a Florida resident who only carries $50,000 liability coverage, hits you.

Fault Determination Rules
Used to determine fault in an accident. Fault Determination Rules are set out in a regulation under the Insurance Act.

Fraud
An act of willful 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 person or organization.

Graduated Licensing
New drivers in Ontario must go though the Graduated Licensing system before they can receive a full driver's licence.

Group Discount or Rates
This is a discount or special rate provided to all members of an eligible organized group. Examples of eligible groups include employees of the same employer, members of a union or professional or occupational association, or certain non-profit groups.

Insurance Policy
The actual insurance contract consisting of terms and conditions under which the insurance is written.

Lapse
A lapse is when a policy has been allowed to run for its determined time and has not been renewed.

Liability for non-owned automobiles
This coverage protects rental vehicles (while on vacation for example) for physical damage, such as collision. It is only valid in the US and Canada, and is always subject to policy limits and a deductible.

Limited waiver of depreciation
This coverage waives depreciation on partial losses and pays up to the original purchase price on a total loss. In order to qualify, you must be the original owner of the new vehicle, and the date of purchase must be less than 24 months ago.

Loss of Use
This coverage provides a rental car (subject to policy limits) while your vehicle is being repaired after being involved in an accident.

Multi-Peril Policy
An insurance policy insuring a number of causes of loss.

Multiple Line Carrier
An insurance company that writes more than one class of insurance.

Negligence
The main principle of negligence is that people should exercise reasonable care when they act. It is often defined as doing something that a reasonable person would not do, or not doing something that a reasonable person would do.

Partial Loss
A partial loss is one that neither exhausts the insurance or completely destroys the insurance property.

Premium
The amount of money a person pays to insure his or her vehicle.

Private Passenger Vehicles
This refers to a vehicle that is operated by an individual or family for personal use, and not for commercial purposes such as a taxi or delivery service.

Specified Perils
This coverage pays for losses caused by one of the following: fire, theft, lightning, windstorm, hail, rising water, earthquake, explosion, riot or civil disturbance, falling or forced landing of aircraft or parts of an aircraft, or the stranding, sinking, burning, derailment, or collision of any kind of transportation in or upon which an insured car is being carried on land or water.

Term
A term is the period of time from the inception to the termination of an insurance policy or bond.

Third Party Liability
Third party liability insurance is designed to protect you from claims made against you by another person for either bodily injury or property damage. In order to be liable, you must be found negligent to some degree.