Most of the definitions below are provided courtesy of the Insurance Institute of Canada. Definitions provided by Insurance Bureau of Canada are indicated with an asterisk ("*").
The language of insurance can be quite complex and confusing. Below are some commonly used insurance terms and their meanings. Insurance professionals with whom you may come into contact should be prepared to explain these terms. If you don't understand, ask!
This information is for educational purposes only and should not be relied upon to form professional opinions on coverage issues.
- Canadian Loss Experience Automobile Rating*
- See CLEAR.
- Canadian Standard for Automobile Theft Deterrent Systems (ULC S338)*
- This is the benchmark for all immobilizer theft deterrent systems. In after-market systems, the Canadian Standard demands that the immobilizer cut three vital circuits in the vehicle - the starter, the ignition and the fuel supply - to disable the vehicle. In Original Equipment Manufacturers (OEM) systems, the immobilizer disables the fuel injection system to render the vehicle inoperable. The Canadian Standard also requires that each theft deterrent system undergo extensive laboratory testing. Immobilizers meeting ULC S338 offer a proactive means of preventing vehicle theft.
- During the policy period, either the insurer or the customer may terminate coverage according to provisions in the contract.
- The amount of capital available to an insurance company, or to the industry as a whole, for underwriting insurance coverage or coverage for specific perils.
- Captive Insurance Company*
- A company that is owned solely or in large part by one or more non-insurance entities (e.g., a municipality) for the primary purpose of providing insurance coverage to the owner or owners.
- Certificate of Insurance
- Written document stating that insurance is in effect. Includes general statement of policy's coverage.
- Certified Copy
- Reproduction of a document, that authority having custody of original signs and attests as a true, genuine and authentic copy.
- See Commercial General Liability Policy.
- Chartered Insurance Broker (C.I.B.)
- A professional designation earned by examination following study courses.
- Civil Commotion
- Disturbance involving a large number of individuals. An uprising of people creating a prolonged disturbance.
- Civil Liability*
- An individual's liability to others for harm caused to them by his or her actions.
- The exercising of a policyholder's right under a policy to be paid by his or her insurance company for certain financial losses suffered. A claim can be any notification of a possible loss under an insurance policy, whether or not any payment follows. For every claim that is reported, the insurance company must set aside money ("reserves") sufficient to cover its anticipated cost.
- One who makes a claim.
- Claims Examiner
- An employee of an insurer who handles and is responsible for incoming claims.
- Words in a policy which describe certain specifications, limitations or modifications.
- CLEAR is the Canadian Loss Experience Automobile Rating. This is a method for classifying different models of cars for insurance purposes by using historical claims data, including Collision, Comprehensive, Direct Compensation - Property Damage, and Accident Benefits coverages. CLEAR is used by many insurance companies across the country.
- Co-insurance Clause
- A clause in an insurance policy requiring an insured to carry a certain percentage, usually 80, 90 or 100 per cent of insurance in relation to the value of the property insured. If the insured fails to do this, then he agrees to be a self insurer of all losses large or small in the same ratio as his failure to comply with the percentage required, is related to the insurance required. For example, a building valued at $100,000 with an 80 per cent co insurance clause would require insurance coverage of $80,000. If coverage is carried for only $40,000 then the insured is a self insurer or co insurer for $40,000 of the $80,000, and the insurance company would be responsible for the same amount. This ratio would apply even if a loss were only $5,000. Then the insurance company would pay $2,500 and the balance or co insurance penalty of $2,500 would be borne by the insured.
- Two or more persons or companies who may be sharing a loss. A company whose policy covers the same risk as that of one or more other companies, is a co insurer whether the policies are written separately or together.
- Falling in of a building.
- A vehicle or a ship collides when it strikes another object or another vehicle or ship. Collision insurance insures against loss so caused.
- Collision Coverage*
- An optional type of automobile insurance coverage that pays for the cost of repairing the insured vehicle if it is damaged in a collision or upset. In some parts of the country, this is referred to as "Section C."
- A secret agreement between persons to defraud another, e.g., an insured driver of an automobile and his passenger may misrepresent the facts of an accident in order to have monies paid to the passenger under the insured's automobile insurance policy
- Commercial Auto Insurance*
- This policy is designed to protect a business in the event of accident, theft, injury and/or other damages involving business vehicles and business staff while driving those insured company vehicles, or their own vehicles or rented vehicles for business purposes. There are a variety of coverages for commercial autos, depending on the business being operated and who owns the vehicles being used.
- Commercial General Liability policy (CGL)*
- A standard form of liability insurance developed for use in the business sector. It is usually contained in a broader mercantile policy also covering property loss and business interruption.
- Commercial Host Liability (Liquor Liability)*
- Coverage for the liability incurred by owners of establishments selling alcoholic beverages, for damage caused by intoxicated patrons and for injury to themselves or third parties.
- Commercial lines*
- Refers to insurance for businesses, organizations, institutions, volunteer groups, governmental agencies, and other commercial establishments.
- Commercial Property Floater
- Property used in a business which requires it to be moved from place to place, may be insured on one of the forms of commercial property floaters. A television studio, for example, may require insurance on their equipment even though it may be out of the regular studio much of the time. In most instances, these are written on special forms suited to the particular need such as contractor's equipment floater, inland marine block policy, jeweller's block policy, salesman's floater policy, etc.
- Commercial Property Policy
- An all risk and all inclusive policy applicable to stocks of wholesalers, distributors and retailers. Coverage is basically fire, extended coverage, theft and "all other perils." Sometimes called Commercial Block or Mercantile Block.
- Compensation based upon amount of production, e.g., independent insurance agents are compensated on the basis of a percentage of the premium. The percentage varies with different lines of insurance.
- Comprehensive Automobile Coverage
- An item of coverage in an Automobile Physical Damage policy insuring against loss or damage resulting from numerous miscellaneous causes such as fire, theft, windstorm, flood, vandalism, etc., but normally not including loss by collision or upset.
- Comprehensive General Liability Policy
- A policy particularly suited to a manufacturer, contractor or large wholesaler or retailer providing broad coverage for claims made against him for bodily injury or damage to property of others for which he may become liable and which arise out of his entire business operation.
- Comprehensive Personal Liability
- A form of liability insurance for individuals which insures the policyholder in the event he has become liable to pay money for damage or injury he has caused to others. This form does not include automobile liability, but does cover almost every activity of the policyholder except those which arise from the operations of a business. Hence "Personal" Liability.
- Compulsory Insurance*
- Any form of insurance (usually auto insurance) that is required by law.
- As applied to insurance, the withholding from an insurance company of information pertinent to a risk.
- Conditions are terms of insurance contracts that impose obligations an insured person must satisfy in order to preserve coverage.
- Is the individual ownership of a single unit in a multiple unit building or group of buildings, together with a percentage interest in that part of the total property owned jointly by all unit owners. In an apartment building, each apartment would be a unit and the stairways, pathways and parking areas would be in common ownership. Condominium property requires special insurance treatment.
- Consequential Loss
- The word "consequential" means something following as an effect or result. It is an indirect result of the occurrence that causes the loss.
The difference between a direct loss and a consequential loss can be 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.
- Contingent Liability
- A liability which may be incurred by an insured as a result of negligence on the part of independent persons engaged by him to perform work. The most common example is the contingent liability of a principal contractor, which may result from construction operations undertaken by his subcontractors.
- Continuation Certificate
- A renewal or premium payment notice of a bond or policy.
- A way to make a promise legally enforceable.
- Contractor's Liability Insurance
- Insurance protecting contractor from defined liability claims arising from contractor's operations.
- Contractual Liability*
- Liability assumed within contract either written or implied. This coverage is generally purchased as an endorsement to CGL coverage.
- A form of theft. The taking over of property which belongs to another and using it as if it were property owned by the person doing the converting. For example, a car bought on a time payment plan may be taken by the purchaser to some far away place with the intent of trying to escape any further payments on the car; or the car may be sold or traded for another under the pretense that the car actually belongs to the purchaser. This is the conversion of the vehicle to the purchaser's own use. It applies to all property belonging to one person but which is in the hands of another, as for example, the bailee of goods, an employer who advances certain monies to an employee for specific purposes, etc.
- To protect with insurance, or the insurance protection provided.
- What the insurance contract covers.
- Crime Stoppers*
- An international, non-profit civilian program that assists police in solving crimes through tips reported by citizens who have knowledge or a suspicion of a crime that has taken place. Since its establishment, Crime Stoppers has contributed to solving more than half a million criminal cases internationally, with a value of more than $3 billion.
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