An explanation of common insurance terms

Have you ever tried to read through your insurance policy and ended up spending more time Googling what the various words and terms meant?

We’ve tried to save you some time by putting together a list of some insurance-y words you might come across in your insurance policy or other insurance documents along with their meanings.

Adjuster: An adjuster works for the insurance company and helps determine the extent of your loss or damage when you submit a claim.

Claim: The notification you submit to your insurance company when you experience a loss or damages to your property.

Coverage: This refers to the protection provided by your insurance policy.

Deductible: When you have a claim, the deductible is the amount that you pay out first, then your insurer covers the remaining cost. Learn more about choosing a deductible in our Home Insurance 101: Deductibles article.

Deduction for depreciation: This refers to the loss of the original value of an item due to age, wear and tear or because it’s obsolete.

Depreciation: A lowering in value over time, usually due to wear and tear.

Effective date: This is the date that your insurance policy takes effect.

Excluded driver: Someone who isn’t covered by your auto insurance policy.

Exclusion: This refers to any losses or events that aren’t covered by your insurance policy.

Guaranteed replacement cost: Your damaged property will be replaced, no matter how much it costs in today’s economy.

Limitation: Similar to an exclusion, a limitation is an exception to your coverage that applies under certain circumstances or for a specified period of time.

Limitation period: If you were to take legal action against an insurance company, you’d have a certain period of time in which to do it. This time period varies depending on what province you live in.

Named insured: The person who’s been issued the insurance policy.

Personal liability: Personal Liability protects you and the people in your home in case you’re sued, whether you’re actually on your property or not. A common reason for getting sued is if someone gets hurt while they’re at your home. Check out a few more examples of in our post Liability coverage explained.

Policy: A legal document that details your insurance coverage, along with its terms and conditions.

Premium: The amount that you pay for your insurance coverage.

Replacement cost: The cost to repair or replace your home or personal belongings, including labour and materials, without any deduction for depreciation. (For homeowners, this isn’t the same as market value which includes the cost of the land.)

Seasonal dwelling: A dwelling (often a vacation home) that’s only occupied for a portion of the year.

Specialty belongings: Specialty belongings include: Jewellery, watches, gems, furs, collectibles (including sports cards, comic books, sports memorabilia, rare or signed books, coins and stamps) and silverware. Learn more in our article on How to look after your most expensive stuff.

Total combined limit: The maximum amount that can be paid out on your specialty belongings.

VIN: A VIN or Vehicle Identification Number is like a fingerprint for your vehicle. It’s a unique 17-character code that tells you where and when the vehicle was manufactured. It can typically be found on your vehicle’s dashboard on the driver’s side, on the driver’s side door post and inside the driver’s side door.


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