While we always try to use plain, everyday language when we communicate with you, there might still be some “insurance-y” words you’re not familiar with.
Here are some of the most common insurance terms and what they mean.
Accident benefits: Your auto insurance policy comes with
Actual replacement cost: No matter how much it might cost to replace in today’s market, your damaged property will be replaced.
Actual cash value (ACV): The
Additional drivers: Any licensed drivers who are allowed to drive your vehicle(s), even it’s not on a regular basis. Additional drivers don’t need to be related to you.
Adjuster: When you submit a claim, your insurance company needs to figure out the extent of the damage or loss so they can determine a settlement amount. The person they assign to do this is called an adjuster.
All perils: Rather than purchasing comprehensive and collision coverage separately for your vehicle, you have the option of getting all perils coverage. This is a blanket auto coverage (also known as “all risks” coverage) that includes both collision and comprehensive with a single deductible. All perils also includes extra coverage for vehicle theft by an employee or someone in the household.
Bare land condominium: A bare land condominium is typically a detached home built on commonly-owned land. The owner would own both the structure and the plot of land it’s built on. The condo corporation would receive fees from the owners to maintain the common areas within the community.
Collision coverage: If your car hits and another vehicle (or object) or if it rolls over,
Comprehensive coverage: Optional
Deductible: Before your insurance company can pay out your claim, you need to first pay the
Depreciation: A decrease in value over a period of time due to wear and tear.
Effective date: This is the date that your insurance policy goes into effect.
Endorsement: An addition to your insurance policy.
Excluded driver: Someone on your auto insurance policy who isn’t covered.
Exclusion: An exclusion is the term used for those losses or events that aren’t covered by your
Family protection: Included with your auto insurance policy (except in Quebec). If you’re in a car accident with someone who only has the minimal amount of liability coverage but your coverage is higher, you could end up losing money if they can’t pay. With the family protection benefit, you’re covered up to the limit of your liability coverage.
First party: The main policyholder listed on the insurance policy. Can also be referred to as “named insured”.
Guaranteed replacement cost: No matter how much your damaged property costs in today’s economy, it will be replaced.
Indemnity: An agreement between you and your insurer (in the form of your insurance policy) where your insurer is required to compensate you for loss or damages, and getting you back to where you were before the incident happened.
In force: An insurance policy that is still active and hasn’t expired or been cancelled.
Insurable interest: You would have insurable interest in something if it’s loss or damage would cause you to suffer financially or otherwise.
Lessor: A person (or company like a car dealership) who provides you with a lease.
Lessee: The person who is granted a lease by a lessor.
Liability/Liability coverage: A liability is a risk. If you have liability coverage, you’re protected financially if you’re in a
Lienholder: A lender who legally owns your property (e.g. a vehicle).
Limitation period: There’s a set period of time in which you can take legal action against an insurance company – this is called the limitation period. Depending on which province you live in, this time period can vary.
Loss assessment: As a condo owner, you’re financially responsible for covering part of the cost of damage to things that happen in the common areas of the condo property. For instance, if someone is hurt in the building’s lobby or if there’s a fire in the laundry room. This
Mortgagee: A lender (e.g. a bank) who lends money to an individual so they can purchase a property.
Mortgagor: The person borrowing money from a lender.
Named insured: A named insured is the person who has been issued an insurance policy.
Overland water coverage:
Personal liability: The typical home insurance policy includes personal liability which protects you and others in your home in case you’re sued – for instance, if someone is hurt during a visit to your home. It can also protect you if you were to damage someone else’s property.
Policy: A legal document that provides all the information about your insurance coverage, as well as its terms and conditions.
Premium: This is the rate that you pay for your home and auto insurance coverage.
Pro rata cancellation: If you cancel your policy before it renews, you’d get back any unearned premium – that is, premium you’d already paid for but hadn’t used.
Replacement Cost: The cost to
Rider: A type of policy that provides additional coverage (for an additional cost) to the original policy.
Risk: If there’s a probability of loss, damage, injury or liability.
Seasonal dwelling: Usually a
Sewer backup coverage: An additional
Specialty belongings: These are
Specified perils: Losses that are a result of events that are specifically defined in your policy, including fire, lightening, theft, hail, windstorm, earthquake, explosion, raising water and riot/civil disturbance.
Third-party liability (auto): With
Total combined limit: If you have coverage for specialty belongings, this is the maximum amount that can be paid out.
Two-way insurance: Auto coverage that compensates for damages to a third party’s vehicle or property, as well as any damage to your own vehicle.
Upset coverage: See
VIN: A VIN or Vehicle Identification Number is a unique 17-character code that indicates when and where the vehicle was manufactured. You can usually find it on the driver’s side of your vehicle, either on the dashboard, the door post or inside the door.