Definitions Flashcards
Agent
A person who is employed to act on behalf of another.
An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public to and is paid a commission on or receives compensation for such business.
Actual Cash Value ( ACV)
The new or replacement cost of the property at the time of loss, less depreciation
Broker
An independent person or firm who acts on behalf of the insured in placing business with insurance companies. Typically, brokers search the market for coverage appropriate to their clients.
Burglary
Forced entry into premises.
Some insurers require evidence of forced entry to paying claims for burglary.
Bid Bond
Guarantees that, in the event his or her bid is accepted, a contractor will sign the contract to do the job per the bid and frequently will be able to furnish a performance bond as well
Bailee
In contract and property law, one to whom goods or property are entrusted for a stated purpose.
Can be either gratuitous ( for no consideration) or for hire (for consideration)
Absolute Liability
Liability that occurs where one has a duty to fill no matter what the circumstances may be.
Often found in cases involving explosives and many automobile laws. An insured of an insurance company may be responsible to a third party irrespective of any statutory faults, negligence or breaches on the part of the insured.
Canadian Accredited Insurance Broker (CAIB)
A professional designation granted after the successful completion of 4 courses by examination.
CAIB was designed by brokers for brokers and focuses on the practical application of technical knowledge and business management strategies.
Carrier
The insurance company which provides coverage or the risk.
Canadian Professional Insurance Broker (CPIB)
A senior designation course of study designed for students who have complete CAIB or CIP, offered through regional brokers associations, including the Independent Insurance Brokers Association of Alberta.
Three stream of study are offered: Personal lines, Commercial Lines, and Brokerage management.
Co-Insurer
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 companies, is a co-insurer whether the policies are written separately or together
Code of Conduct
A formally adopted statement of applied ethics, or a statement of what is expected in practice from the members of a company, organization or association that has formally declared its operating vales and principles.
Most codes of conduct begin with a description of the principles and values to which the organization aspires. The code may also prohibit specific behavior’s or actions by those it covers.
Co-Insurance Clause
A clause in an insurance policy requiring an insured to carry a certain percentages, (usually 80, 90, or 100 percent) 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 require. The formula for this is DID over SHOULD times the LOSS.
Fiduciary
Person of higher trust, someone who holds position of trust
Errors and Omission
Must be $500,000 per claim per person MIN.
Min $2 million max per claim.
Broker
Sells for many
Agent
Sells for one.
Indemnify
To provide compensation for loss or expenses incurred. A contract, express or implied, to repay in the event of a loss. Insured neither gains nor looses.
Defining Risk
Risk is simply described as the chance of financial loss or object of insurance.
Speculative Risk:
This involves the possibility of either financial loss or gain.
Like playing the lottery.
Pure Risk
This involves the chance of financial loss which does not; at the same time offer a chance of financial gain, for example; Loss of property. When there is no opportunity for a person to profit from a loss the risk is pure.
Only pure risk is insurable.
Boiler and Machinery Insurance
Commercial insurance that covers damage caused by the malfunction or breakdown of boilers, and a vast array of other equipment including air conditioners.
Heating, electrical, telephone and computer systems.
Often called equipment breakdown, or system breakdown insurance
Canadian Certified Insurance Broker (CCIB)
The highest designation awarded to brokers by the insurance brokers association of canada, after candidates successfully complete two written exams and one oral exam designed to test applied knowledge of property and liability coverage through risk analysis.
Canadian Insurance Claims Manager Association
The canadian insurance claims managers association (CICMA) is an organization of insurance company claims managers that promotes a high standard of ethics in the handling of claims. One of its main functions is to administer the canadian inter-company arbitration agreement, which it sets up to arbitrate disputes among the companies who are signatories to the agreement. This avoids many possible cases of litigation between insurers.
Cargo Insurance
A type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are lost or damaged. Also refers to goods shipped by various means- land, air inland water.
Chartered Insurance Professional (CIP)
This ten course program places emphasis on the integration of both practical and theoretical knowledge and it features concentrations for underwriters, brokers/ agents and adjusters.
The program is 10 courses. Five mandatory, three applied and two electives chosen from more than 20 available courses.
Offers by the Insurance Institute of Canada
Co-Insuer
Two o 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.
Disclosure
Act of making something known. Example; everything you know about an insured must be disclosed to the insurance company.
Direct Loss
Occurs when the peril insured against actually strikes or “attacks” the object of insurance
Errors and Omissions Insurance
An insurance form that protects the insured against liability for committing an error and omission in the performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury or property damage
Required in Alberta, Coverage at least $500,000 per claim
with max payout $2 Million in a policy year.
Endorsement
An amendment added to a written document, particularly an agreement between parties, altering its provisions.
Facility
A pooling agreement between all automobile insures that a market is guaranteed for all licensed drivers and registered owners. The results of the total industry pool are shared by all members of the agreement.
Facility has recently been replaced in most provinces by the facility assosciation.
Facility Association
Similar to Facility in intent. However, individual risks are written with selected carriers on behalf of the association, with the collective results then shared by all of the association.
Co-Insurance
Requires an insured to share in a loss with the insurer if they are underinsured.
Condominium Unit (Standard)
A condominium unit that is located within a multi-unit building. It’s boundaries are the ceilings, floors and walls of the unit and everything inside that space.
Bodily injury
Means physical injury or death
Bodily injury (CGL policy)
Means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
Binder
Written confirmation that insurance coverage is in effect. It includes a summary of the coverage bound.
Binding authority
The authority to bind an insurer to an insurance contract without first submitting the application to an underwriter and to confirm such insurance coverage to an applicant.
Civil Authority
Any person acting under the authority of any level of government with respect to the protection of persons and property in the event of an emergency.
Direct Loss
Physical damage to property caused directly by a peril.
Endorsement
An amendment made to an insurance policy altering the provisions of the contract (policy).
Direct Writer
An insurance company who deals directly with the public.
Extra expenses
Additional expenses incurred to reduce the impact of a loss.
Fiduciary
One who holds property or money in trust for another.
Floater
Provides additional coverage beyond what is provided in a habitational policy for items that are moveable or float from location to location.
Friendly Fire
One which is burning something intended to be burned or something burning within its intended confines.
Fiduciary Duty
A duty to act in trust and in the best interests of another, particularly with respect to monetary matters.
Fidelity Bond
A bond in which an insurer agrees to reimburse an employer for a loss arising out of an employee’s dishonest act.
Facility Association
An organization that exists for the purpose of providing insurance ( at least basic compulsory coverages) for risks which are unable to obtain insurance protection in the regular market.
Grid Rating
Rating which applies to private passenger vehicles for basic coverage premiums.
Hostile Fire
A fire which becomes uncontrollable or breaks out where it was intended to be or one which is burning property not intended to be burned.
Indemnify
To return an individual after a loss to the same financial position he or she enjoyed immediately prior to the loss.
Indirect Loss
A loss which results as a consequence of a direct loss.
