Definitions

Question 1

Accommodation Sharing

Answer 1

An arrangement set up by means of a website or mobile app in which a property primarily occupied by its owner is rented for a short time period to a third party.

Question 2

Subrogation

Answer 2

Legal process by which an insurance company, after the payment of a loss, is assigned the rights of the insured to recover the amount of the loss from those who are legally liable for it.

Question 3

Hazard

Answer 3

a. A risk or probability that the event insured against might occur.
b. A condition that engenders or increases the chances of a loss.

Question 4

Common Hazard

Answer 4

A hazard that is generally found in most occupancies. Heating, lighting, and housekeeping are examples of hazards common to most occupancies.

Question 5

Special Hazards

Answer 5

Foreseen hazards/risks common to certain types of businesses that are not covered in an ordinary place. For example, woodworking plants and paint shops.

Question 6

Automatic Sprinkler

Answer 6

A device to protect property from damage by fire in which water is piped to devices called sprinkler heads that melt with heat and release water to extinguish a fire.

Question 7

Liability Insurance

Answer 7

Insurance that agrees to indemnify the insured for sums he or she may be required by law to pay third parties as damages for bodily injury or damage to property. The maximum amount of insurance provided under a policy of liability insurance.

Question 8

Statute Law

Answer 8

A law set down in a government act and passed by legislature.

Question 9

Tort

Answer 9

A legal wrong arising from a duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owed to people, generally, rather than to a specified individual.

Question 10

Negligence

Answer 10

Failure to use the degree of care expected from a reasonable and prudent person.

Question 11

Duty Of Care

Answer 11

The obligation that a person has to exercise reasonable care with respect to the interests of others, including protecting them from harm.

Question 12

Private Nuisance

Answer 12

An unlawful interference of a person’s enjoyment and use of his or her land.

Question 13

Public Nuisance

Answer 13

An action or a thing that interferes with the general public. It interferes with the public as a class, not merely with one person or a group of citizens.

Question 14

Nuisance

Answer 14

In law, a class of wrong that arises out of unreasonable, unwarranted, or unlawful use by a person of his or her own property, whether that property be real or personal or from his or her own improper, indecent, or unlawful personal conduct and producing an annoyance, inconvenience, discomfort, or hurt to others or to their property that the law would presume a consequential damage. In insurance claims, it is most frequently met as a cause of action, arising from the escape of some obnoxious substance.

Question 15

Occupancy

Answer 15

The act of holding possession of a property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and/or people in it.

Question 16

Trespasser

Answer 16

A person who wrongfully enters onto someone else’s land with neither the right nor permission to be there.

Question 17

Licensee

Answer 17

A person who has permission to enter a premises for his or her own purpose.

Question 18

Contractual Entrant

Answer 18

A person who enters onto premises under a contract with the occupier for example, a hotel guest or a theatre goer.

Question 19

Invitee

Answer 19

A person who is expressly or impliedly invited onto the premises for some purpose involving economic or potential economic benefit to the occupier for the premises. For example, a customer entering a store for the purpose of making a purchase.

Question 20

Hold Harmless Agreement

Answer 20

An agreement that allows one party to protect another party against any future losses or claims that may result from a particular activity. Also known as an indemnity agreement.

Question 21

Indemnity Agreement

Answer 21

A written contract entered into between indemnitor and surety in which the indemnitor secures surety against loss the surety may sustain as a result of having used a bond for a third party or for the indemnitor.

Question 22

Employers Liability Insurance

Answer 22

Coverage for the legal liability imposed on an employer to pay damages to an employee injured by the employer’s negligence. This is not workers’ compensation insurance, where special acts of legislation set out specifically the relationship between the employer and employees in certain circumstances and the formula by which awards in each case are computed.

Question 23

Contributory Negligence

Answer 23

Many accidents are the partial fault of both parties who are involved in the accident. The plaintiff who sues another party for damages may also be guilty of some negligence, which is a concurrent cause of the damage, and is therefore guilty of contributory negligence.

Question 24

Umbrella Policy

Answer 24

A special form of liability policy designed to protect the insured for certain unknown contingencies over and above other coverages and to provide excess insurance.

Question 25

Facility Association

Answer 25

An entity established by the Canadian automobile insurance industry to ensure that automobile insurance is available to all owners and licensed drivers of motor vehicles where such owners or drivers are unable to obtain automobile insurance through the voluntary insurance market.

Question 26

Risk Sharing Plan

Answer 26

A self insurance method of managing or reducing exposure to risk by spreading the burden of loss among several units of an enterprise or business syndicate. Risk retention pools formed with the contributions of participants are often utilized as a way to self insure risks among multiple entities.

Question 27

Lessor

Answer 27

One that conveys property by lease.

Question 28

Lessee

Answer 28

One that hold real or personal property under a lease.

Question 29

Lienholder

Answer 29

One who holds a registered claim, against a given property as security or collateral against a loan or workmanship performed in relation to that property. The financial commitment associated with a registered lien must be fully discharged and satisfied before the property in question may be liquidated, sold or transferred to another party.

Question 30

Non-owned Automobile Insurance

Answer 30

A policy that protects the insured against third party claims arising out of some other person driving or using hir or her own vehicle in the business of the insured.

Question 31

Other Automobile

Answer 31

A non owned automobile; that is not owned by anyone in the household and does not have insurance coverage.

Question 32

Canadian Loss Experience Automobile Rating (CLEAR)

Answer 32

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.

Question 33

Manufacturer’s Suggested Retail Price (MSRP)

Answer 33

The price for a product as recommended by the manufacturer of that product.

Question 34

Pure Premium

Answer 34

Portion of the total premium that is needed to pay expected losses. It does not take into account money needed for company expenses.

Question 35

Premium

Answer 35

The price of insurance protection for a specified risk for a specified period of time.

Question 36

Acquisition Cost

Answer 36

The cost of putting business on the books and acquiring the premium. The items involved are not standard with all insurers, but generally may include such items as agents’/brokers’ commissions, field representatives’ costs, premium tax, and perhaps some of the relevant head office acquisition costs of operation.

Question 37

Commission

Answer 37

Compensation based upon the amount of production.

Question 38

Underwriting Profit

Answer 38

The amount of money an insurance company gains as a result of its insurance operations. Excess of earned premiums collected over loss payments and expenses.

Question 39

Underwriting Loss

Answer 39

The amount of money that an insurance company loses as a result of its insurance operations. It excludes investment transactions and income taxes.

Question 40

Actuary

Answer 40

One who specializes in the mathematics of insurance mortality rates and the like.

Question 41

Ratemaking

Answer 41

The process of compiling and analyzing data to establish rates that accurately reflect the level or risk. Usually performed by actuaries.

Question 42

Rate

Answer 42

Amount charged to an insured that reflects the expectation of loss for a covered risk, insurance company expenses, and profit. In other words, it is the basis of premium calculation for the insurance provided for the exposure.

Question 43

Loss Ratio

Answer 43

The loss ratio is the ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. Usually expressed as a percentage.

Question 44

Automobile Statistical Plan (ASP)

Answer 44

A collection of statistical information that all automobile insurers who write business in Canada must record and file as prescribed by the superintendents of insurance. Commonly known as the Green Book.

Question 45

Law Of Large Numbers

Answer 45

The mathematical premise that states that the degree of uncertainty is reduced as the number of events increases.

Question 46

Class Rating

Answer 46

A rating approach that uses rates that reflect the average probability of loss for business within large groups of similar risks; the predominant method used for rating commercial properties.

Question 47

Schedule Rating

Answer 47

A method of rating risks by measuring them against fixed standards of construction and protection. Risks below standards earn a charge that increases the rate; risks above earn a credit that reduces the rate.

Question 48

Loading

Answer 48

An additional charge included in an insurance rate to reflect a hazard not contemplated in the basic rate for the class.

Question 49

Product Recall Insurance

Answer 49

Insurance that indemnifies the insured for the cost of recalling products known or suspected to be defective.

Question 50

Errors And Omissions (E&O) Insurance

Answer 50

An insurance form that protects the insured against liability for committing an error or 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.

Question 51

Directors And Officers (D&O) Liability Insurance

Answer 51

Protection for officers and directors of a corporation against damages resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured. Also called D&O liability insurance.