Glossary of Insurance Terms

Question 1

Agent

Answer 1

In insurance: a person authorized to represent insurer in dealing with third parties in matters relating to insurance.

Question 2

Bailee for Hire

Answer 2

One who has temporary possession of personal property for others for a purpose other than sale, and who is compensated for caring for it.

Question 3

Binder

Answer 3

A written or oral agreement from the insurer giving temporary protection to insured, pending issue of the policy.

Question 4

Bodily Injury

Answer 4

Generally defined in liability policies to mean bodily injury, sickness, or disease sustained by a person, including death resulting from any of these, at any time.

Question 5

Broker

Answer 5

An independent middleman, not tied to a particular company, who obtains insurance for his clients from insurance companies or their agents.

Question 6

Burglary

Answer 6

In insurance policies: the unlawful taking of property from within the premises by a person unlawfully entering or leaving the premises, as evidenced by marks of forcible entry or exit.

Question 7

Commission

Answer 7

Sum paid as remuneration to the broker for business placed with an insurer.

Question 8

Condition

Answer 8

A condition imposed upon insureds under the policy requires them to do or not to do something during the term of the policy.

Question 9

Condominium

Answer 9

A system of separate ownership of individual untils, in a multiple unit building.

Question 10

Consideration

Answer 10

In a contract, an exchange of something of value between the parties.

Question 11

Contract

Answer 11

An agreement between two or more parties which is enforceable by law.

Question 12

Damages

Answer 12

The specific dollar amount or percentage of the insured value to be borne by the insured before they are entitled to recover from the insurer.

Question 13

Disability

Answer 13

When used in Accident and Sickness Insurance, a physical or mental inability to work.

Question 14

Dwelling

Answer 14

The building occupied as a private residence.

Question 15

Endorsement

Answer 15

Acknowledges a change in the terms of the contract.

Question 16

Ethics

Answer 16

Relating to moral character. Conforming to professional standards of conduct.

Question 17

Exclusion

Answer 17

Provision specifying the situations, occurences, or persons not covered by the policy.

Question 18

Fiduciary

Answer 18

One who manages money or property for another.

Question 19

Fire

Answer 19

The loss of property due to ignition or burning.

Question 20

Floater

Answer 20

Insurance document used to provide coverage for property having a high degree of mobility.

Question 21

Forthwith

Answer 21

Without delay. The word “forthwith” and “immediately” convey the same meaning.

Question 22

Fraud

Answer 22

A deliberate attempt to deceive, with a view to securing some profit.

Question 23

Friendly Fire

Answer 23

Fire contained to the place it is supposed to be, such as a fireplace.

Question 24

Hazard

Answer 24

A condition which may cause a peril to occur.

Question 25

Hold Harmless

Answer 25

A contractual agreement whereby one party assumes legal responsibility for the acts of another.

Question 26

Hostile Fire

Answer 26

One which becomes uncontrollable or breaks out from where it is intended to be, and becomes a hostile element.

Question 27

Indemnity (principle of)

Answer 27

Insurance principle which aims at ensuring the victim of a loss receives the actual amount of the loss; no more and no less.

Question 28

Insurance Interest

Answer 28

People have an insurable interest when they are able to show that they would suffer financially from a loss; a requirement of insurance contracts.

Question 29

Insurance

Answer 29

The undertaking by one person to indemnify another person against loss or liability for loss, in respect of a certain risk or peril to which the object of insurance may be exposed.

OR

To pay a sum of money/other thing of value upon the happening of a certain event.

Question 30

Loading

Answer 30

The rate over and above the fire rate which is charged by the insurer to provide additional policy coverages.

Question 31

Material Fact

Answer 31

A fact which, if the insurer knew about it, would cause it to decline the insurance altogether, or charge a higher premium for accepting it.

Question 32

Minimum Retained Premium

Answer 32

The minimum amount of premium an insurer will retain in the event the policy is cancelled prior to its expiry.

Question 33

Negligence

Answer 33

Failure to use the degree of care which an ordinary person of reasonable prudence would use under the given circumstances.

Question 34

Partial Loss

Answer 34

A loss under an insurance policy which does not either completely destroy or render worthless the insured property, or which does not exhaust the insurance limits applying thereto.

Question 35

Payee

Answer 35

One to whom insurance monies are payable in the event of a loss to insured property.

Question 36

Peril

Answer 36

The cause of loss.

Question 37

Premises

Answer 37

The land contained within the lot lines.

Question 38

Premium

Answer 38

The money for consideration paid by the insured to the insurer for insurance protection.

Question 39

Private Protection

Answer 39

Refers to the things a person has done internally to prevent or reduce loss.

Question 40

Property Damage

Answer 40

In commercial liability insurance policies: generally defined as “physical injury to tangible property”, including all resulting loss of use of that property; or loss of use of tangible property that is not physically injured”.

Question 41

Public Protection

Answer 41

Refers to the protection provided to insured property from outside sources.

Question 42

Pure Risk

Answer 42

Involves the chance of financial loss with no chance of financial gain.

Question 43

Rebate

Answer 43

Discount or reduction in stipulated premium of policy, generally by agent or broker, and intended as an enticement.

Question 44

Relative

Answer 44

One person connected to another by blood or affinity.

Question 45

Repair

Answer 45

The act of restoring a damaged structure or thing to a condition as close as possible to that in which it originally existed.

Question 46

Replacement Cost

Answer 46

The cost of replacing, repairing, constructing, or reconstructing–whichever is the least– the property on the same site with new property of like kind and quality; for like occupancy, without deduction for depreciation.

Question 47

Retention

Answer 47

Refers to “self-insurance”; a means of generating funds from within the organization to pay for losses.

Question 48

Rider

Answer 48

Adds addition coverages to the existing contract.

Question 49

Risk Control

Answer 49

A risk management technique concerned with taking measures to reduce the frequency and severity of losses.

Question 50

Risk

Answer 50

The chance of financial loss to which the object of insurance may be exposed.

Question 51

Robbery

Answer 51

Felonious taking of property from the possession of another against his will, accomplished by means of force or fear.

Question 52

Subrogation

Answer 52

Refers to the lawful substitution of a third party in the place of a party having a claim against another party. In insurance contracts, the insurer has the right to “step into the shoes” of the party whom it has compensated, and sue any party whom the compensated party could have sued.

Question 53

Theft

Answer 53

The taking of one’s property without the owner’s consent.

Question 54

Third Party

Answer 54

One who is not a party to the insuring agreement, but who may have rights therein.

Question 55

Tort

Answer 55

A legal wrong, other than breach of contract, for which the court will provide a remedy in the form of a suit for damages.

Question 56

Tortfeasor

Answer 56

One who commits a tort; a wrong-doer.

Question 57

Total Loss

Answer 57

Complete destruction of the insured property.

Question 58

Underwriter

Answer 58

a) The one assuming the risk, in return for the payment of a premium.

b) The person within the insurance comapny authorized to accept or reject applications for insurance.

Question 59

Utmost Good Faith

Answer 59

A requirement of insurance contracts; implies complete honesty, concealing nothing.

Question 60

Valued Policy

Answer 60

One in which the insured and insurer agree as to the value of the property insured in advance of any loss to it; such amount to be paid in the event of a total loss of the covered property.

Question 61

Void

Answer 61

Having no legal force or binding effect.

Question 62

Voidable

Answer 62

That which is capable of being declared void.

Question 63

Waive

Answer 63

To voluntarily give up a right.

Question 64

Waiver

Answer 64

The unilateral and voluntary relinquishment of a known right.

Question 65

Waiver of Consurance

Answer 65

A clause contained in commercial property insurance policies which provides that the coinsurance penalty will not be applied in situations involving small losses even though insured may not be in compliance with coinsurance requirements (i.e. pentaly waived for losses which are less than 2% of amount of insurance and less than $5000).

Question 66

Warranty

Answer 66

A promise that certain facts are truly as they are represented to be and that they will remain so.