Key Terms Flashcards
Deductible
The amount of money a policyholder pays out of pocket first before the insurance begins to cover the balance.
E.g. Loss = $4000; Deductible = $500; Insurer pays $3500.
General Insurance
Any insurance product other than travel, life or health insurance.
Hazard
Any condition that increases the risk or chance of loss occurring or increases the amount of damage that may happen if there were a loss.
E.g. Exposed electricals, wet ground
Indemnify
The action compensating an insured following a loss under the insurance policy.
Indemnity
The contractual obligation by the second party (the insurer) to put the first party (the insured) back in the same financial position they were in at the time the loss occurred.
Insured/Policyholder
The person or entity who purchases an insurance policy. (First party)
Insurer
The insurance company who issues an insurance policy. (Second party)
Moral Hazard
Subjective characteristics of an insured or an applicant for insurance that increases the likelihood of loss.
E.g. Dishonesty
Object of Insurance
The item that is insured or covered in an insurance policy.
Peril
A cause of loss.
E.g. Fire, wind, theft, falling objects, weather, vandalism.
Physical Hazard
Observable conditions relating to the object of insurance.
E.g. Tight spaces, height, heat, construction.
Premium
The sum of money paid by a person to an insurance company in exchange for an insurance policy.
Principle of Indemnity
A basic rule of insurance stating that policyholders receive the actual amount off their loss, no more and no less.
Property and Casualty (P&C) Insurance
Another name for general insurance.
Property insurance is coverage for homes, business assets, equipment, and more.
Casualty insurance is coverage against finding a legal responsibility for causing injury to another person or damage to their property.
Pure Risk
The chance of financial loss with no chance of financial gain.
Registered Insurance Broker
An insurance broker in Ontario who is governed by the Registered Insurance Brokers (RIB) Act.
Reinsurance
A form of insurance that can be purchased by an insurance company to limit the amount of loss it might experience at any one time.
Registered Insurance Brokers of Ontario (RIBO)
A self-governing, self-funded organization of general insurance brokers in Ontario.
Risk
The chance of financial loss occurring, or an object or activity that insured or about to be insured.
Risk Retention/Self-insurance
A conscious decision on the part of an organization to self-insure all or a portion of losses rather than purchasing insurance (that is, a planned acceptance of future losses).
Speculative Risk
The possibility of either financial loss or gain.
Binder
A written or oral agreement giving temporary insurance protection, pending issuance of the insurance policy by the insurer.
Broker Binding Authority
The power given to a brokerage under a contractual agreement allowing the brokerage to immediately provide insurance coverage to an applicant up to a pre-agreed limit without first receiving approval from an underwriter.
Broker Portal
A software program downloaded to the broker policy management system that allows brokers to upload and download a policy information data to a specific insurance company’s portal.
