Key Terms and Definitions Flashcards
Risk
The chance of financial loss to which an object of insurance is exposed
Speculative Risk
The chance of financial gain or loss
Pure Risk
The chance of financial loss but no chance of financial gain
Insurance
The undertaking of one person to indemnify another against loss or the liability for loss in respect to certain risk or peril the object of insurance may be exposed.
Contract
An agreement between two or more persons which creates an obligation to do or not do a particular thing
Consideration
The exchange of something of value between parties.
Insurable Interest
One has an insurable interest in the subject matter of insurance when they will suffer financially by a loss
Utmost Good Faith
The high standard of honesty that insurers, brokers and insureds are held to when forming insurance contracts.
Indemnity
The application of the principal of indemnity ensures that people receive the actual amount of their loss, no more no less.
Insurance Binder
A temporary agreement of the insurer to provide specific coverages pending the issue of the policy.
Agency Agreement
A written contract between the insurance company and the brokerage that acknowledges their relationship.
Void Contract
One which is unable in law to support it’s intended purpose, and is considered never to have existed.
Voidable Contract
One which may be voided at the option of the wronged party, but not by the wrongdoer.
Peril
The cause of loss.
Direct Loss
Occurs when the peril insured actually attacks the object of insurance.
Indirect loss
Losses which arise as a consequence of direct loss.
Actual Cash Value
New or replacement cost at the time of loss, minus depreciation
Replacement Cost
The cost to repair or replace the property at the time of loss with with property that is new or of like quality, without deduction for depreciation.
Valued Policy
Both the insured and the insurer agree at the time the policy is issued as to the value of the property being insured. When loss occurs, the agreed amount will be paid.
Blanket Coverage
A single limit of insurance for all property that falls in a specific class.
Scheduled Coverage
Covered property is itemized on the policy
Fiduciary
A person held in a special position of trust and confidence who handles the financial affairs of another.
Unearned Premiums
Premiums not yet earned by the insurer which are held in trust to refund the insured in the event of the cancellation of the policy before the term ends.
Fire
The presence of a visible flame or glow. Actual ignition or burning is required.
Friendly Fire
One which is contained within its proper receptacle.
Hostile Fire
One which passes outside the limits assigned to it.
Proximate Result
Damage which arises from a natural or continuous sequence of events from the peril causing the loss.
Material Change
Any change within the control and knowledge of the insured that arises after the policy has been issued and serves to increase the chance of loss.
Pro Rata
The rate in which refunds will be calculated to the insured when the insurer cancels the policy.
The amount of premiums paid divided by the number of days in the policy, multiplied by the remaining days unused.
Short Rate
The rate of return that the insured will receive a refund when they cancel a policy.
Refunded premiums will be calculated pro rata, minus deduction for cancellation fees and administrative charges.
Notice of Loss
A written notice submitted immediately by the insured, or the broker on the insured’s behalf, to the insurer in the event of a loss.
Proof of Loss
A formal verification under oath detailing the loss and amounts being claimed under the policy
Fraud
The deliberate act of deception with the intent to gain a profit
Deductible
Amount the insured is required to absorb for each loss for which insurance is provided before receiving payment from the insurer
Subrogation
When the insurer has paid a claim for a loss caused by a third party, the Insurance Act allows the insurer to place itself “in the insured’s shoes” in respect of their right to recover the amount of the loss from the responsible party.
Proprietary Insurers
Insurance companies which exist to make a profit or return on their investment
Non-Proprietary Insurers
Insurance companies which are organized for reasons other that profit.
They are owned and controlled by their policyholders and their mandate is to secure insurance at as low a cost as possible.
Personal Property
Contents of the insured’s dwelling and other personal property owned, worn or used by the insured while on the premises, which is usual to the ownership or maintenance of a dwelling.
Vandalism
The willful or ignorant destruction of property.
Malicious Act
Wrongful act done without legal justification or excuse.
Vacant
Refers to circumstances where, regardless of the presence of furnishings, all occupants have moved out with no intention of returning and no new occupant has taken up residence.
Theft
Includes all means of taking property without the owner’s consent.
Additional Living Expenses
Coverage that provides for additional cost of living elsewhere when the dwelling is damaged by an insured peril and the damage is sufficient t make the dwelling until for occupancy, or requires that the insured move out while repairs are being made.
Also provides for loss of fair rental value if part of the dwelling was rented or being held for rental at the time of the loss.
Mobile Home
A home that is factory built, on it’s own chassis, and which can be easily moved.
Condominium
A system of separate ownership of individual units in a multi unit building.
Endorsement
An extra sheet or slip of paper attached to the policy indicating in writing that the insured and insurer have agreed toa a change in terms of the insurance contract.
Fine Arts
Traditionally includes paintings, pictures, etchings, tapestries and other bona fide works of art of rarity, historical value or artistic merit.
Criminal Law
Category of law that deals with wrongs against society.
Civil Law
Law that concerns itself with settling disputes between individuals or other legal entities in matters not involving a criminal act.
Plaintiff
The party making the complaint (suing someone)
Defendant
The party who allegedly committed the wrong.
Tort
A wrong done to another in breach of a duty laid down by law.
Strict Liability
Doctrine in law in which “a person is guilty until proven innocent”
Negligence
The omission to do what a reasonable person guided by the normal considerations regulating human affairs would do, or the doing of something a reasonable person would not do.
Special Damages
Damages which can be accurately measured and which are intended to reimburse the plaintiff for out of pocket expenses.
General Damages
Damages which cannot be exactly determined but which reflect an amount the court believes necessary to compensate the aggrieved party fairly.
Trespasser
Is one who is on another’s premises for his or her own purpose without the express or implied permission of the occupier.
Licensee
A licensee is someone who comes onto the premises for his own purpose but with the occupier’s consent.
A licensee is someone who goes upon the lands of another with express or implied invitation to transact business with the owner or occupant to their own advantage or to the mutual advantage of licensee and occupier.
Invitee
Someone who enters by invitation be it express or implied.
Their entry is connected with the owner’s business or with an activity the oner conducts or permits to be conducted on the land and there is mutual benefit or benefit to the owner.
Visitor
Classification given to a licensee or invitee under provincial Occupier’s Liability Acts.
Joint Liability
When two or three people act together so as to cause injury or damage, they are held to be jointly liable.
Farming
Ownership, maintenance or use of premises in the production of crops or the care or raising of livestock including all necessary operations.
Also farm markets and roadside stands where they sell the products of the farm.
Custom Farming
Use of insured’s farm machinery or equipment for others away form insured’s farm premises for compensation.
It does not include work done for others in return for work done by them.
Residence Employee
Those whose duties are exclusively in connection with the maintenance and use of the residence premises.
Farm Employee
Those paid for their work principally connected with farming activities outside the insured’s dwelling, or doing work o behalf on the insured in a neighborly exchange of assistance and there is no obligation to pay.
Pink Card
In provinces where automobile insurance is provided by private insurers, a pink card is used to provide proof of financial responsibility.
In provinces having government insurance plans, the pink copy of the certificate of registration serves as proof of financial responsibility.
Facility Association
An insurance pool in which all licensed automobile insurers participate and which provides insurance to those who may be refused insurance by private insurers.
Driver’s Abstract
A record of the driver history of the applicant and other drivers which can be obtained from provincial licensing authorities.
Uninsured Automobile
One in which neither the driver nor the owner has collectible bodily injury liability insurance.
Unidentified Automobile
One in which the identity of either the owner or driver cannot be ascertained and which causes bodily injury or death to an insured person arising out of actual contact out that automobile with the automobile in which the insured is an occupant.
General Average
Designed to provide payment for ocean marine losses voluntarily incurred for the safety of the entire venture.
The insurers of the parties whose property was saved shall contribute to the losses of the parties whose property was sacrificed.
Temporary Substitute Automobile
One which is temporary being used as a substitute for the automobile described on the policy
It qualifies only if the described automobile cannot be used because of its breakdown, repair, servicing, loss, destruction or sale.
Occupant
Any person who drives the automobile or, is being carried on or upon or entering into or leaving the automobile.
Newly Acquired Automobile
One which replaces an automobile described on the policy or is in addition to others owned by the insured which are all insured by the same insurer.
Step Licensing
A step licensing system is a system which requires a higher degree of knowledge for each increasing step
Ethics
Principals of conduct that governing an individual or group.
Professional
A professional is one who possesses special skills or knowledge. They are committed to continuing education, and are a member of an association that regulates their field.
Self Regulation
The right of an industry to govern its own affairs.
Accident
Means an unintentional or unforeseen occurrence due to external, violent, sudden fortuitous causes beyond the insured’s control.
Extended Family
Means the dependent child, spouse, parent, guardian, brother, sister and grandparent of the insured applicant or spouse.
Insured
Means an insured applicant, their spouse and any dependent children
Insured Applicant
A Canadian resident under 65, insured under their provincial medical insurance plan, who has been named on an invoice application issued by a broker.
Sickness
Bodily sickness or disease, contracted and commencing after the policy is issued while the policy is in effect.
