Study 8: Claims Settlement - Key terms Flashcards
Deponent
A witness making a sworn or affirmed testimony out of court as part of the discovery process.
First-party loss
A loss suffered by the insured as first party to the insurance contract.
Third-party loss
A loss suffered by the insured arising out of the insured’s liability for loss or damage suffered by another who is not party to the insurance contract - that is, by a third party.
Replacement cost clause
A provision, generally in property insurance coverage, to provide a substitute of the damaged or lost property with something similar, including having the same use but not necessarily identical to the property being replaced, without extra cost to the insured.
Actual cash value (ACV)
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: (1) cost to repair or replace less depreciation; (2) fair market value; or (3) consideration of all relevant evidence of the value of the damaged property.
Principle of indemnity
The concept that an insured will be reimbursed for their loss (subject only to the policy limit and terms). If there is no loss, there can be no indemnity.
Aggregate deductible
A deductible applied as a whole to all the claims that occur during the policy year. Once this aggregate deductible is met, the balance of the insured claims are paid without a deductible.
Franchise deductible (or clause)
A provision in an insurance policy whereby the insured pays all claims up to the amount set in the franchise. If, however, any loss exceeds that amount, the insurance company assumes full responsibility for the full amount of the loss, including the franchise amount.
Salvage
The remaining value of property after severe damage by fire or other peril. The overall loss is reduced by the salvage value. Undamaged property may be quite saleable, and some property may be only partially damaged, thus repairable and then saleable.
Release
An oral or written discharge from an obligation, duty, or demand. To let go of, or give up a legal claim or right to one against whom it could be enforced.
Limitation period
The time prescribed by law within which a party has the opportunity to bring a legal action.
Discoverability rule
A rule in tort law stated in provincial legislation that specifies that a limitation period begins when the material facts upon which an action is based had been, or ought to have been, discovered by the plaintiff through due diligence.
Pleadings
The formal written allegations or denials by parties in a lawsuit to a tribunal and the remedies or dispositions the parties seek.
Statement of claim
A written statement by a plaintiff detailing the facts that support the claim against the defendant and the relief sought.
Notice of action
A summons or notice to a party that informs the party of its involvement in a lawsuit; filed at the court and served to the party before the formal statement of claim is issued.
