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Glossary of Terms

Abandonment: Although usually forbidden by most types of insurance, this is the voluntary release of the insurer’s rights and responsibilities for the property covered.

Accident: An unusual and unexpected result that occurs during the performance of an usual act, or an unexpected event which happens by chance and does not ordinarily take place during the normal course of things.

Act of God: An unforeseen and violent act of nature.

Actual Cash Value: This is the actual or current value of the property at the time of the loss. Depending on the policy, it also may be the cost of replacing the article with a similar model in similar condition, or it may be the price of the article plus any appreciation or depreciation since the time of its purchase.

Additional Insured: Some policies cover not only the named insured, but certain named or unnamed others, such as an automobile policy that insures specific individuals, but also cover anyone driving with that insured’s consent.

Additional Living Expenses:  A provision to provide reimbursement for costs above the normal living expenses that are incurred while the insured is forced to live away from home during house repairs because of fire or other damage. It applies to expenses such as restaurant meals, hotel rooms, and transportation, and is usually pays only enough to maintain the insured’s usual standard of living.

Additional insurance:  Additional insurance is insurance that is added to an already existing policy. Unless it is agreed to by the company or its authorized agent, the insurance is voided.

Adjuster: This person investigates the loss and negotiates the settlement with the claimant on the insurance company’s behalf. Some adjusters are independent, while others are employed by the insurance company.

Adjustment: The “adjustment” is the process of arriving at the settlement amount. It can consist of a series of computations, or it may involve discussions of liability, quantum and other matters if the case is a liability claim. Adjustments may also contain both discussions and computations.

Agent: An insurance agent is the person who represents the insurer and also assists in arranging the insurance contract with the applicant. Agents who are usually bound by contract to represent one insurer are usually called “exclusive agents”. The insurers they represent are known as “direct writers”.

All Risk Policy: Coverage against loss or damage from all perils, except those specifically excluded.

Alterations: Buildings and other personal property may frequently be changed or modified which is otherwise known as an “alteration”. If any change or modification affects an insurable risk, then the insurance company should be notified of the proposed change so the policy can properly describe the revised property. The change is usually confirmed by means of an “endorsement” or “rider”.

Amount at Risk: This is the amount of insurance a company applies to any property. It doesn’t matter if the amount is equal to the actual value of the property, or of lesser or greater value.

Application: This is a request for insurance or a preliminary declaration made by the property owner to the company that describes the characteristics of the risk, the amount required, and any other details essential to the proper writing of the risk. It is required to be made out and signed by the applicant.

Appraisal: The monetary valuation of property made by a competent and qualified person, known as an “appraiser”.

Appraisers: Persons who, because of their special knowledge, are vested with authority in determining the real value of the property or damage.

Assignment: The transfer of rights or interest from one party to another. Insurance policies are personal contracts and are not transferable except by special consent of the insurance company.

Assumed Liability: This occurs when the liability of one person has been assumed by another. The assuming of the liability is usually done by a contract or by implication. Insurance policies have very little or no coverage for liability assumed by contract (with the exception of side-track agreements).

Automatic Coverage: A provision providing automatic coverage for increases in value of newly acquired or changing interests. In most instances, such additional coverage is only covered automatically for a certain set length of time, after which the change must be endorsed in the policy. Usually the policy must already contain coverage for similar items.

Automatic Reinstatement: After a loss, this is the immediate restoration of the sum insured to the original amount.

Automobile Insurance: Involves two basic types of coverage: liability insurance for losses caused by injuries to persons, and physical damage insurance for losses caused by the insured vehicle.

Betterment: “Betterment” occurs when the repairs or replacements for the loss result in the insured receiving something better than he or she had before the claim. In most instances, the difference in value is discussed before the repairs or replacement has been made, and after the insured has agreed to their appropriate contribution towards the “betterment”. This is also referred to as “new for old.”

Binder: This is a temporary agreement that grants the newly insured certain coverages or risks pending the issuance of the actual insuring policy.

Bodily Injury: Bodily injury is the physical injury or damage to the body of an individual. It does not include inanimate injuries such as hurt feelings, embarrassment, false arrest, libel, and slander.

Broker: A broker is an independent businessperson who acts on behalf of the insured. The broker may have business with a number of insurers and seeks out clients (insureds) to offer the most beneficial match to meet the client’s insurance needs.

Budget Payment Plan: Payment of the premiums in installments through post-dated cheques or automatic withdrawal from a chequing or savings account.

Builder’s Risk: Insurance covering property during the course of construction where there is risk and where the values are changing daily. In the case of residential property, a dwelling form may be used and permission granted to complete construction.

Burglary: The unlawful removal of property from premises involving visible forcible entry.

Cancellation: This is the termination of the policy before the end of the set period. Usually if the company cancels the policy, the insured is entitled to a pro-rata return for the unused portion. If the insured cancels, he or she is entitled to a short-rate return of the premium.

Captive Agent: Agents who place all their business with one insurance company are known as “captive agents.” In some instances they may be salaried employees of the company. In others, they may be selling the insurance on a commission basis, but have a contract to write only business that would be acceptable to the one insurance company.

Catastrophe: A sudden, great disaster (e.g. hurricane) causing substantial damage, extended damage by flood or fire that consumes a large area.

Claim: When the insured exercises of their right to be indemnified by their insurance company, it’s called a “claim”. It is frequently used, however, to indicate the amount of claim the insured is making.

Clause: A term used to identify certain sections of a policy, such as a “co-insurance clause” that refers to the part of the policy dealing with co-insurance.

Co-insurance:  A policy condition requiring the sum insured to be maintained for a specified minimum percentage of the actual cash value. If not maintained, the insured must bear a proportionate amount of any partial loss.

Co-insurer: One of two or more persons or companies who may be sharing a loss. When a policy contains a co-insurance clause where the insured has not properly complied, the insured also becomes a co-insurer in the loss.

Collision Coverage: This automobile insurance pays for damages on the vehicle when in a collision with another car or object, regardless whether or not the accident is the fault of the insured. Such payments are usually subject to a deductible amount.

Comprehensive: A word commonly used to describe the type of policy issued to imply that the particular policy is broader than most. The policy generally has an increase in the scope of the contract or an extension into additional perils.

Comprehensive Coverage (Automobile): This type of automobile insurance covers damages to the vehicle from causes other than collision - such as flood, hail, explosion, theft, and windstorm. Generally, it excludes “Collision and Upset”, which is required to be insured separately.

Compulsory Insurance: Coverage required by statute or law.

Condition: A stipulation in an insurance policy defining, extending or reducing the rights and responsibilities of either the insurer or the insurance company.

Consequential Damage: Damage which is an indirect result of an accident or fire.

Construction: Type of materials used in constructing a building such as wood frame, brick, stone, brick veneer.

Constructive Total Loss: A partial loss, but one where the damage is so extensive that repairs would cost as much or more than the property is worth, or the limit of insurance of the policy.

Contents: Articles in a building other than the building itself.

Contract: A written or oral promissory agreement, such as an insurance policy, between two or more persons which is enforceable by law.

Contribution: Sharing of loss or liability between two or more insurance companies covering the same risk. Most insurance policies contain a contribution clause.

Cover Note: Same as “binder” – see definition.

Coverage: Protection by a particular policy that can be used interchangeably with the terms “insurance” or “protection” as “Homeowners Coverage” or “Tenants Protection” or “Condominium Insurance”.

Damages: A sum of money claimed or awarded as compensation for loss or injury.

Date of Inception of the Policy: The actual date and hour of the liability should be embodied in every policy. It usually specifies the hour and date of commencement, and the hour and date of termination. Also called “effective date”.

Debris Removal: A provision in an insurance policy most commonly found in fire insurance that provides indemnification for the cost of debris removal after a fire.

Declaration: Statement given by the insured, warranting that information given by him or her is true.

Deductible Clause: Small claims are expensive for an insurance company to handle in relation to the amount involved. In many insurance policies, a provision is made where the insured agrees to pay for small claims in return for a reduced premium. “Disappearing deductible” uses a formula where the deductible exists for small losses, but is gradually reduced as the size of the loss increases.

Deposit Premium: A premium based on an estimate. It is subject to adjustment based on the actual figures either at renewal or at some other agreed-to time.

Depreciation: Reduction in value of property through use, ageing, deterioration and obsolescence.

Detached: This means separate, such as detached buildings that are not connected in any way to other buildings or the insured premises.

Deterioration: Physical impairment.

Direct Writer: An insurance company selling directly to the public and not through independent agents or brokers.

Discount: Reduction in the rate or premium for features which improve the risk, or if several coverages are incorporated into one policy.

Duration of Risk: The period of time for which the risk is to run. The period should be distinctly stated in the policy.

Earned Premium: This is the used or elapsed amount of the insurance premium. It is the expired portion of a premium.

Effective Date: The date of inception of an insurance policy or bond or the date when the protection becomes effective.

Endorsement: Endorsements appear as additional pieces of paper attached to a policy indicating that the written consent of the parties has been given to change the terms of the original contract and that such changes will not affect the insurance.

Errors and Omissions Insurance: Professional, semi-professional and serviced work may place an obligation on the individual to see that the task is properly performed. Any error or omission in the performance may make the individual responsible for damages. Errors and Omissions Insurance is designed to protect the individual in such a situation.

Estimated Premium: A tentative premium set with the anticipation of being approximately correct but which may be increased or decreased when the final calculation is made by the issuing insurance company.

Excess Insurance: Excess insurance relates to an insurance policy which becomes effective only when a loss is in excess of a certain amount, or where it is in excess of the primary policy.

Exclusion: Something specifically mentioned as not being covered by the policy.

Expiration: The date of termination of a policy. At that date, it automatically expires or ceases.

Explosion: Sudden and violent tearing that could be caused by gas or compressed air. This peril is usually insured under policies covering fire.

Extended Coverage: Additional named perils often added to the basic fire insurance coverage.

Extra Expense Policy: Extra expense insurance is a form of insurance to cover the additional expense of an insured when carrying on a business following a loss.

Facility Plan: A plan for assuring a market for the poorer automobile risks.

Fine Arts Insurance: A broad form of coverage against loss from “all risks”, with a few specific exceptions. It is used to insure sculptures, paintings and other valuable pieces and is usually written on a “valued” basis so that in the event of a total loss, the amount to be paid is the amount quoted on the policy.

Fire: When uncontrolled, fire can destroy houses, crops, lumber stands, etc. Such fires are known as “hostile fires” and are the subject of insurance.

Fire Department Service Clause: A provision in a fire insurance policy agreeing to pay the cost of bringing a fire department to the location of the property insured in event of a fire. It is valuable where the insured’s property is not in a built-up area with its own fire department, or where the risk is sufficiently large to require the possible need of additional fire department services.

Fire Limits: The limit of an area of fire protection.

Fire Proof: “Fire proof”, in insurance, means something with a high degree of resistance to the spread of fire. It is a misnomer as no building is completely fire proof. If constructed in a manner safer than buildings and articles that do spread fire, it is commonly referred to as “fire resistant”.

Fire Resistive: Type of building construction that resists the effects of fire.

Fixtures & Fittings: This refers to furnishings of a building are considered as permanent attachments as opposed to moveable items, such as furniture. Tenant’s fixtures should be insured by the tenant.

Flat Cancellation (or Flat Rate Cancellation): Termination of a policy coincides exactly with its inception or renewal date. In certain special circumstances, a policy can be “cancelled flat”. In this case, as the policy was cancelled from the beginning, the insured is entitled to a full return to what has been paid.

Floater Policy: A policy covering the same type of risk at a number of specified or unspecified locations. Usually includes types of goods being frequently moved from one location to another.

Fraud: An act of willful deception and dishonesty carried out by an individual to secure an advantage or profit at the expense of another.

Fraudulent Misrepresentation: Making a statement that one either knows to be false or is made carelessly without regard to its validity. In insurance it is most often used when the insurer intentionally misrepresents a risk to get insurance, or when providing evidence of loss after the loss has occurred.

Freezing Insurance: Insurance against loss by freezing.

Fur Floater: An “All Risk” type of coverage on furs or articles trimmed with fur.

Glass Insurance: Protection against damage to glass, usually in the form of plate-glass windows and stained-glass windows. It generally covers the glass itself from breakage and other incidental expenses associated with the item.

Hazard – Physical Hazard: On all properties for which insurance policies are issued there is a possibility of a loss. Various physical items that make the prospect of such a loss greater or less are referred to as physical hazards.

Hazard – Moral: This term is the measure of improvement or impairment of a potential peril based on the mental attitude of the insured or the person concerned. For example, a person with a history of setting fires would probably present increased moral hazard.

Hazard, Peril or Risk: These words are not synonymous and cannot be used interchangeably. An insurance company may make an insurance policy in which the insured is protected against the “peril” of fire. In making this policy, the company has considered the various “hazards”, such as its physical location in relation to other properties. The policy is written and is then referred to as a “risk”.

Hold-Up: This is the taking of money or property from another by putting the victim in fear of personal violence. A person with a gun threatening the life of an individual if he or she does not surrender his or her cash is a typical holdup; however, in cases where no weapon is used, if the victim is afraid the person may physically hurt him or her, the act is still considered a holdup.

Home Owner’s Policy: A policy designed to cover the all the various risks of a homeowner in one policy. It is flexible and may cover fire, as well as provide extended coverage on additional living expenses, theft, vandalism and malicious mischief. It is designed, if needed, to cover a seasonal residence, a broad form of personal liability, voluntary property damage, or an outboard motor and boat.

Hull Insurance: Insurance policies written on a ship covering the ship itself or on an aircraft covering the aircraft itself are known as “Hull Insurance”.

Improvements or Betterments: After signing a policy, changes may take place and an insured may improve or enlarge the building, change the roof, install new flooring or a tenant may install a new air-conditioned office space which would eventually benefit of the real property owner. These are known as “improvements” or “betterments”, and the amount of insurance should be adjusted accordingly.

Imputation of Negligence: This happens when the law makes a person responsible for the negligence of another,r although the person has not directly been negligent. A parent may be held negligent for the acts of his or her child.

Increased Hazard: The insurance premium is based on the hazards present at the time the policy is written. The insuring company should be advised of any changes that may increase the hazard. Failure to do so may put the coverage in jeopardy and void the policy.

Incumbrance or Encumbrance: Any incumbrance on the property to be insured should be mentioned to the insurance company when the policy is made, or if added during the policy term. Incumbrances may consist of judgment liens, mortgages, or liens of other character.

Incurred but not Reported Claims: Insurance companies are required to have reserves on all claims. This includes claims that have not yet been reported to the company. This sum is usually determined by an estimate based upon the actual claims reported late one or two years earlier.

Incurred Losses: This includes the total losses paid, as well as an estimate of loss reserves within a given period.

Indemnity: Indemnity is the monetary amount the insured is allowed to receive as stated within their policy.

Independent Insurance Agent: Agents who sell insurance and represent just one company. They are independent businesspersons or financial institution employees.

Indirect Damage: Damage that did not occur as a direct consequence of the peril but is in someway associated with the peril is called “indirect damage”, such as a rented property where the property is rented from another and is destroyed by fire. The loss of rent is an indirect damage.

In Force: Insurance that is valid at the particular time. It would not include cancelled or expired policies.

Inherent Explosion: An explosion caused by the natural characteristics of property within a building or location, such as a grain elevator holding volatile grain dust which with certain heat conditions may produce an explosion.

Inherent Vice: A condition of the particular goods themselves, which by their very nature causes a deterioration. For example, vegetable and meat will not keep unless special arrangements are made to prevent their deterioration.

In Kind: Generally referred to in insurance policies to mean replacement of a similar article in quality, general description, workmanship and material.

Inspection Report: A detailed description of premises or property to be insured, including the hazards involved. It is prepared following a physical inspection of the risk.

Insurable Interest: To make insurance policies legal and valid, the insured must possess a sufficient interest in the insured object to involve them in a monetary loss, should the object be damaged or destroyed. Unless the insured will suffer financially in the event of a loss, they do not have an insurable interest and are not legally entitled to insure the risk.

Insurance: Insurance is the undertaking, usually by a company specializing in such undertakings, to indemnify another person against loss or liability arising out of certain perils. It is the sharing of the losses of a few people among the many who pay premiums.

Insurance in Force: Total amount of collectible outstanding insurance at a particular time.

Insurance Policy: The actual insurance contract consisting of terms and conditions under which the insurance is written.

Insurance to Value: Insuring property for its actual cash value (current replacement cost less depreciation). However, if the policy contains a replacement cost clause, then the value is the cost to replace the item.

Insured: This is the person whose risk of financial loss from an insured peril is protected by the policy. Also called the policyholder.

Insurer: The insurance company or the individual who has agreed to supply the indemnity against loss by certain perils.

Insuring Clause: This is the agreement to protect the insured against the particular peril for which the insurance is purchased. It is an essential part of all insurance contracts.

Jewelry Floater: This is an “All Risk” policy on jewelry belonging to a particular individual.

Judgment: An order given or made by a Court in any civil proceedings where a sum of money was made payable.

Kidnapping Insurance: Insurance against losing money to kidnappers. This may also be covered as an extension of the “money” policies.

Landlords Protective Liability: An insurance policy covering owners, landlords, and tenants from liability arising from accidents on the particular property described.

Lapsed: When a policy has not been renewed, the policy is said to have lapsed.

Law of Large Numbers: A mathematical principle of probability in which the larger the number of risks or exposures used in the calculation, the more accurate the total result will be.

Lay-Up Warranty: A provision in marine policies that a ship will not be in use for certain periods of time. Because of the lesser perils, the premium during the time the ship is not in use is lower. If it is used during the lay-up period, there is no coverage.

Lease: A contract where one party gives another party the use and possession of lands, buildings, vehicle(s) for a specified time and for fixed payments.

Leasehold: (see also Lessee): Land held by lease. In an insured building is standing upon leased ground, the terms of the policy demand that the insurance company be made aware of the situation. Such buildings are held in law as personal property (chattels real).

Leasehold Interest: A tenant in a property has an insurable interest in the use of that property. For example, the tenant may have sublet all or part of the premise, and therefore, has an insurable interest in his or her right to continue their use of the premises. This type of insurance is known as “Leasehold Interest”.

Insurance Legal Liability: Responsibility imposed by law for negligence resulting in bodily injury and/or property damage to someone’s property.

Lessee: Person or company to whom property is leased.

Lessor: The grantor of a lease.

Liability: A responsibility of one person to another person enforceable in law. See “legal liability”.

Liability Insurance: Insurance that covers the insured for his or her for bodily injuries or property damage to others. For example, automobile liability policies cover the insured’s liability in regards to the use and operation of a vehicle.

Liability Limits: Liability policies set out the maximum amount of insurance the insurance company is liable for. Generally the cost of investigation, defense, and court costs are included in addition to the quoted limits. In many instances, such as automobile insurance, the limit is an amount per accident. On other forms such as products, malpractice and contractors liability, the amount quoted is a total amount to be paid during the policy period. In accident insurance, the limit is frequently quoted per passenger, even though the number of passengers at a particular time is not known.

Libel: This refers to anything that is written and published that is intended to injure the reputation of another unjustly by bringing them to ridicule, hatred or contempt. If the same words were spoken instead of written and published, the term “slander” would apply.

Lien: A word indicating an incumbrance on property, either for discharge of a duty or the payment of a debt. When such a lien exists, the conditions attached must be disclosed to the insurance company.

Life Insurance: Insurance on the life of an individual or individuals. It pays out a certain sum on the death of the individual and is frequently coupled with a savings factor.

Lightning: Most fire insurance policies make the company liable for all losses caused by lightning, even when no fire occurs. Most policies, however, carry the electrical apparatus clause, which excludes loss caused by artificially generated electrical currents to electrical equipment.

Limit, Aggregate: The maximum amount paid by the policy during the policy period by reason of a loss or a series of losses.

Limit, Basic: The limit of insurance in a particular section of the policy, such as the limit to be paid as a result of an accident.

Limited Policy: A policy in which there is not complete coverage for all perils or types of accidents, or one in which certain coverages are limited such as with a deductible.

Livestock Insurance: Livestock insurance protects you against loss if your livestock encounters certain specifically stated perils.

Livestock Mortality Insurance: Insurance on the life of an animal generally used in such cases as a racehorse or other highly pedigreed stock. Like life insurance on an individual, it pays a lump sum in the event of the death of the animal within the policy period.

Loss: In insurance, any reduction in the value of a property caused by the insured peril is the amount of a loss. The phrase is also loosely used in insurance to represent any sum which an insurance company might be expected to pay. Often used instead of “claim”.

Loss Adjustment Expenses: Expenses involved in the adjusting of losses, such as adjuster’s fees, court costs, and lawyer’s fees.

Loss or Damage: “Loss” designates the portion which is entirely lost or destroyed, while “damage” designates the part of the property that is not consumed, but remains after the fire in a more or less damaged condition.

Loss of Use: Insurance protection against loss due to the inability to use an item because of its damage or destruction. Coverage may include a car rental, while the insured car is being repaired.

Loss Payable To: It is customary to insert a “loss payable to” clause in insurance policies. When there are other interests, such as mortgages, the clause is completed by inserting the name of the interested parties, such as “Loss payable to the XYZ Loan Company”.

Loss Paid: The total payments made to discharge obligations under insurance policies.

Loss Reserve: With each claim, the insurance company estimates the probable ultimate cost of that claim and sets that sum of money aside in a “Loss Reserve”.

Lost Policy Voucher or Lost Document Voucher: A statement signed by the insured acknowledging that the policy has been mislaid or lost, and agreeing that the insurance is cancelled. It releases the insurance company of liability under the contract. To obtain a refund on the lost policy, the insured would be required to sign off that policy, surrendering it to the company. The “Lost Policy Release” enables the insurance company to make the refund without requiring the insured to produce the policy.

Malicious Mischief: Injury to the rights or property of another with a wicked or perverse intent. (See also “vandalism”)

Market Value: The value of assets (stocks, bonds, debentures, real estate, etc.) based on current market valuation.

Medical Payments Insurance (Voluntary): A provision to pay specified medical expenses for another person, regardless of the insured’s legal obligation to pay them. Voluntary medical payments are frequently part of homeowners, condominium and tenants policies. Medical Payment Insurance is a voluntary coverage for others who may be injured on the insured’s premises.

Minimum Premium: To discourage the costly processing of the extremely small payments, such business is usually subject to a “minimum premium”. It is also used in circumstances when cover is given for a short period of time.

Minor: A person under the age of being legally capable of transacting business on his or her own behalf (usually under 21 years).

Misrepresentation: This is the failure of the applicant to make a fair disclosure of all pertinent circumstances, and can result in a void policy.

Mortgage Clause: A clause providing protection in certain circumstances to the mortgagee in the event that the insured fails to comply with policy conditions.

Mortgagee: The person or company to whom property is pledged as security.

Mortgagor: A person who mortgages property by borrowing money and using it as security for the loan.

Multiple Line Carrier: An insurance company that writes more than one class of insurance.

Mysterious Disappearance: The disappearance of property from unexplainable circumstances.

Named Insured: A person named in an insurance policy and for whom the policy is primarily written. It is distinguishable from the simple word “insured” in that an insured includes both named and unnamed insureds.

Named Perils: Specific perils against which the particular insurance policy is issued.

Named Perils Policies: Policies that state the perils against which protection is given and no others. This is distinct from the “All Risk Policy”, which covers all risks of all perils with the exception of certain specific perils shown as exclusions in the policy.

Negligence: The omission to do something a reasonable person would have done in similar circumstances, or doing something which a reasonable person, in the same circumstance, would not have done.

Negligence – Contributory: If the accident could have been avoided, or if some small negligence on the part of the plaintiff contributed to the accident, they have no right of recovery and are considered negligent.

Negligence – Criminal: Offences of negligence for which there are penalties provided in the Criminal Code.

Negligence – Gross: A complete lack of regard for the safety of others.

Negligence – Ordinary: Something less than the degree of care that an ordinary person in similar circumstances would have done.

Negligence: Doing something a prudent person would not do or not doing something a prudent person would do, resulting in loss by damage or injury.

Non-Owned Automobile Policy: A policy protecting the insured against third-party claims when another person uses his or her car for the insured’s business. If the employee was conducting business on behalf of the employer – and because the employer is responsible for the acts of the employee – the employer may be sued if the employee was negligent while driving the vehicle. The Non-Owned Automobile Policy protects the employer with respect to any such suits.

Non-Waiver: The known relinquishment or abandoning of rights, either by verbal expression or presented in writing.

Notice of Loss: The condition requiring that any person sustaining a loss against the property insured by the policy shall immediately give notice to the company of such loss. This notice is a condition precedent to recovery, unless waived by the insurer. Failure to give notice as required has been held to be a bar against recovery.

Nuisance: Unlawfully interfering with a person’s use or enjoyment of land including the interference of easements and allowing or causing the escape of obnoxious things onto the land of another.

Null and Void: Of no legal or binding force.

Obsolescence: Changes in public tastes may change the value of an article even though it may not be worn out, rendering the item obsolete.

Occupancy: Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy and no other.

Occurrence: A happening or an event.

Ocean Marine: A type of insurance coverage on cargo and ships on the high seas.

Off Premises Clause: A provision in residential policies providing coverage of household goods when away from the premises within certain limits. This may not extend to contents held at another’s owned premises.

Onus (Propondi): The burden of proof.

Optional Loss Settlement Clause: A clause in an insurance policy permitting the insured to have a choice of benefits.

Other Insurance: Normally the insured must disclose to the insurance company information about what insurance, if any, he or she already carries on the property. As a matter of principle, the insured should also advise existing insurance companies of new policies that they are taking out on the same property.

Package Policy: A single policy covering two or more separate risks for the same insured, with common effective dates and one overall premium.

Paid Losses: This is the total payments for claims made by an insurance company to discharge obligations under policies issued within a particular period.

Pair & Sets Clause: Instead of paying for the replacement of a pair when only one is lost or damaged, this clause limits the insurance company’s liability to replacing only the lost item.

Partial Loss: A partial loss is one that neither exhausts the insurance nor completely destroys the insurance property.

Payee: The person to whom money is paid.

Payer: The party who pays the bill.

Peril: A potential cause of the loss. The insured may have coverage against the “peril” of fire, explosion, windstorm, etc.

Personal Effects Policy: A policy covering the personal belongings of the insured anywhere in the world, except at the insured’s particular premises (which is presumably insured separately). It may be obtained either in an “All Risks” form or be covered under certain specified perils, such as “Outside Theft”.

Personal Injury: All injuries to the person, including non-physical injuries such as false arrest, libel, slander, defamation of character, etc.

Personal Property: Property in which a person has a personal interest.

Personal Property Floater: A broad form of personal property coverage for essentially “All Risks” coverage with certain exceptions.

Personal Theft: Protection for the insured against losses from the act of stealing.

Physical Hazard: The exposure to loss arising out of physical risk, such as location, construction, heating, and fire protection.

Plaintiff: One who is suing another.

Policy: A contract of insurance is referred to as a “policy”. It is the legal document issued to the insured setting out the terms of the contract of insurance.

Policy Conditions: Policy conditions are generally set out in a special part of the policy. They deal with the arrangement between such matters as how the insurer shall be notified of a claim, special limits of liability or trustee agreements, the rights to other insurance without notice, assignments, subrogation, etc.

Policy Holder: A person in whose favour an insurance policy is issued. Commonly interchangeable with “Assured” and “Insured”.

Policy Period: The time between the inception and the expiry of the particular insurance policy, as it appears on the policy document.

Reserves: Insurance companies are required to hold money in reserves as a safeguard to meet their obligations to their clients under the contracts.

Policy Writing Agent: Insurance agents who have authority from the companies they represent to issue policies.

Policy Year: In annual policies, it is the policy period. In policies for longer periods, it is the current year between anniversary dates.

Pool: A group of insurance companies who unite to underwrite some particular risk or certain types of risks. The collecting of premiums, paying of losses and expenses involved are divided on an agreed-to basis.

Power of Attorney: A written document empowering another person to act for the person giving them power of attorney. The person giving the power is the “principal” and the person who is acting in substitution for the principal is called the “attorney”.

Precedent: Generally refers to something that has happened earlier in time, such as the ruling of an earlier lawsuit for a similar set of circumstances. An earlier decision establishes a precedent which may be followed in similar future situations.

Premises: The building, including the land surrounding and belonging to it.

Premium: A sum of money paid by the insured for the protection provided by the insurance policy.

Premium Reserve: The premium reserve is the amount of the unearned portion of the policy and is pro-rated between the time of calculation and the expiry date.

Prescription: A time period, after which the cause of action ceases. Statutes set out a period of time where an action must commence. The cause of action fails if the action was not started within the prescribed time period.

Prime Insurance or Primary Insurance: Insurance coverage that is paid first, as opposed to “Excess Insurance”, which pays only after the primary insurance limit is exhausted.

Prior Insurance: Insurance written prior to the present policy on the same or similar risk.

Privity of Contract: A binding relationship existing between the immediate parties of a contract.

Producer: A term commonly applied to an agent or broker who sells insurance directly or indirectly to the public.

Prohibited Risk: Any class of business which an insurance company will not insure under any circumstances or conditions.

Proof of Loss: A sworn declaration (by the insured) giving details of the claim. The details would include the cause and extent of loss.

Property Damage: In insurance this refers to damage to physical property of others as opposed to personal injuries to others. It is commonly written in conjunction with public liability or personal injury insurance.

Property, Preservation of: It is the duty of the insured to do whatever they reasonably can to save and protect the property insured during and after a fire. In case they do not do so, the company will not be liable for the loss. In other words, the insured is, under the conditions of his or her policy, bound to do whatever they can to minimize the loss.

Pro-Rata: In proportion or proportionately.

Pro-Rata Cancellation: An arrangement for terminating an insurance contract, usually by the insurance company, in which the insured is refunded the exact proportion of the premium that has not been used.

Pro-Rata Clauses: A provision in an insurance policy to pro-rate the loss. It may be a provision to pro-rate between the insured and the insurance company, such as the co-insurance clause, or it may be a provision to pro-rate as between other insurance companies on the same risk.

Protected: A fire risk in an area served by a fire department and fire hydrant.

Protection: The coverage afforded by the policy and is frequently used interchangeably with the word “protection.”

Protection and Indemnity (known as “P.&I.”): Liability insurance carried by marine carriers to protect against damages or injuries caused by the use and operation of the vessel.

Provisional Premium: An advanced premium in which the final adjustment of the premium is made at the end of the policy term and/or at set intervening times.

Proximate cause: The effective cause of the loss.

Public Adjuster: An adjuster representing the insured. In most areas, they are required to be licensed and are permitted only to act for the insured and not the insurance company.

Public Policy: The principles under which freedom of contract or private dealings are restricted by law for the good of the community.

Radioactive Material: Material giving off nuclear radiation is known as radioactive material.

Rate: The rate is the unit of charge for the policy and is based on the risk class. It is fixed to enable the insurance company to accumulate sufficient funds in order to pay the losses for claims, as well as cover the expenses of collecting and disbursing the funds.

Rebuilding or Repairing: If the company elects to rebuild or repair the premises damaged or destroyed, it must give notice of its intentions within a stated time period after receipt of the “Proofs of Loss”.

Recovery: Money that reduces the amount of a claim or loss, such as a contribution from another insurance policy.

Refund: Return premium.

Reinstatement: The reinstatement of a policy is to return it back the same amount and force as it was prior to the loss. Some policies carry “automatic reinstatement”, which automatically reinstates the original sum after a loss.

Reinsurance: Placing part of the insurance with another insurance company is called a “reinsurer”. Sometimes if the insurance company is carrying a large portion of a particular risk, they may buy insurance from another insurance company, thus “reinsuring” part of that risk. It is designed to limit the original insurer’s liability on any one risk or class of risk.

Reinsurer: An insurer who assumes the risk of another insurer under a reinsurance contract.

Release: A discharge from obligation or responsibility. The most common types in insurance are: First-Party Releases between the insured and the insurance company, Third-Party Releases between the insured and a third party, and Indemnifying Releases that are between the insured and a guardian for another person not legally mentally competent.

Renewal: Continuing an insurance contract for a successive period with the same terms and conditions.

Renewal Certificate: The legal document issued to the insured that continues the insurance for a further specified period.

Renewal Premium: Premium required for the continuation of a policy for a further specified term.

Rent Insurance: Insurance protecting against the loss of income from rents. It is particularly valuable where a landlord may depend upon a rental income to pay mortgages.

Repairs: Ordinary repairs are permitted to a property without notice to the insurance company. For anything more than ordinary, such as if the repairs take the form of reconstruction or modeling of the building, the insurance company’s consent must be obtained in writing. Failure to observe the conditions may void the policy or a claim.

Replacement Cost Clause: Applies to the cost of replacing the loss.

Replacement Value: The cash value of what it would cost to replace the particular article being claimed.

Representation: The acceptance or rejection of an insurance risk and the amount of the premium is determined by facts submitted by the person applying insurance. An improper statement in the “representation” of the risk is corrected by endorsement or by charging an additional premium. The penalty for false information on material facts or warranties may void the policy.

Reserve: Insurance companies are required to hold sums of money in special accounts, as required by law, to cover estimates of all outstanding reported losses and portions of each premium. The reason for these reserves is to protect the insuring public against any possible financial loss.

Residence Employee: A person whose work is associated with one or more residential buildings.

Res Ipsa Loquitur: Roughly translated, this means “the facts speak for themselves”. It is a doctrine of law or a presumption of certain facts.

Return Premium: The amount returned to the insured due to a reduction in the type of coverage or through an improvement in the risk. It also could be the amount returned to the insured because of the early termination of a policy.

Rider: A rider is a separate document attached to and extending another policy. Extensions of a policy are normally made by endorsements. Where this extends to an additional form of coverage, it is performed by adding a “Rider” to the policy.

Riot: A disturbance of the public peace, through the unlawful assembly of three or more persons.

Risk: A term applied to the personal property insured.

Robbery: Taking property from another, while the person being robbed is in fear of personal violence.

Running Down Clause: Used in marine insurance to indicate collision with another ship.

Safe Burglary Insurance: Protection against loss by forcible entry into a safe.

Safety Deposit Box Insurance: A policy protecting the contents of a safety-deposit box from loss.

Salvage: Property that has been damaged by an insured peril, but still has some value. This value is taken into account in determining the amount of the loss.

Schedule of Insurance: A detailed list of items attached to the policy describing the property, locations, amounts insured and the conditions that apply.

Scheduled Property: This is property that is specifically identified and assigned a value in the policy. Different provisions may apply to those losses under “unscheduled” and those for the “scheduled” property.

Self-Insurer: A person, corporation or organization that retains all or part of a risk itself instead of using an insurer.

Settlement: An agreement between parties. In insurance it is usually an agreement as to the amount of money to change hands to discharge a liability.

Slander: The oral utterance or spreading of a falsehood harmful to another’s reputation.

Smoke Damage: Damage caused by smoke. When there is a fire, it is common to find a good deal of the property damaged by smoke, even though the particular item may not be damaged by the actual fire.

Specific Insurance: Insurance on items individually or specially described.

Sprinkler Leakage Insurance: Protection against damage accidentally arising from the discharge of water from the sprinkler system.

Standard Forms: Insurance which is written using the standard phrasing used by all insurance companies is known as a “standard form”. Generally speaking, the only “standard forms” are those which are set down by legislature as being the required form to be written – as is the case in most provinces for automobile insurance. In other types of insurance, the forms may be similar but not necessarily identical. Therefore, it is important to compare policy phrasing.

Standard Provisions: The essential parts of an insurance contract, which are commonly used in the industry.

Statuary: Sculptured figures. These and other works of art should be covered by specifically itemizing them on the policy, with a full description and an agreed value set against each.

Storage: Articles that are held for safekeeping and are meant to be delivered in the same condition as when received.

Subrogation: The legal process where the insurer pursues any rights or recovery for loss against a responsible third party.

Subrogation Release: A release taken by the insurance company on indemnifying its insured. It states the insurance company shall be “subrogated” to the rights of recovery from a responsible party.

Subscription Policy: A single insurance policy in which two or more insurance companies may take a portion of the risk. It indicates the proportion to be borne by each company, and is usually issued by the company with the largest percentage and signed by or on behalf of the other insurers.

Substandard Risks: Risks that are more hazardous than the standard risks and require somewhat higher rates.

Sum Insured: The amount of insurance that the premium is based on.

Supply Bond: This type of surety bond guarantees the availability of materials and equipment within a designated period of time.

Surety: The name given to an individual (or insurance company) who agrees to be responsible for certain acts or performances of one party to another party.

Surety Bond: A “surety bond” is not an insurance policy, but agreement set by an individual or insurance company guaranteeing that they will be responsible for certain acts or performances of one party to another party. For example, an insurance company may, as surety, guarantee the owners of a new building that the contractor hired to complete the construction will have sufficient money to perform his part of the contract.

Suretyship: This is the act of an insurance company (or individual) voluntarily binding himself to another in order to guarantee that the other person will or will not do something. This not strictly speaking “insurance”, but the insurance company could provide the financial backing to guarantee that the person will meet his obligations.

Surrender: Cancellation of a policy by mutual consent between the insured and insurance company.

Survey: An examination or inspection of a risk to be insured.

Tenant: One who holds property, houses or land owned by another, by payment of rent.

Tenants Package Policy: A package policy specially designed to meet the normal insurance requirements of a private tenant. It generally covers personal belongings and liabilities.

Term: The period of time from the inception to the termination of a policy or bond.

Theft: The wrongful taking of the property of another. Any act of stealing, including larceny, pilfering, robbery or burglary.

Third Party: In an Insurance Liability policy, the third party is the person who may be injured or whose property may be damaged other by another. The company and the insured are the other two parties.

Third-Party Insurance: Insurance in which the insured is indemnified for any loss which they might have suffered as a result of their legal liability to others.

Time on Risk: An incomplete period of insurance for which a premium is charged.

Tort: A civil wrong or an injury caused by one person to another person.

Total Loss: A claim for the whole amount covered by the insurance.

Trespass on Land: The act of entering onto the property of another without permission or invitation from the owner.

Uberrimae Fidei: “Utmost good faith”. Certain transactions require the utmost of good faith on both sides, and both parties must disclose all relevant facts. It is a basic principle of all insurance contracts.

Umbrella Policy: A special liability policy designed to protect the insured for certain unknown contingencies over and above their normal coverages and limits.

Underinsurance: A situation where the insurance is less than the full value of the property insured. It becomes important with respect to co-insurance clauses where the insured is required to carry insurance to a certain proportion of the cash values.

Underwriter: The insurance company or group that underwrites or insures a particular risk. It is also used as the identification of the individual within the company whose responsibility it is to accept or reject business.

Underwriting Profit (or Loss): The excess of earned premiums over the incurred losses and expenses, shows the underwriting profit. The reverse would show an underwriting loss.

Unearned Premium: The part of the premium which has not been used or earned and which must be returned to the insured in the event of cancellation of policy.

Uninsured Motorist Coverage: This provision covers the insured if their vehicle is damaged in an accident by someone who is uninsured and is unable to pay for the damages.

Unlicensed Insurer: An insurance company not licensed to operate in the Province or in Canada.

Unnamed Insured: Where a policy extends to cover not only the person named as the insured, but others whose names do not appear. The other persons are known as “unnamed insured”.

Unoccupied: When the premises is complete, but no persons temporarily live there, the premises are said to be unoccupied.

Unprotected: A property located in an area not regularly serviced by a fire department.

Vacant: A property is vacant when the normal occupant is absent and does not plan on returning.

Valuation: Same as “appraisal”. Often required for insurance on valuables such as jewellery, furs, and fine art.

Value: The value of an article is the sum of money that would be required to replace it with material of like kind and quality after all allowances for appreciation, depreciation, wear and tear, and obsolescence.

Valued Policy: One where the parties agree at the time of issuance on the value of the property to be insured.

Vandalism or Malicious Mischief: The intentional damaging or destroying of property. It does not necessarily require malicious intent against the owner of the article, but is based largely on a desire to damage or destroy.

Vicarious Liability: Liability imposed upon a person even though he is not a party to the particular occurrence.

Void or Voidable: A contract is void when it is destitute of all legal effect. A voidable contract is one that can be made void at the option of one of the parties.

Volunteer: One who gives service without reward or promise of reward.

Waiting Period: An accident or sickness policy that provides a weekly indemnity benefit that will not become payable until after an agreed-to period of time.

Waiver: A voluntary relinquishment of a known right. A waiver under a policy is required to be clearly expressed verbally and presented in writing.

Waiver of Co-insurance: The waiver of co-insurance states that the co-insurance clause does not apply when the total loss does not exceed a certain percentage of the sum insured or a stated amount.

Warranty: A guarantee or assurance. When the insured applies for an insurance policy, they present certain facts so the insurance companies can decide whether or not they wish to write the risk and what rate should be charged. The information supplied is a warranty on the part of the insured. All other statements are representations. Many policies contain clauses stating that the same condition will be maintained throughout the term of the insurance. These are warranties.

Water-Damage Clause: Coverage for certain specific causes of water damage.

Wind Storm: A movement of air of sufficient violence to be considered a “storm”. It is not defined on any meteorological scale.

Without Prejudice: A phrase meaning that any statement made during negotiation or any offer of settlement is not to be interpreted as an admission of liability, or as an admission of the amount of liability.

Witness: One who gives evidence in any case or matter.

Worldwide Coverage: This is the geographical limit of an insurance policy and is generally restricted by territorial or continental boundaries. In some policies, such as personal effects policies, personal property floaters and various other types of floater policies, coverage is applicable anywhere in the world.

Written Premium: The total amount of premium collected on that class of business or on all classes of business.


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careers1For many Canadians, insurance is much more than simple financial protection. The right coverage can affect many different aspects of a company’s day-to-day activities, and in order to find a reliable insurance plan, Ontario businesses turn to ELM Insurance Brokers.

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While there are many insurance brokers, there are select few brokers that specialize in surety. Because of its dedicated staff that is focused in this specialized area, Elm is best able to deliver to its contractor clients. Elm is one of Intact's preferred brokers because of its quality of business and its effectiveness in articulating its client’s risks and needs.

Michael Lanzillotta
Intact Insurance Company
Surety Manager, Specialty Solutions

Working with the ELM Insurance team has been and will continue to be an absolute pleasure. With their vast experience and knowledge of the insurance industry, I feel that I am always pointed in the right direction. I know that if a question arises, ELM is only a phone call away! With their guidance and professionalism, I've find myself in a better business position. Lou, Emily, Matthew and their entire hard working staff are fantastic to work with and just make the process that much easier, always finding the best deal.

Thank you for everything.

David F. Aquino

Elm Insurance has been providing our company with exceptional all-encompassing commercial insurance services for 10+ years. In our experience with Elm, they have been extremely consistent, and very attentive to our individual needs. Their informative and dedicated team, keeps us in tune with the latest and best coverage to safeguard our company’s interests and ensures our protection, while staying competitively priced.

Spencer Lavis
Cambria Design Build
Commercial/Industrial General Contractor

We have worked with ELM Insurance for the past two decades and we have had the benefit of working with their knowledgeable and helpful staff. Any and all insurance inquiries whether job specific or in general have been answered in timely and easily understood fashion. We would gladly recommend their services to others

Daniel Aquino – President
Aquicon Construction Co. Ltd.

I am writing to express our very positive assessment of ELM Insurance Brokers Inc. With multiple staff all knowledgeable and experienced in their fields of practice, they are consistently able to deliver the needed experience and focused approach required by their clients. Moreover, they do so while maintaining professionalism and integrity with all of their stakeholders. We truly enjoy working with ELM Insurance Brokers Inc. and believe they provide an excellent service for their clients in all areas of risk management.

Jim Lazenkas
Manager, Specialty Solutions (Surety)
Intact Insurance

We established our relationship with Elm Insurance Brokers since SKYGRiD Construction was founded. We found early on that their approach in looking for solutions by being dedicated and creative, as well as their passion in what they do being very much aligned to our culture and values! We continue to look forward working with them.

Fernando Tito
SKYGRiD Construction

I just wanted to send a note to say that I am continually impressed by the excellent service that ELM Insurance provides. Any time I have had questions or issues Matt and the team at ELM have been there to help quickly and efficiently. It is a pleasure to deal with a company that takes pride in providing a first class service over the years. I have no problems at all recommending your company. Keep up the good work and thanks for all your help so far.

Mike Di Girolamo

Working alongside Elm Insurance during the process of attaining insurance has been such a pleasant experience. Elm insurance worked diligently towards finding out which policy best suited our business’s needs. After an initial consultation the efficient team at ELM Insurance truly had an understanding of our business and quickly provided us with a few options to review. Between their kind customer service, knowledgeable staff and quick response times Elm Insurance is an easy choice for all your insurance needs.

Antonio Ienco
Co-Founder & Chair
Vaughan Film Festival

It's been seven years since I started managing the working relationship with ELM Insurance Brokers and I can honestly say I am proud to have Lou, Naz, Matt and the rest of the staff as business partners. They truly understand the importance of a solid relationship with insurance companies and fundamentally take great care of their clients, both personal and commercial. I look forward to many more years of our successful partnership in this win-win relationship with ELM Insurance.

Luis Mesia MBA, B.Eng., CIP
Senior Account Executive-Ontario Region

It has been an absolute pleasure dealing with ELM insurance brokers! They always respond to our inquiries in a timely matter, they are always looking out for our best interests, and for the right product to match our needs. We have recently set up our Life Insurance through ELM as well and Matthew was very thorough and took his time to explain all the policy options. Also his recommendations based on experience were very knowledgeable. We totally appreciate the honesty, friendliness and patience the company has shown us. Also the willingness to accommodate to OUR schedule with appointments is very appreciated considering the busy lives we all lead. It is also amazing to see a family business thriving in this world of large corporations. With ELM insurance you aren’t just another policy to them, you are treated importantly and personally!

We currently have multiple insurance policies with ELM, and plan to be customers for life!

Stephanie Roberti & Giovanni Rea

ELM’s team of professionals is committed to being solution and detail-oriented, earning them respect and loyalty from clients and the insurance industry. Travelers Canada is proud to have worked with ELM for over two decades, and we continue to be impressed by the integrity and care with which it conducts business.

Franco Rasetta
Regional Underwriting Director, Contract Surety
Travelers Canada

ELM has been providing both personal and business insurance services, including construction bonding to Accel for over 4 years. Their level of service and attention to detail has made it a pleasure working with them. Lou Civichino and his team are thorough and take the time to review our insurance needs and making sure we have right coverage. I have no hesitations recommending ELM Insurance to any of my colleagues or associates. Thank you for all of your hard work!

Anthony Corsetti
Accel Construction Management

We have had the pleasure of working closely with ELM Insurance Brokers since the inception of Trisura in 2006. On a personal level however, I have been doing business with Lou Civichino and his family for over 25 years.

Elm’s hands on approach, dedicated team of experienced and knowledgeable experts and their high ethical and business standards have made them an exceptional partner for both insureds and insurers alike.

Elm is always focused on delivering on their clients’ needs and work tirelessly to facilitate insurance solutions to meet those needs. I strongly endorse and recommend the services of ELM Insurance.

Mike George
President & CEO
Trisura Guarantee Insurance Company

Working with ELM insurance was a great pleasure! My husband and I were looking into insurance for our first home and knew very little about insurance and what was needed. Our broker, Matthew Civichino was very knowledgeable and able to help guide us in choosing the right insurance package to best fit our needs. His explanations and house visits were over and above what I thought buying insurance would be. He truly cared about meeting our needs as well as our budget without compromising on our insurance. Now, my husband and I are living in our new home and feel 100% comfortable and secure, which is the best feeling of all.

Thank you Matthew and the whole team at ELM Insurance!

Daniel & Leanne Greco