Insurance Glossary

Simplified Definitions for Insurance Coverage Jargon

Here are the definitions of some commonly used insurance terms and phrases explained in plain English for you. They are listed in alphabetical order.

A

Accident Benefits
Statutory accidents benefits is mandatory coverage for auto insurance in Ontario. It covers medical costs and rehab, loss of income due to disability or death, and funeral expenses. Learn more
Accident Forgiveness
An “accident forgiveness” program keeps your driving record intact even after your first at fault accident.
Acts of God
The expression Act of God is often used to describe a natural event that causes damage such as forest fires, earthquakes, tornadoes, landslides, etc. In Canada, insurance companies do not use the term ‘Act of God’, but instead say peril. (See Named Perils coverage)
Agent (Insurance)
An insurance agent is usually employed by an insurance company and therefore offers the various insurance products of that one company.
All Perils or All Risk Coverage (auto)
All Risk auto coverage combines collision and comprehensive coverages. In addition, it covers loss or damage caused if a person who lives in your home steals the vehicle that is covered by your policy. Learn more
All Perils or All Risk Coverage (home)
Provides broader coverage for normal risks to your home, except those that are specifically excluded, such as acts of terrorism or flooding.
At Fault Accident
When you are found to be the cause or at fault, fully or partially, for an accident.

B

Broker (Insurance)
An insurance broker is usually employed by an insurance brokerage that can offer the various insurance products of many different insurance companies.
Business Income Insurance
Business income insurance provides coverage for income lost as a result of property damage, vandalism, theft, or any other covered reason that interrupts a company’s ability to do business.

C

Casualty
Someone or something that is hurt, damaged, or killed in an accident.
Certificate of Auto Insurance
Shows the vehicles covered and for what, and how long the policy is in effect. The small (often pink) copy must be kept in the insured vehicle at all times as proof of insurance.
Claim
A claim is made when you report a loss to your insurance company due to a car accident, for example, or due to a theft in your home.
Collision Reporting Centre
In many urban areas, you can go to a Collision Reporting Centre to report an accident within 24 hours when police are not needed at the scene. However you are obliged by law to call the police when the combined damage to vehicles is over $1000 (which is most accidents these days) or if there are injuries.
Collision Coverage
Collision & Upset is optional in an auto policy to help you pay to get your vehicle repaired. Learn more
Commercial Auto Insurance
Commercial auto insurance protects vehicles being used for business purposes, including company cars, trucks, and shipping vehicles. It is particularly important to have when using personal vehicles for commercial tasks. Leased vehicles, rented vehicles, and hired autos may require additional coverage.
Comprehensive (or Upset) Coverage
Comprehensive auto insurance is optional in an auto policy to cover you when your vehicle is damaged in some other way, such as theft, vandalism, flying debris, etc. Learn more
Coverage
The dollar amount up to which you are covered for expenses caused by collision if an accident happens, or for other situations (theft or vandalism, for example) if you have comprehensive auto insurance, or a home policy.

D

Deductible
The portion of a loss that you are required to pay. You can lower your monthly premiums if you are willing to have a higher deductible; that is, pay a higher amount of the loss should a loss or claim occur.
Direct Writer
An insurance company that sells its own insurance products directly to the public.

E

Employment Practices Liability
Employment practices liability protects against issues that may arise in employee management, including hiring and termination, and daily management, and encompasses issues like wrongful termination, discrimination, and sexual harassment.
Errors and Omissions
Errors and Omissions, or E&O, covers you against professional errors or negligence should you be found accountable in the event of your client’s financial loss. Learn more
Exclusions
These are situations or property not covered by a standard policy. Even with an All Risk policy, not all perils are insured against. For example:

  • Automobile: a personal car policy does not usually offer any coverage if the vehicle is being used in a business.
  • Home: The most common exclusion that would be viewed as a peril or “Act of God” is a flood. No insurance company in Canada offers flood insurance under a home policy.

F

Fire Insurance
A peril that is usually covered by property insurance.
Fleet Insurance
If your business has 5 or more cars, trucks or other vehicles, you may be eligible for fleet insurance.
Flood Insurance
No insurance company in Canada offers flood insurance under a home policy. A flood is the most common exclusion in home policies. Sewer back-ups or groundwater seeping into your basement are different situations and may be covered.

G

Group Plan
Large companies can have insurance plans designed for the specific needs of their employees, usually 100 or more to qualify for a group plan.

H

High-Risk Driver
Drivers who have had a number of convictions or at fault accidents, had policies cancelled because they haven’t paid their premiums, or have other risk-related characteristics.
High-Value Insurance
High value homeowner’s insurance offers more coverage and higher limits to protect those with more material wealth than average, whether it is the home itself and/or high-value collectibles or jewelry.

I

Income Replacement Benefits
If you cannot work as the result of an automobile accident, you may want to consider this optional coverage to increase your maximum weekly protection.
Insurance
Insurance is a contract in which the insurer agrees to compensate the insured for specific losses and specific perils.
Insurer
The insurance company who is responsible for paying in the event of an insured loss.

L

Liability
A liability is something you are legally responsible for or liable for; in business, debts or monies owing are commonly known as liabilities. General liability insurance covers you in situations where you are found responsible for bodily injury or property damage.
Licensed
In Ontario, only a RIBO-licensed broker, agent or insurance company is authorized to sell insurance. (See RIBO below for more information)
Life Insurance
Simply put, a life insurance policy pays your beneficiary a cash payment when you die. The amount of money depends on what you are insured for and the type of policy that you buy. (See Term Life Insurance and Universal Life Insurance for more information)
Limit
Usually refers to the highest dollar amount available to you when an eligible claim is made.

M

Medical, Rehabilitation and Attendant Care Benefits
You can buy optional additional coverage over and above the current standard maximum amounts included in the accident benefits of auto policies. Learn more
Mortgage Insurance
An insurance policy that pays the balance of your mortgage back to the lending institution, but only if the person listed on the mortgage dies.

N

Named Perils Coverage
Provides coverage for specific basic perils outlined in the policy. This coverage is usually less expensive, but places more risk of financial loss on you.
No Fault Insurance
No fault insurance means that you deal only with your own insurance company when you need to make a claim. Learn more

P

Perils
A peril is a particular risk that may cause a loss or damage. Fire and theft are examples of perils. See Named Perils coverage.
Permanent Life Insurance
A category of life insurance that provides lifelong coverage. Unlike term life insurance, Permanent Life Insurance does not expire after a predetermined period of time. In addition to a death benefit, Permanent Life Insurance also has a savings component, allowing you to cash in or borrow against its accumulated value. There are two main types of permanent life insurance: whole and universal life insurance.Learn more
Personal Injury
Personal injury coverage protects not against physical injury but against libel, defamation, or slander for which you, your employees, or your company may be held accountable.
Product Liability Insurance
Product liability policies cover any damages that come from the use of your products by consumers, whether through manufacturing errors, faulty design, or safety flaws that can otherwise cause harm.
Premises Liability
Premises liability insurance protects against accidents that happen on your property, like slips, falls, and broken bones, and can cover both employees and visitors.
Premiums
Premiums are the rates you pay, either monthly or annually for your level of insurance coverage.
Professional Liability
Professional liability protects you and your employees against errors and negligence that may occur in the process of performing daily obligations, like malpractice or errors and omissions.
Property Insurance
Protects home and property, or business assets and property from perils such as fire, theft and accidental damage.

R

RIBO
RIBO stands for the Registered Insurance Brokers of Ontario, which is the self-regulatory body for insurance brokers in Ontario. Learn more

S

Statutory Accident Benefits Coverage
Mandatory for auto insurance in Ontario. It covers medical costs and rehab, loss of income due to disability or death, and funeral expenses.

T

Term Life Insurance
A term life insurance policy (also called temporary life insurance) protects you over a specific period of time. Generally, term life insurance policies are 5, 10, 15, 20 and even sometimes 30 years in length. (See also Permanent Life Insurance) Learn more
Theft Insurance
Theft is a peril that is usually covered by automobile or property insurance.
Third-Party Liability Coverage
Mandatory for auto insurance in Ontario. This covers you when the driver of your vehicle is legally liable for injuries to another person or for damage to another person’s property. While you are legally required in Ontario to carry a minimum of $200,000, you may want to increase this coverage to $1 million or $2 million since the additional cost is small in most cases.

U

Underwriter
Employed by insurance companies, an underwriter is responsible for investigating the factors affecting the probability of loss and the costs that the insurance company may have to pay. Underwriters use a lot of statistical data to calculate the likely risk and cost of insuring an individual.
Uninsured Driver Coverage
Mandatory for auto insurance in Ontario and covers you if you are injured or killed by an uninsured driver (including an unknown hit-and-run driver) who is found liable for the accident. Learn more
Universal Life Insurance
Universal life insurance is a form of Permanent Life Insurance that gives the policyholder the ability to shift funds between the savings and the insurance components of the policy. Universal life insurance typically has the most flexibility regarding premium payments, death benefits and savings.

W

Whole Life Insurance
Whole life insurance is a type of life insurance that is considered a permanent plan. This policy will last from the time it is purchased until the owner cancels the plan or passes away. The cost of these plans does add up since they do last throughout your lifetime and never expire. These policies will often allow you to cash out against them as well and offer a payout.Learn more
Wrongful Act
Any error, misstatement, misleading statement, act omission, breach of duty or neglect allegedly committed or attempted.

Questions About Uninsured Automobile Coverage?

Feel free to speak with our insurance experts about any aspect of your auto policy. For free advice and no-obligation insurance quotes, contact Mitchell and Whale Insurance Brokers at 800-731-2228 or email us at info@mitchellwhale.com. We’ll be happy to help you.

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