General Level 2 Exam - Terminology

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Absolute Liability

Back 1

Liability that occurs where one has a duty to fill no matter what the circumstances may be. In

Alberta, the Absolute Liability Law under Auto

Insurance is a minimum of $200,000.

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Accident and Health (Sickness) Insurance

Back 2

A form of insurance compensating an individual for loss as a result of an accident or illness. The amounts and items covered vary from policy to policy and depend to some extent on what

coverage is purchased by the insured.

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Actual Cash Value

Back 3

The fair market value of property taking into

account factors that might augment or reduce the value of the property in question.

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Additional Living Expense Insurance

Back 4

Coverage applicable when an insured's dwelling is damaged by an insured peril to such an extent that one cannot live in it until repaired. This

insurance pays the extra amount it costs to live elsewhere until repairs are made, such as the cost of living in a hotel.

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Adverse Selection

Back 5

A situation occurring when an insurer does not receive a fair cross-section of a broker's portfolio of business. (ex. when a broker places poor risks with one insurer and good risks with another insurer).

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Agency Contract

Back 6

The written agreement between an insurer and a broker outlining their respective rights and

duties.

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Agent

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1) A person who is employed to act on behalf of another

2) An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public and is paid a commission on or receives compensation for such business. See also Broker.

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All Risk Policy

Back 8

A name given to an insurance policy which

covers against the loss caused by all perils

except those which are specifically excluded by the terms of the policy.

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Amount of Insurance

Back 9

The limit of payment for which an insurer is

liable under a policy.

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Applicant

Back 10

The person or firm requesting insurance

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Application

Back 11

A request for insurance. This may be done

verbally, in writing, or by using a printed form.

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Appraisal

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A valuation or an estimation of the value of property usually done by an expert in that field who has no personal interest in the property.

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Appraisal Clause

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A clause in an insurance policy that gives the

insurer the right to demand an appraisal on the damaged property. It gives both the insurer and insured a means of settling disputes over the value of lost or damaged property.

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Appraiser

Back 14

Person who because of special knowledge is vested with authority in determining the real

value of property or damage.

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Appurtenances

Back 15

That which belongs to something else (ex. snow tires for a car). this term means that one thing belongs to another thing, that the two will remain in relationship, and will pass with the ownership.

An accessory or other item associated with a particular object.

Synonyms: accessories, equipment

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Arbitration

Back 16

Reference of a dispute to one or more impartial persons chosen by the parties to the dispute to determine their right and/or obligations. The parties agree in advance to abide by the

arbitrament. Each party has a chance to be heard.

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Arson

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At common law, the deliberate and intentional burning of property by its owner or by another person.

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Attractive Nuisance

Back 18

A legal tort doctrine which holds that any person who has or creates any condition on his

premises, private or public, that may reasonably be considered to pose a danger to children and at the same time attract them (to it), has a duty to take precautions as a reasonable person would do to prevent injury to minors.

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Automatic Reinstatement

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After a claim has been paid or the property

restored, most policies automatically return the stated limit of insurance to its original amount.

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Automobile Insurance

Back 20

Insurance coverage that provides indemnity and/or compensation for injury or physical

damage which ensued from the ownership, use, or operation of an automobile.

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Bailee

Back 21

In contract and property law one to whom goods or property are entrusted for a stated purpose. Can be either gratuitous (for no consideration) or for hire (for consideration).

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Bailment

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The act of placing goods in the possession of a bailee.

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Bailor

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A person entrusting goods to another.

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Basic Premium

Back 24

A starting charge made to which is added the premium developed by the application of rates as directed.

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Betterment

Back 25

Physical improvements beyond mere

maintenance or repairs that augment the value of a property.

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Binder

Back 26

A written or oral agreement given by an insurer to insure a risk, pending the issue of a policy. A binder is deemed to be the policy and must be cancelled in the same manner.

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Breach

Back 27

Failure to live up to the conditions or warranties contained in a policy

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Broker

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An independent person or firm who acts on behalf of the Insured in placing business with

insurance companies.

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Building Codes

Back 29

Rules and regulations of government bodies

defining standards that construction in that

jurisdiction must meet.

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Burglar Alarms

Back 30

Devices of various types which give warning of entry into premises by unauthorized persons.

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Burglary

Back 31

Unlawful removal of property from premises

involving visible forcible entry.

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Business Interruption Insurance

Back 32

Various types of insurance against business

expenses and loss of income resulting from a fire or other insured peril.

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By-law

Back 33

A law or ordinance dealing with matters of local or internal regulation made by a local authority or by a corporation or association.

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By-law Endorsement

Back 34

An endorsement explaining how a particular

insurance company deals with a claim which is affected by a local by-law.

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Care, Custody and Control

Back 35

A term used primarily in liability coverage's which refers to property belonging to another but which is legally in the insured's possession or under his or her control.

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Casualty Insurance

Back 36

Loosely used to describe an area of insurance not particularly or directly concerned with life

insurance , fire insurance or auto insurance. Most frequently refers to liability, burglary, and plate glass insurance but may include Fidelity and Surety.

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Cede

Back 37

An insurer cedes part of a risk to a reinsurer when it transfers or reinsures part of the risk.

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Certificate of Authority

Back 38

A document supplied by an insurance company to its agent indicating what authority it is

conferring on him/her. This is usually

accomplished through an "agency agreement."

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Canadian Chartered Insurance Broker (C.C.I.B.)

Back 39

A professional designation earned by

examination following study courses.

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Chartered Insurance Professional (C.I.P.)

Back 40

A professional designation (Canada) earned by the successful completion of several educational requirements by the Insurance Institute of

Canada.

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Civil Code

Back 41

1) The civil law of the province of Quebec.

2) The reduction of law to a set of rules.

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Claim

Back 42

Strictly speaking, a claim is the exercising of the right of an insured to be indemnified by his or her insurance company for damage suffered. It is frequently used, however, to indicate the amount of the claim. In practice, it is any

notification of a possible loss under an

insurance policy whether any payment is likely to follow or not. For every claim that is

reported, the insurance company must set aside reserves equal to the figure which it is anticipated the claim will cost.

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Claimant

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One who makes a claim

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Claims Adjuster

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An employee of an insurer who handles and is responsible for incoming claims.

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Claims Made Basis

Back 45

Provision in some insurance and reinsurance contracts covering only claims made during the term of the contract.

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Clause

Back 46

Words in a policy which describe certain

specifications, limitations, or modifications.

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Co-Insurance Clause

Back 47

A clause in an insurance policy requiring an

insured to carry a certain percent, usually 80, 90, or 100% of insurance in relation to the

value of the property insured. If the insured fails to do this, then he/she agrees to be a self-insurer of all losses in the same ratio as his failure to comply. Ex. a building valued at $100K with 80% co-insurance would require coverage of $80K. If coverage is carried for only $40K, then the insured is responsible for $40K of the $80K and the insurer would be responsible for $40K. This ratio applies regardless of the amount of the loss.

Front 48

Co-Insurer

Back 48

Two or more persons or companies who may be sharing a loss. A company whose policy covers the same risk as that of one or more other

companies, is a co-insurer whether the policies are written separately or together.

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Collapse

Back 49

Falling in of a building

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Collision

Back 50

A vehicle or a shop collides when it strikes another object or another vehicle or ship. Collision insurance insured against these types of losses.

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Common Carrier

Back 51

One who offers to transport merchandise for hire and must accept shipments from anyone who wishes to use the services. Different laws and rules govern common carriers who only transport the goods of those with whom they have made agreements

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Common Law

Back 52

The part of English law that is derived from

custom and judicial precedent rather than

statutes. Often contrasted with statutory law.

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Comprehensive General Liability Policy

Back 53

A policy particularly suited to a manufacturer, contractor or large wholesaler, or retailer

providing broad coverage for claims made against him for bodily injury or damage to

property of others for which he may become

liable and which arise out of his entire business operation.

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Comprehensive Personal Liability

Back 54

A form of liability insurance for individuals which insures the policyholder in the event he or she has become liable to pay money for damage or injury he or she has caused to others. This is separate from auto liability coverage but does cover almost every activity of the policyholder except those which arise from the operations of a business.

Front 55

Compensatory Damages

Back 55

Payment for direct loss of use, injuries or care and loss of services for bodily injury or property damage

Front 56

Conditions

Back 56

The general terms or requirements upon which the insurance is based. For the mutual

understanding of the parties the conditions will commonly be state such matters as how the

policy can be cancelled or renewed, provisions with respect to changes of the insured's interest, provisions as to what an insured should do in the event of a loss/subsequent to a loss.

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Conditions of the Contract

Back 57

Articles in the contract defining or describing terms, responsibilities of owner and contractor,

performance and payment schedules, and the like.

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Condominium

Back 58

Is the individual ownership of a single unit in a multiple unit building or group of buildings,

together with a percentage interest in that part of the total property owned jointly by all unit owners. In an apartment building, each

apartment would be a unit and the stairways, pathways, and parking areas would be in

common ownership. Requires special

insurance treatment.

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Consequential Loss

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A secondary consequence of a loss/an indirect result of the direct loss.

Front 60

Consideration

Back 60

The inducement (cause, motive or price) to a contract. It can be either expressed or implied. In an insurance contract, the premium is the consideration.

Front 61

Constructive Total Loss

Back 61

A partial loss but where the damage is so

extensive that repairs would cost as much or more than the repaired property would be worth, or the limit of insurance. Ex. hail

damaged vehicles

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Contract

Back 62

An agreement made between two or more

persons, which is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him or her by the

other party, to do or to abstain from doing some act.

Front 63

Contract Docs

Back 63

Agreement. addenda, supporting docs, general conditions, supplementary conditions,

specifications & drawings, and modifications to an agreement.

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Contractual Liability

Back 64

Liability assumed by a contract either written or implied. There's very little coverage for this in most legal liability policies but it may be covered as an additional risk with an additional premium.

Front 65

Contributory Negligence

Back 65

Many accidents are the fault of both parties who are involved in the occurrence. The plaintiff who sues another party for damages also may be guilty of some negligence, which is a concurrent cause of the damage.

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Cover

Back 66

To protect with insurance

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Coverage

Back 67

The nature of protection afforded by a particular policy.

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Credit Report

Back 68

A report provided by a commercial credit

reporting company which provides details on the reputation and financial strength of an

individual or corporation.

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Custody

Back 69

Immediate control that an authority exercises over property or people.

Front 70

Debris Removal

Back 70

A provision in an insurance policy most

commonly found in fire insurance providing

indemnification for the cost of removal of the debris after a fire.

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Declaration

Back 71

Statement, signed by the insured, warranting that information given by him is true.

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Decline

Back 72

To refuse acceptance of an insurance

application.

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Deductible

Back 73

An agreed specified sum to be deducted from the amount of loss and assumed by the Insured

Front 74

Deductible Clause

Back 74

A clause defining the amount of loss for which insured is liable; defines insurer's and insured's contributions to cover losses.

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Depreciation

Back 75

Reduction in value of property through use,

aging, deterioration, and obsolescence.

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Direct Billing

Back 76

A system of collection of premiums whereby the insurance company "direct bills" the insured for the premium in lieu of the conventional

collection of premiums by the agent or broker.

Front 77

Directors and Officers of Liability Insurance

Back 77

Protection for officers and directors of a

corporation against damages resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation for expenses incurred in defending lawsuits arising from

alleged wrongful acts of officers or directors. These policies always require the Insured to retain part of the risk uninsured.