Below is a glossary of insurance terms and definitions that are commonly used in the insurance industry. It’s important to note that this page is currently under construction. Not all definitions may be visible.
IMPORTANT: Definitions in this glossary are created by Jones Insurance and sourced from various resources. These definitions are not legal definitions, and should not be used in any legal manner.
A
Accident
An unexpected event that causes injury, damage, or loss.
Act of God
A natural event that is beyond human control, such as an earthquake, tornado, or severe storm.
Actual Cash Value (ACV)
The value of property at the time of a loss after depreciation for age, wear, and condition has been taken into account.
Adjuster
A claims professional who investigates a loss, determines what coverage applies, and helps settle insurance claims.
Agent
A licensed insurance professional who sells insurance products on behalf of one insurance company.
All Perils
In Ontario auto insurance, All Perils combines Collision and Comprehensive coverage and also protects against theft by someone living in your household or employed by you.
All Risk
Coverage that protects against all causes of loss except those specifically excluded in the policy.
Application
The information submitted to an insurance company when applying for insurance. Insurers use this information to determine eligibility, coverage options, and premium.
Authorization
Permission given to another person or organization to act on your behalf.
Assessed Value
The value assigned to a property by a municipal assessment authority for taxation purposes.
Asset
Anything of value owned by a person or business, such as property, vehicles, equipment, investments, or cash.
Auto Liability
Coverage that protects you if you are legally responsible for causing injury, death, or property damage involving your vehicle.
Auto Physical Damage
Coverage that helps pay for damage to your vehicle caused by collision, theft, vandalism, fire, hail, or other covered perils (any unexpected or accidental event, situation, or incident that causes property damage or loss.)
Automobile Policy
An insurance policy that provides coverage for a vehicle. In Ontario, this may include liability coverage, accident benefits, direct compensation for vehicle damage where applicable, and optional physical damage coverages.
B
Balance Sheet
A financial statement showing a company’s assets, liabilities, and equity at a specific point in time.
BCEGS (Building Code Effectiveness Grading Schedule)
A rating system that evaluates how effectively a municipality enforces building codes, which can influence insurance underwriting.
Beneficiary
A person or organization designated to receive benefits from a life insurance policy or other insurance contract.
Benefits (Medical & Hospital Expenses)
Payments made by an insurer for eligible medical treatments, services, or hospital expenses covered under a policy.
Boatowners / Personal Watercraft Coverage
Coverage for boats, personal watercraft, motors, trailers, equipment, and related liability exposures.
Bodily Injury
Physical injury, sickness, disease, or death suffered by a person.
Boiler and Machinery (Equipment Breakdown)
Coverage for sudden and accidental breakdown of mechanical, electrical, or pressure equipment.
Bonds
A type of investment where money is loaned to a government or corporation in exchange for interest payments.
Broker
A licensed insurance professional who works on behalf of clients and can offer products from multiple insurance companies.
Builders Risk
Coverage for buildings under construction, including certain materials and equipment used during construction.
Burglary and Theft
Coverage for stolen property and certain losses caused by break-ins, theft, robbery, or attempted theft.
Business Auto
Insurance for vehicles used in connection with business operations.
Business Interruption
Coverage that helps replace lost income and ongoing expenses when a business cannot operate because of a covered loss.
C
Cancellation
The termination of an insurance policy before the policy expiry date.
Capital and Surplus
The difference between an organization’s assets and liabilities.
Capital and Surplus Requirement
A regulatory requirement that ensures insurance companies maintain sufficient financial resources to pay claims.
Capital Gain (or Loss)
The profit or loss realized when an asset is sold.
Casualty Insurance
Insurance that primarily protects against liability claims and legal responsibility for injuries or damage to others.
Catastrophe
A large-scale event that causes significant damage, injuries, or insurance losses.
Civil Liability
Your legal responsibility for injuries or property damage caused to another person.
Claim
A request made to an insurance company for payment or coverage following a covered loss.
Claims-Made Policy
A liability policy that typically responds only when the claim is reported during the policy period or any applicable reporting period.
Class Rating
A system that determines insurance rates based on characteristics shared by a group of insureds.
Claims Adjustment Expense
Costs incurred by an insurer to investigate, manage, and settle claims.
Commencement Date
The date an insurance policy or coverage begins.
Commercial Auto
Insurance for vehicles owned or operated by a business.
Commercial Farm
Insurance designed for farming operations, including property, liability, equipment, livestock, and farm structures.
Commercial General Liability (CGL)
Coverage that protects a business against claims of bodily injury, property damage, and personal injury arising from business operations.
Commercial Package Policy (CPP) or Business Package Policy (BPP)
A package policy that combines property, liability, and other common business coverages into one policy.
Commercial Property
Coverage for buildings, equipment, inventory, and other business property.
Credit Risk
The possibility that a borrower or debtor may fail to meet their financial obligations.
Crop Hail Insurance
Coverage for crops damaged by hail and certain other specified weather-related events.
Cyber Attack
An unauthorized attempt to access, damage, disrupt, or steal information from a computer system.
Cyber Insurance
Coverage that helps businesses respond to cyber incidents such as data breaches, ransomware attacks, and privacy-related claims.
Comprehensive General Liability
Liability coverage protecting businesses from many common third-party liability exposures, subject to policy terms and exclusions.
Comprehensive Personal Liability
Coverage that protects individuals and families against claims for bodily injury or property damage they are legally responsible for causing.
Conditions
The responsibilities and requirements that both the insurer and insured must follow under a policy.
Contractual Liability
Liability assumed through a written contract or agreement.
D
Date of Issue
The date an insurance company officially issues a policy or policy document.
Declaration Page
The section of your policy that summarizes important details such as the insured parties, coverage limits, deductibles, policy period, and property or vehicles insured.
Deductible
The amount you agree to pay toward a covered loss before your insurance policy responds.
Demutualization
The process by which a mutual insurance company converts to a shareholder-owned company.
Direct Incurred Loss
A loss that results directly from a covered peril, such as fire damage caused by a fire.
Direct Loss
Physical damage caused directly by a covered event.
Depreciation
The reduction in value of property over time due to age, use, wear and tear, or obsolescence.
Directors and Officers (D&O) Liability
Coverage that protects directors and officers of an organization from claims arising from decisions made while performing their duties.
Dwelling Property
A residential building insured under a property insurance policy.
Driving Frequency and Distance
How often and how far you drive. In Ontario, annual distance driven can affect your automobile insurance premium.
Driving History for Other Drivers
The driving records of people who regularly operate your vehicle. Their claims and conviction history may affect your premium.
Driving Record
A history of accidents, claims, and driving convictions that insurers use when determining premiums.
E
Earned Premium
The portion of a premium that has been “used up” because coverage has already been provided.
Earthquake
A natural ground movement that can cause significant damage to property. Earthquake coverage is typically optional.
Effective Date
The date and time insurance coverage begins.
Endorsement
A change made to an insurance policy that adds, removes, or modifies coverage.
Errors and Omissions (E&O)
Professional liability insurance that protects against claims alleging mistakes, negligence, or failure to provide professional services.
Event Cancellation
Coverage that helps reimburse certain financial losses when an event must be cancelled, postponed, or interrupted due to a covered cause.
Excess and Umbrella Liability
Additional liability protection that applies after the limits of an underlying policy have been exhausted.
Exposure
The possibility of loss due to ownership of property, business operations, driving activities, or other risks.
Experience Rating
A method of calculating premiums that considers a person’s or business’s claims history.
F
air Value
The estimated price an asset would sell for in an open and competitive market.
Farmowners Insurance
Coverage designed for farms that combines protection for homes, farm buildings, equipment, livestock, and liability.
Facultative Reinsurance
Reinsurance arranged for a specific risk rather than an entire group of policies.
Fire
Damage caused by an uncontrolled flame or combustion.
Fire Legal Liability
Coverage for damage caused by fire to property belonging to someone else for which you are legally responsible.
Flood
Damage caused by water overflowing onto normally dry land. Coverage varies by insurer and policy.
Fire Resistive Construction
Building construction designed to slow the spread of fire and reduce fire damage.
Form
The policy wording that outlines coverage, exclusions, conditions, and definitions.
Floater Policy
Coverage for property that moves between locations, such as jewelry, tools, cameras, or equipment.
G
Goodwill
The value of a business’s reputation, customer relationships, and brand beyond its physical assets.
Garaging Location
The location where a vehicle is normally kept when not in use. This can affect automobile insurance premiums.
Grace Period
A period after a payment due date during which coverage may continue while payment is made.
H
Hard Market
A period when insurance premiums generally increase and coverage becomes more difficult to obtain.
Hold-Harmless Agreement
An agreement where one party agrees not to hold another party responsible for certain losses or damages.
Homeowners Insurance
Coverage for your home, belongings, liability, and additional living expenses following a covered loss.
Home-Based Business
A business operated from a residence. Additional insurance coverage may be required.
Housekeeping
The maintenance, cleanliness, and organization of a property that helps reduce hazards and losses.
I
Improvements and Betterments
Upgrades made by a tenant to rented property that increase its value.
In Force
An active insurance policy that is currently providing coverage.
Indemnify
To restore someone financially after a covered loss, subject to policy terms and limits.
Inspection
A review of property, vehicles, or operations by an insurer to evaluate risk.
Incurred But Not Reported (IBNR)
Claims that have occurred but have not yet been reported to the insurer.
Incurred Claims
Claims that have happened during a policy period, whether reported or not.
Incurred Losses
The total cost of claims, including amounts paid and amounts reserved for future payment.
Principle of Indemnity
The insurance principle that a claim payment should restore the insured to their financial position before the loss, not provide a profit.
Independent Contractor
A self-employed individual who provides services under contract and is not an employee.
Insurable Interest
A financial or legal interest in property or a person that could result in a loss if damage, injury, or death occurs.
Insurance Audit
A review by an insurer to verify information used to calculate premiums.
Insured
The person, organization, or entity covered by an insurance policy.
Insurer
The insurance company providing coverage.
J
Joint Insured
Two or more people or organizations listed on the same policy and sharing coverage.
K
Known Loss
A loss or damage that occurred before insurance coverage was purchased and is not insurable.
L
Liability Insurance
Coverage that helps protect you if you are legally responsible for causing bodily injury or property damage to others.
Limit of Insurance
The maximum amount an insurer will pay for a covered loss or claim.
Loss Payee
A person or organization, such as a lender, that has a financial interest in insured property and may receive claim payments.
Leased Vehicle
A vehicle operated under a lease agreement rather than owned by the driver.
M
Material Change in Risk
A significant change that affects the risk insured under a policy and must be reported to the insurer.
Medical, Rehabilitation and Attendant Care Benefits
Ontario accident benefits that help pay for treatment, rehabilitation, and care services after an automobile accident.
Minimum Premium
The lowest premium an insurer will charge for a policy.
Misrepresentation
Providing incorrect, incomplete, or misleading information when applying for or maintaining insurance coverage.
Moral Hazard
A condition that increases the likelihood of loss because of a person’s actions, behaviour, or dishonesty.
N
Named Insured
The individual, business, or organization specifically identified on the policy declarations.
Non-Owned Automobile
A vehicle not owned by a business but used in connection with its operations.
Notice of Cancellation
Written notification that an insurance policy will be cancelled on a specified date.
Negligence
Failure to take reasonable care, resulting in damage, injury, or financial loss to another person.
O
Occurrence
An accident or event that results in bodily injury or property damage during the policy period.
Occupancy
How a building or portion of a building is used, such as residential, office, retail, or manufacturing.
Other Insurance Clause
A policy provision explaining how coverage will apply when more than one policy may respond to the same loss.
P
Peril
A specific cause of loss or damage, such as fire, theft, windstorm, or vandalism.
Policyholder
The person or organization that owns an insurance policy.
Policy Period
The length of time an insurance policy remains in effect.
Premium
The amount paid for insurance coverage.
Primary Coverage
Insurance that responds first to a covered loss before any excess or secondary insurance.
Proof of Loss
A formal statement provided to an insurer describing a loss and the amount being claimed.
Property Insurance
Coverage that protects buildings, equipment, inventory, and other physical property against insured losses.
Protective Safeguards Endorsement
A policy condition requiring protective systems, such as sprinkler systems or burglar alarms to be maintained and operational.
Physical Damage Coverage
Automobile insurance coverage that protects a vehicle against direct loss or damage, including collision and comprehensive coverage.
Policy Declarations (Declaration Page)
The section of an insurance policy that summarizes key details such as the named insured, coverages, limits, deductibles, policy period, and insured property.
Q
Quote
An estimate of premium and coverage based on information provided by the applicant.
R
Rate
The amount charged for a specific insurance exposure.
Rated Driver
A driver whose record is used to determine premium.
Reinstatement
The restoration of coverage following cancellation or lapse.
Renters Insurance
Insurance designed for tenants.
Replacement Cost
The cost to repair or replace property with similar new property without deduction for depreciation.
Residence
The home where a person primarily lives.
Rider
Another term for an endorsement.
Risk
The possibility of loss.
S
Salvage
Property remaining after a loss that still has value.
Seasonal Dwelling
A cottage or property occupied only part of the year.
Sewer Backup
Coverage for losses caused by water or sewage backing up through drains, sump systems, or sewer lines.
Settlement
The resolution and payment of a claim.
Soft Market
A period when insurance premiums tend to decrease and coverage becomes more readily available.
Specified Perils
Coverage limited to specifically listed causes of loss.
Subrogation
The insurer’s legal right to recover claim payments from the party responsible for a loss.
Suspension of Coverage
An endorsement used when a vehicle is being stored and not driven for a period of time.
T
Tenant
A person or business that rents property from another party.
Tenant Legal Liability
Coverage for accidental damage caused by a tenant to rented premises.
Theft
The unlawful taking of property.
Total Loss
A loss where property is damaged beyond economical repair or replacement.
U
Umbrella Liability
Additional liability coverage that applies after underlying liability limits have been exhausted.
Underwriter
An insurance professional responsible for evaluating risk and determining pricing and eligibility.
Uninsured Automobile Coverage
Coverage that protects insured persons when an at-fault driver is uninsured or cannot be identified.
V
Vacancy
A condition where a property is largely empty and not regularly occupied.
Valuation
The method used to determine the value of insured property.
Vandalism
Intentional damage to property.
Vehicle Identification Number (VIN)
The unique serial number assigned to a vehicle by its manufacturer.
W
Waiver of Depreciation
See OPCF 43R.
Warranty
A statement or promise within a policy that must remain true for coverage to apply.
Water Damage
Damage caused by water from a covered source. Coverage depends on the cause of the loss and policy wording.
Where You Live
In Ontario auto insurance, geographic location can affect premiums due to local claims trends, repair costs, theft rates, and traffic patterns.
Wreck Removal
Coverage for the cost of removing damaged property or debris after a covered loss.
Wrap-Up Liability
A liability policy that provides coverage for the owner, general contractor, and subcontractors involved in a construction project. It is designed to cover claims arising from work performed on that specific project.
X
Y
Years Licensed
In Ontario auto insurance, the number of years a driver has been licensed can affect premium calculations.
