Actual Cash Value
The fair market value of property taking into account factors that might augment or reduce the value of the property in question.

Additional Living Expense Insurance
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.

Agent
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.

All Risk Policy
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. Frequently, a policy of insurance is written to insure damage to property caused by specific "named perils," which are listed on the policy. However, policies may be issued in certain cases to insure against "all risks of loss or damage" and are then called "all risks" policies. The term excludes insurance against certain hazards.

Amount of Insurance
The limit of payment for which an insurer is liable under a policy.

Applicant
The person or firm requesting insurance.

Application
A request for insurance. This may be done verbally, in writing or by using a printed form.

Appraisal
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.

Appraisal Clause
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.

Appraiser
Person who because of special knowledge is vested with authority in determining the real value of property or damage.

Appurtenances
That which belongs to something else, e.g., appurtenances of automobile. The term "appurtenances" means that one thing belongs to another thing, that the two will remain in relationship, and will pass with the ownership.

Arbitration
Reference of a dispute to one or more impartial persons chosen by the parties to the dispute to determine their rights and/or obligations. The parties agree in advance to abide by the arbitrament. Each party has a chance to be heard.

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

Attest
1) The witnessing of signatures. Where a document is signed a witness who has seen the document signed before him may "attest" that the signatures on the document are genuine.
2) Audited financial statements are said to be "Attested," i.e. the auditor attests the corporation's representations.

Audit
1) An examination of evidential matters to determine the reliability of a record or assertion.
2) In connection with financial statements a review of the accounting records and other supporting evidence of an individual or an organization to assess the reasonableness of the statements as presented (not a guarantee of accuracy).

Automatic Reinstatement
After a claim has been paid or the property restored, most policies automatically return the stated limit of insurance to its original amount.

Automobile Insurance
Insurance coverage that provides indemnity and/or compensation for injury or physical damage which ensues from the ownership, use or operation of an automobile.

Bailee
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).

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

Bailor
A person entrusting goods to another.

Balance Sheet
Financial statement showing assets, liabilities and equity of a company.

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

Betterment
Physical improvements beyond mere maintenance or repairs that augment the value of a property .

Binder
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.

Blanket Crime Policy
An individual policy covering several crime perils on a single amount rather than on individual limits.

Blanket Policy (Insurance)
Insurance on two or more items, or locations, in one aggregate sum insured without separate amounts for each item.

Boiler and Machinery Insurance
Coverage that indemnifies in the event of loss with respect to and arising from the ownership, use and operation of boilers, pressure vessels and machinery.

Brick Veneer Construction
Frame construction with a single course of brick as an outside covering.

Broker
An independent person or firm who acts on behalf of the insured in placing business with insurance companies.

Builders Risk Insurance
Insurance coverage on property under construction including loss to buildings or ships, including machinery and equipment, under course of construction, and materials incidental to construction.

Building Codes
Rules and regulations of governmental bodies defining standards that construction in that jurisdiction must meet.

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

Burglary
Unlawful removal of property from premises involving visible forcible entry.

Burglary Insurance
Insurance against loss of property caused by burglars.

Business Insurance
A form of insurance to protect a business against the loss of services of a key employee or employees. Usually accident and sickness, however, life insurance may also form part of the package. Also called Partnership Insurance or Corporation Insurance.

Business Interruption Insurance
Various types of insurance against business expenses and loss of income resulting from a fire or other insured peril.

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

By-law Endorsement
An endorsement explaining how a particular insurance company deals with a claim which is affected by a local by-law.

Care, Custody and Control
A term used primarily in liability coverages which refers to property belonging to another but which is legally in the insured's possession or under his control.

Cargo
Goods being transported, such as the load of a truck or the goods being carried by a ship. The cargo of a ship does not include the equipment needed to operate the ship.

Cash Surrender Value
When an insured wishes to cancel a life insurance policy before the full term, the policy may have a cash value which is stipulated in the policy. The longer the policy is in force, the higher the cash value is likely to be. It is a sum paid back by the life insurance company to the insured when an insured requests the termination of the policy.

Casualty Insurance
Loosely used to describe an area of insurance not particularly or directly concerned with life insurance, fire insurance or automobile insurance. Most frequently refers to liability, burglary and plate glass insurance but may include Fidelity and Surety.

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

Certified Copy
Reproduction of a document, that authority having custody of original signs and attests as a true, genuine and authentic copy.

Canadian Chartered Insurance Broker (C.C.I.B.)
A professional designation earned by examination following study courses.

Chartered Insurance Professional (C.I.P.)
A professional designation (Canada) earned by the successful completion
of several educational requirements as designated by the Insurance
Institute of Canada.

C.C.I.B.
See Chartered Insurance Broker.

C.I.P
See Chartered Insurance Professional.

Civil Code
1) The civil law of the Province of Quebec.
2) The reduction of law to a set of rules. In some countries for example, France, most of the laws of the country were at one time reduced to a set of rules after the style of the Roman Code although these too have subsequently been subject to certain new statutes. In some jurisdictions, certain sections of the law are reduced and simplified to a "Civil Code."

Civil Commotion
Disturbance involving a large number of individuals. An uprising of people creating a prolonged disturbance.

Claim
Strictly speaking, a claim is the exercising of the right of an insured to be indemnified by his 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.

Claimant
One who makes a claim.

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

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

Clause
Words in a policy which describe certain specifications, limitations or modifications.

Co-insurance Clause
A clause in an insurance policy requiring an insured to carry a certain percentage, usually 80, 90 or 100 per cent of insurance in relation to the value of the property insured. If the insured fails to do this, then he agrees to be a self-insurer of all losses large or small in the same ratio as his failure to comply with the percentage required, is related to the insurance required. For example, a building valued at $100,000 with an 80 per cent co-insurance clause would require insurance coverage of $80,000. If coverage is carried for only $40,000 then the insured is a self-insurer or coinsurer for $40,000 of the $80,000, and the insurance company would be responsible for the same amount. This ratio would apply even if a loss were only $5,000. Then the insurance company would pay $2,500 and the balance or coinsurance penalty of $2,500 would be borne by the insured.

Co-insurer
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.

Collapse
Falling in of a building.

Collision
A vehicle or a ship collides when it strikes another object or another vehicle or ship. Collision insurance insures against loss so caused.

Collusion
A secret agreement between persons to defraud another, e.g., an insured driver of an automobile and his passenger may misrepresent the facts of an accident in order to have monies paid to the passenger under the insured's automobile insurance policy.

Commercial Property Floater
Property used in a business which requires it to be moved from place to place, may be insured on one of the forms of commercial property floaters. A television studio, for example, may require insurance on their equipment even though it may be out of the regular studio much of the time. In most instances, these are written on special forms suited to the particular need such as contractor's equipment floater, inland marine block policy, jeweler's block policy, salesman's floater policy, etc.

Common Carrier
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 than do private or contract carriers who only transport the goods of those with whom they have made agreements.

Common Law
American, Canadian and British law derives its force and authority from the universal consent and practice of the people over the years. Certain aspects of the law are written into statutes. The underlying principles and usages and rules of action which do not rest for their authority on this statutory or legislative law are to be found in principles set forth by decisions of the Courts over the years.

Many rules were promulgated in feudal times. During the reign of Henry II (beginning 1154 AD) the King's Courts became organized and common law began to evolve. The Courts met frequently and when one Court made a decision in connection with a certain issue, that decision was followed by the other courts and became the law unless modified by statue or by gradual evolution.

Comprehensive General Liability Policy
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.

Comprehensive Personal Liability
A form of liability insurance for individuals which insures the policyholder in the event he has become liable to pay money for damage or injury he has caused to others. This form does not include automobile liability, but does cover almost every activity of the policyholder except those which arise from the operations of a business. Hence "Personal" Liability.

Conditions
The general terms or requirements upon which the insurance is based. For the mutual understanding of the parties the conditions will commonly state such matters as how the policy can be cancelled or renewed, provisions with respect to change of the insured's interest, provisions as to what an insured should do in the event of a loss, and conditions as to what he should do subsequent to a loss etc.

A condition precedent is one that must be fulfilled prior to the general fact at stake. The insured, for example, is required to give notice of a claim and fulfill certain other obligations as a condition precedent to his receiving a settlement.

A condition subsequent is one which is applicable subsequent to the event, as for example, the insured is required to co-operate in the disposition of the claim and to co-operate, other than in a monetary way, to assist to recover from anyone who is responsible for the loss.

Conditions of the Contract
Articles in contract defining or describing terms, responsibilities of owner and contractor, performance and payment schedules, and the like.

Condominium
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. Condominium property requires special insurance treatment.

Consequential Loss
The word "consequential" means something following as an effect or result. It is an indirect result of the occurrence that causes the loss.

The difference between a direct loss and a consequential loss can be seen in the destruction of a power station by wind. The damage to the power station is a direct loss by wind. There is actual physical damage directly resulting. The destruction of the power station also interrupts the generation of power by the station. For example, a cold storage plant is without electrical power. Foodstuffs spoil as a result or as a consequence. This is a consequential loss, not a direct loss.

Consideration
The inducement to a contract; the cause, motive or price which induces a contracting party to enter into an agreement, act or forbearance or promise thereof. It is an essential part of a binding contract. Consideration is either expressed or implied.

The money, or whatever is being used in substitution of money, paid for the article or contract is "the consideration."

Constructive Total Loss
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.

Contract
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 by the other party, to do or to abstain from doing some act. The offer and acceptance may either be expressed or inferred by indication in the conduct of the parties.

Contract Documents
Agreement, addenda, supporting documents, general conditions, supplementary conditions, specifications and drawings and modifications to an agreement.

Contractor's Liability Insurance
Insurance protecting contractor from defined liability claims arising from contractor's operations.

Contractual Liability
Liability assumed by a contract either written or implied. Legal liability policies are based upon liability in tort or negligence and have very little coverage normally for contractual liability (with a possible exception of such matters as sidetrack agreements, etc.) However, contractual liability may be covered in many instances as an additional risk with an additional premium.

Contributory Negligence
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. Such a party is guilty of contributory negligence.

Cover
To protect with insurance, or the insurance protection provided.

Coverage
The nature of protection afforded by a particular policy. Can be used at times interchangeably with "insurance" or "protection" as "fire coverage" or "fire protection" or "fire insurance."

Credit Report
A report provided by a commercial credit reporting company which provides details on the reputation and financial strength of an individual or corporation.

Custody
Immediate control that an authority exercises over property or people.

Daily Report
Copy of the policy or bond for company or agency records. This term may also include all correspondence, notes, inspection reports, credit reports, etc. pertaining to the policy.

Data Processing (Equipment Insurance)
A special insurance usually on an all risks basis. Covers physical loss and loss from business interruption if the damage necessitates shutdown of operations.

Debris Removal
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.

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

Decline
To refuse acceptance of an insurance application.

Deductible
An agreed specified sum to be deducted from the amount of loss and assumed by the insured. See also Franchise.

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

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

Direct Billing
A system for the collection of premiums whereby the insurance company "directly bills" the insured for the premium in lieu of the conventional collection of premiums by the agent or broker. The insurer sends a statement to the agent, usually monthly, recording the premiums collected directly, and credits the agent with the commission on those items.

Directors and Officers Liability Insurance
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.

Disability
Inability to carry on in one's normal occupation due to accident or sickness.

Disclosure
Act of making known something known.

Driver Training Credit
To encourage driver education courses at schools and colleges, many insurers grant premium rebates to applicants for private passenger automobile insurance who have successfully completed an approved training program.

Dwelling
The living quarters occupied, or intended for occupancy, by a household.

Earned Premium
1) That portion of premium earned or charged for the period of time a policy remained effective. For example, an annual policy paid for in advance would be one twelfth "earned" at the end of the first full month of its term.
2) An amount calculated by taking earned premium reserve at beginning of period plus premium written during period, less unearned premium reserve at end of period.
3) Premium actually exposed to loss.

Earthquake Insurance
Insurance against damage by earthquake.

Effective Date
The date of inception of an insurance policy, or the date additional coverages become effective.

Employer's Liability Insurance
Coverage for legal liability imposed on an employer to pay damages to an employee injured by the employer's negligence. This is not Worker's Compensation Insurance where special acts of legislature set out specifically the relationship between the employer and employees in certain circumstances and formula by which awards in each case are computed.

Encumbrance
Mortgage, lien or other charge against a property.

Endorsement
An amendment added to a written document, particularly an agreement between parties, altering its provisions.

Equipment
Material for use on one machine, one vehicle, one unit. For example, a car comes "equipped" with five tires. Tires other than those on the car are not "equipment" of the car. They are instead the dealer's "stock of tires." Equipment also includes contractor's equipment, e.g., backhoe, bulldozer.

Estate
1) In law, one of the various interests in land.
2) The net worth of an individual's worldly goods.

Estimate (Bid Function)
Costs a contractor anticipates for a project.

Estimated Premium
A tentative premium set in the anticipation of being approximately correct but which may be increased or decreased when the final premium calculation is made.

Estoppel
A bar created when someone by his action or lack of it indicates that he will not exercise a right he has. He stops himself from exercising his right later, e.g., if A owns a pen and stands by and watches B sell the pen to C, as if the pen belonged to B, then A cannot later reclaim the pen, arguing that it was his.

Exclusion
Risks, perils or properties defined in the policy as not covered.

Experience
Comparison of premiums earned with claims incurred for: a) an individual insured b) group of insureds c) class of coverage.

Expiry
End of the policy period.

Explosion
A rupture of a pressure vessel of some kind due to excessive internal pressure (usually accompanied by a loud noise).

Exposure
The hazard threatening a risk because of external or internal physical conditions.

Extended Coverage Insurance
An endorsement that enlarges the coverage afforded by the primary policy. Coverages such as windstorm, hail, smoke, riot are extended coverages on a fire policy.

Extra Expense Insurance
A form of insurance policy covering the extra expense of an insured in carrying on a business following a loss by an insured peril.

Face Brick
Brick, chosen for its visual rather than its structural characteristics, used on wall's exposed surface.

Face of Policy
The front of the policy on which normally the name of the insurance company, the name of the insured, the amount of insurance and the type of insurance appear among many other items.

Fair Market Value
Price at which a buyer and seller, under no compulsion to buy or sell, will trade.

Fellow, Chartered Insurance Professional (F.C.I.P.)
A professional designation awarded to a Chartered Insurance Professional
(C.I.P.) after the successful completion of several additional -
university level - educational requirements as designated by the
Insurance Institute of Canada.

Fire Damage
Damage caused by fire.

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 the 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 additional fire department services.

Fire Insurance
Coverage for losses from fire and lightning and also the resultant damage caused by smoke and water. Usually supplemented by Extended Coverage Insurance. See definition.

Fire Marshall
A public official involved in fire prevention and in investigation of fires particularly where arson is suspected.

Fire Resistant
A fire resistant building or article is generally designed to resist certain higher heat temperatures for a certain period of time. It has a lesser degree of resistance to fire and ranks slightly more hazardous than "fireproof."

Fixed Assets
Tangible long-term assets such as land, building, furniture, fixtures, machinery, equipment etc. held for use rather than for sale.

Fixtures
Anything that is attached to real property is known as a "fixture." Fixtures when permanently attached to real property become part of the real property. Tenant's fixtures are fixtures of a removable nature and are the responsibility of the tenant for insurance purposes. Whether a fixture is a tenant's fixture and movable or a landlord's fixture and immovable is frequently determined by the purpose of the fixture.

Flat Cancellation
The cancellation of a policy as of the effective date with all paid premium refunded.

Fleet Policy
In automobile insurance, this is a policy insuring a number of cars for one owner. In marine insurance, a policy insuring a number of ships for one owner.

Floater Policy
A policy covering the same risk at a number of perhaps unspecified locations possibly over a wide area (even world-wide); usually includes goods being frequently moved from one location to another, e.g., Fur Floater, Jewelry Floater, Contractors' Equipment Floater, etc.