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Glossary

NOTE:  All definition are from the Insurance Bureau of Canada

C

CANCELLATION - During the policy period, either the insurer or the customer may terminate coverage according to provisions in the contract.

CAPACITY - The amount of capital available to an insurance company, or to the industry as a whole, for underwriting insurance coverage or coverage for specific perils.

CERTIFICATE OF INSURANCE - Written document stating that insurance is in effect. Includes general statement of policy's coverage.

CERTIFIED COPY - Reproduction of a document, that authority having custody of original signs and attests as a true, genuine and authentic copy.

CHARTERED INSURANCE BROKER - A professional designation earned by examination following study courses.

CIVIL LIABILITY - An individual's liability to others for harm caused to them by his or her actions.

CLAIM - The exercising of a policyholder's right under a policy to be paid by his or her insurance company for certain financial losses suffered. A claim can be any notification of a possible loss under an insurance policy, whether or not any payment follows. For every claim that is reported, the insurance company must set aside money ("reserves") sufficient to cover its anticipated cost.

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 co insurer 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 co insurance penalty of $2,500 would be borne by the insured.

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

COLLISION COVERAGE - An optional type of automobile insurance coverage that pays for the cost of repairing the insured vehicle if it is damaged in a collision or upset. In some parts of the country, this is referred to as "Section C."

COMMERCIAL GENERAL LIABILITY POLICY (CGL) - A standard form of liability insurance developed for use in the business sector. It is usually contained in a broader mercantile policy also covering property loss and business interruption.

COMPREHENSIVE AUTOMOBILE COVERAGE - An item of coverage in an Automobile Physical Damage policy insuring against loss or damage resulting from numerous miscellaneous causes such as fire, theft, windstorm, flood, vandalism, etc., but normally not including loss by collision or upset.

COMPULSORY INSURANCE - Any form of insurance (usually auto insurance) that is required by law.

CONDITIONS - Conditions are terms of insurance contracts that impose obligations an insured person must satisfy in order to preserve coverage.

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.

CONTINGENT LIABILITY - A liability which may be incurred by an insured as a result of negligence on the part of independent persons engaged by him to perform work. The most common example is the contingent liability of a principal contractor, which may result from construction operations undertaken by his subcontractors.

CONTRACT - A way to make a promise legally enforceable.

CONVERSION - A form of theft. The taking over of property which belongs to another and using it as if it were property owned by the person doing the converting. For example, a car bought on a time payment plan may be taken by the purchaser to some far away place with the intent of trying to escape any further payments on the car; or the car may be sold or traded for another under the pretense that the car actually belongs to the purchaser. This is the conversion of the vehicle to the purchaser's own use. It applies to all property belonging to one person but which is in the hands of another, as for example, the bailee of goods, an employer who advances certain monies to an employee for specific purposes, etc.

COVER - To protect with insurance, or the insurance protection provided.

COVERAGE - What the insurance contract covers.

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