This is a short list of key insurance terms, listed in alphabetical order. You can find more terms in the The Insurance Bureau of Canada's glossary.
Actual Cash Value (ACV): Replacement cost of damaged or lost property less depreciation. Example: Fire destroys 18-year-old sofa. If the contents coverage is ACV, the insurer will pay the value of an 18-year-old sofa (i.e., not very much). Auto insurance is generally ACV. For new vehicles there is an endorsement (OCPF43/43a) that gives replacement cost for a period of generally 2 years.
Agent: An insurance professional who is an employee of one insurance company, selling and servicing that company’s products.
Broker: An insurance professional who is an independent salesperson selling and servicing products from several different companies with which they have agreements. Insurance companies pay brokers commissions for the coverages they sell.
Certificate of Insurance: A statement from an insurance company that explains what is covered by a policy, for what period, and to what limit.
Claim: A request for payment of a loss in accordance with an insurance policy.
Claims-made policy: A policy that provides coverage for claims made when the policy is active, even if the incident leading to the claim took place before the policy was in place.
Commercial General Liability: An insurance policy that covers the liability risks that are common to most businesses and nonprofit organizations. Always confirm whether the risks you are concerned about are covered.
Deductible: The amount a policyholder must pay, per claim, towards the total amount of an insured loss.
Directors & Officers Liability Insurance (D&O Policy): Insurance that provides coverage against wrongful acts, which might include actual or alleged errors, omissions, misleading statements, and neglect or breach of duty on the part of the board of directors and other insured persons and entities. Some D&O policies include employment practices liability coverage.
Employment Practices Liability Insurance (EPL): Insurance that provides coverage for claims arising out of employment practices (e.g., termination of an employee). EPL policies generally cover the organization, its directors, officers, and employees.
Endorsement: Change in policy coverage that removes certain coverage from, or adds certain coverage to, a policy. Example: Sewer back-up coverage is an endorsement that can be added, for additional premium, to property insurance if the insurer agrees to offer it in that area and to that policyholder.
Exclusions: Specific conditions or circumstances that are not covered under an insurance policy. Comprehensive or “all peril” policies do not list what is covered; rather, they simply state that everything is covered except what is listed in the exclusion section.
Financial Services Commission of Ontario (FSCO pronounced “FISCO”): The agency that regulates the insurance industry in Ontario. They approve rate increases, wording changes, etc.
Group Insurance: Insurance issued to a group that provides coverage for individual group members under a single master policy.
Insurance Brokers Association of Ontario (IBAO): The Insurance Brokers Association of Ontario (IBAO) is a voluntary membership organization representing more than 10,000 independent insurance brokers across Ontario.
Insurance Bureau of Canada (IBC): This organization represents a large percentage of the companies that insure the homes, cars, and businesses of Canadians. IBC member companies provide about 90% of the non-government general insurance sold in Canada.
Hard Market: A period when insurance can be difficult to obtain and often is more expensive.
Indemnification: An obligation contractually assumed by, or legally imposed on, one party to protect another against loss or damage from specific liabilities.
Liability: Any legally enforceable obligation. Liability covers third party bodily injury (BI) and third party property damage (PD). It never covers the first party (the insured) or the second party (the insurance company), so it is often referred to as ‘third-party liability.”
Liability Insurance: Insurance that covers the policyholder's legal liability resulting from injuries to, or property damage of, a third party.
Lines of Business: Insurers usually sell multiple lines of business: personal auto, personal property (also called habitational insurance), commercial auto, commercial property, liability, boiler and machinery, marine, aircraft, mortgage, etc.
Minimum Premium: The minimum price an insurer will sell a policy for, regardless of how small the risk is. If an individual or organization buys several policies from the same insurer, they will usually waive the minimum premium.
Negligence: Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
Occurrence-based Policy: A policy that provides coverage for incidents occurring during the time the policy is active regardless of when the claim is made.
Premium: The sum paid by a policyholder to keep an insurance policy in force.
Professional Liability Insurance: Also known as malpractice coverage or errors and omissions (E&O) coverage; covers liability for damages arising from the rendering of or failure to render professional services.
Property Insurance: Insurance that covers direct damage to the policyholder’s property and equipment, including losses that occur as a consequence of an insured peril (e.g., loss of business income, loss of rent, extra expenses).
Replacement Cost (RC): Unlike Actual Cash Value (ACV), the claim is settled by the insurer without taking depreciation into account. Using the same example from ACV, the insurer would buy a brand new sofa of like quality. Property insurance is generally RC. The exception is seasonal properties, which are often insured ACV because the risk is higher.
Risk: The possibility of an adverse event.
Risk Management: The process of analyzing exposure to risk and determining how best to deal with such exposure.
Soft Market: A period when insurance is often less expensive and can be easier to obtain.
Underwriter: An insurance company employee who decides if an insurance risk is acceptable and, if so, under what terms and at what price.
Vicarious Liability: The responsibility of one party (e.g., an employer) for the acts of another (e.g., an employee).
Waiver: The act of voluntarily giving up of a right.
Wordings: Insurance documents that explain, usually in legal terms, what is covered and excluded, conditions of coverage, how claims are settled, etc. In Ontario, auto insurance wording is regulated by the provincial government so all insurance companies have the same wording. For all other types of insurance (e.g., home, tenant, CGL, D&O), wordings vary from company to company even though they may be insuring the exact same risk.
Write: If a broker, agent, or underwriter has agreed to give a client insurance, they are said to “write” that business into their “book of business.”
Reminder: If you don't see the term you are looking for here, you will likely find it in The Insurance Bureau of Canada's more extensive glossary.