It's safe to assume that the vast majority of Canadian adults hold at least one, if not more, insurance policies. Whether it's car insurance, life insurance, travel insurance or home insurance, insurance is part of our life. But, as much as it is part of our everyday life, insurance terms are often not part of our everyday language. Insurance is complex, but it can be easier to understand with an everyday language glossary to help.

The definitions and information in this insurance glossary is for general and educational purposes only. It is not intended to take the place of professional guidance, advice or interpretation.*


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


A

Accident benefits
Accident Benefits coverage is one of the components of an auto insurance policy. In the vast majority of provinces and territories it is mandatory. Accident Benefits coverage usually provides compensation for items like medical and rehabilitation treatments, attendant care costs, and loss of income to people (you, your passengers or pedestrians) who are injured in a car collision, regardless of who caused the accident. Availability, and extent of coverage, will vary by province.
Actual Cash Value
Basically, Actual Cash Value is what a stolen or damaged item is worth at the time it was stolen or damaged. Different than Replacement Cost, Actual Cash Value takes into account depreciation and represents the fair market value of the property.
Agent
There are three ways insurance is sold in Canada - through insurance brokers, insurance agents and direct sellers (also known as direct writers). An insurance agent is a person who is authorized and licensed to sell or advise on the insurance products of typically one insurance company. Common examples that you would be most familiar with are Allstate agents and State Farm agents.
Alberta Automobile Insurance Rate Board
According to the Alberta Automobile Insurance Rate Board (AIRB) website, the AIRB's primary role, "is to regulate premium level for basic coverage (third party liability and accident benefits), monitor additional coverage (collision and comprehensive) and approve the rate plans of new insurers that want to sell auto insurance in Alberta."
All-Risk
If a policy is All-Risk, it means that all perils (an event, danger or hazard) that cause loss or damage are covered under the policy, unless it is specifically excluded. This is in contrast to Named-Peril policy that specifically detail which events, dangers or hazards are covered.
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B

Beneficiary
As it relates to life insurance, a beneficiary is the person listed to receive the proceeds of the policy upon the death of the person insured.
Broker
There are three ways insurance is sold in Canada - through brokers, agents and direct sellers (also known as direct writers). An insurance broker is a person who is authorized and licensed to sell or advise on the insurance products on behalf of a number of different of insurance companies; usually a broker works with around 5 or 6 different insurance companies.
Business Use (as it relates to auto insurance)
Often when getting auto insurance quotes you'll be asked how you use your car, of which business use is a common reply. Typically business use means you mostly use your vehicle for work-related purposes and only occasionally for leisure (personal) use. Typical examples of work-related purposes include driving to appointments or presentations, meeting with clients, or if you're a salesperson on the road.
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C

Canadian Life And Health Insurance Association
The Canadian Life and Health Insurance Association(CLHIA), established in 1894, "is a voluntary non-profit association with companies accounting for 99 per cent of Canada's life and health insurance business."
Collision Coverage
Collision coverage, also known as Upset, is an optional auto insurance coverage. If you opt into taking it, Collision Coverage pays for the cost of repairing your car if it's involved in a collision. There is usually a deductible.
Comprehensive Coverage
Comprehensive coverage, like Collision, is an optional auto insurance coverage. If you opt into taking it, Comprehensive Coverage pays for damages and losses resulting from non-collision incidents like theft and vandalism (there's lots of other stuff covered too.) There is usually a deductible.
Coverage
The scope of the protection offered by an insurance policy; the risks/losses etc. as detailed in the policy.
Critical Illness Insurance
Critical Illness Insurance provides you with a lump sum payment to help with the cost of recovery should you become critically ill during the term of the policy. Because it's a term policy, the rate you will pay is the same for the entire duration of your coverage. Critical illness insurance policies vary in the conditions covered but in general will cover the most common critical illnesses facing Canadians today including the big three: cancer, heart attack and stroke.
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D

Deductible
A deductible is the amount a policyholder agrees to pay toward the cost of an insurance claim. An insurance company will only pay for loss or damage that exceeds the amount of the deductible.
Direct Writer
There are three ways insurance is sold in Canada - through brokers, agents and direct writers (also known as direct sellers). An insurance company that offers insurance products, like auto insurance or home insurance directly to the consumer is a direct writer/seller. Basically, from start to finish these insurance companies are in a direct relationship with their consumers.
Discount
A discount means you'll pay less; it's a deduction from the amount. There are a variety of insurance discounts available which can help you pay less for insurance when certain criteria are met. Examples of discounts include: multi-line discount (where you bundle policies), hybrid discount (available to people who drive a hybrid vehicle), and the winter tire discount (available to those who change their tires seasonally). Insurance discounts vary by provider and availability.
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E

Effective Date
Insurance policies all have an effective date; the date the protections from the policy begin. It can also mean the date that coverage has been added or removed from a policy. Unless a time is specifically requested, the effective date usually commences at 12:01 a.m.
Endorsement
An endorsement is an amendment to an insurance policy that changes the terms of the policy by adding or removing coverage.
Excluded Driver
An excluded driver is a person who is specifically not covered under a policyholder's auto insurance. This person is not permitted to drive the insured vehicle for any reason.
Exclusions
Exclusions are items or conditions that are not included (i.e. covered) under an insurance policy. For example, most home and auto insurance policies exclude wear-and-tear or mechanical breakdown.
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F

Face Amount
As it relates to life insurance, the face amount is the stated value of the policy that is paid on the death of the life insured or at the policy's maturity. Also sometimes called the sum insured.
Facility Association
The Facility Association is an organization that ensures that anyone who needs car insurance can get car insurance. According to the Facility Association website, they "ensure that automobile insurance is available to all owners and licensed drivers of motor vehicles where such owners or drivers are unable to obtain automobile insurance through the voluntary insurance market." They serve Alberta, New Brunswick, Newfoundland & Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island and the Yukon.
Fault Determination Rules
These are rules that insurance companies use to determine who is at fault for an accident, or the degree of fault for an accident. Fault rules vary by province and not all provinces have fault determination rules set out; however, Ontario, Quebec, New Brunswick and Nova Scotia do. If there are no fault determination rules in your province, then typically an insurance adjustor will determine fault after considering a number of factors like: the rules of the road, past court decisions, governing legislation, statements from other drivers, witnesses and passengers, police reports etc.
Financial Services Commission of Ontario
According to the Financial Services Commission of Ontario (FSCO) website, FSCO "is a regulatory agency of the Ministry of Finance that regulates insurance, pension plans, loan and trust companies, credit unions, caisses populaires, mortgage brokering, and co-operative corporations in Ontario."
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G

General Insurance Ombudservice (GIO)
The General Insurance Ombudservice (GIO), created in 2002, helps Canadian consumers resolve disputes they're having with their home, auto or business insurance company. The service they offer is free, available in both English and French, and impartial.
Government-Run Auto Insurance
In British Columbia, Saskatchewan and Manitoba auto insurance is provided by government agencies. In British Columbia, this is the Insurance Corporation of British Columbia (ICBC); in Saskatchewan this is SGI (Saskatchewan Government Insurance); and in Manitoba it's the Manitoba Public Insurance agency

In Quebec, there's a combination of both private and public insurance; under Quebec's public automobile insurance plan, residents are protected for bodily injury "even if you don't own a car or hold a driver's licence. The premiums for this universal plan are taken from vehicle registration and driver's licence fees. From private insurers, drivers must purchase "at minimum" the Mandatory Liability Insurance needed.
Guaranteed Issue Life Insurance
Guaranteed Issue Life Insurance is a type of life insurance policy often favoured by people who are having trouble finding affordable life insurance because of their age or health. There is typically no medical involved, and no one is turned down for coverage.
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H

High Risk Driver
There is no-one singular defining factor that makes a driver high risk; it's usually a combination of several like being a new driver, having multiple tickets or accidents, having a combination of tickets and accidents, and/or having had past insurance policies cancelled for non-payment. There may be other factors as well, but these are the most common.
Highway Traffic Act
Basically, the Highway Traffic Act covers the rules of the road that all drivers and vehicle owners must follow in their province. It typically covers all manner of transport-related issues like vehicle licensing, how traffic offenses are classified, parking permits, driver licensing requirements, vehicle load, dimension and weight allowances or restrictions, and more. Each province has their own version of the Highway Traffic Act. Depending on the province it may be called something else (e.g. Motor Vehicle Act, Highway Safety Code, Traffic Safety Act etc.)
Homeowners Insurance
A collection of coverages that protect homeowners from some of the risks associated to owning a home like fire, theft, vandalism, water damage, liability (if you're sued) etc. Home insurance policies vary by insurance company.
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I

In Force
If an insurance policy is in force it means that the policy is in effect and has not expired or since been cancelled since it was taken out.
Insurance Bureau of Canada
According to the Insurance Bureau of Canada (IBC) website, the IBC is the national industry association representing Canada's private home, car and business insurers.Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada.
Insurance Corporation of British Columbia (ICBC)
According to the Insurance Corporation of British Columbia (ICBC) website, the ICBC, "is a provincial Crown corporation established in 1973 to provide universal auto insurance to B.C. motorists. " The ICBC is also responsible for driver licensing, and vehicle licensing and registration in British Columbia.
Insured
The insured is usually the policyholder who is entitled to covered benefits and protections as outlined in the insurance policy.
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J

Joint First-To-Die Life Insurance
"Joint first-to-die" life insurance provides life insurance protection for two people, usually spouses or partners, but the benefit is paid only once - on the death of the first of the two policyholders.
Joint Last-To-Die Life Insurance
"Joint last-to-die" life insurance provides life insurance protection for two people, usually spouses or partners. The death benefit is usually paid after the death of the second person.
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K

Key Person Insurance
Key Person Insurance is a policy, usually a life insurance policy or disability insurance policy, that provides coverage if a key individual in a businessâ€"like an owner or co-owner (someone who is essential to the continued success of a business) dies or is unable to work as a result of a disability. The benefit usually affords the business the opportunity to recruit, hire and train a replacement, pay of debts or finance losses.
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L

Lapse
An insurance policy has lapsed if, after having reached its expiry date, it is not renewed or extended. If a policy has lapsed it is no longer in effect.
Liability
If you are liable for something, it means that you are legally bound. It is a legally enforced obligations.
Liability Insurance
Liability insurance will provide financial protection (up to a maximum amount) if the policyholder (or insured) is found legally responsible for damages or losses to another. Auto insurance, home insurance and business insurance usually have some form of liability insurance as part of the coverage.
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M

Manitoba Public Insurance
According to the Manitoba Public Insurance website, MPI is, "is a non-profit Crown Corporation that has provided basic automobile coverage since 1971." MPI is also responsible for driver licensing, and vehicle licensing and registration in Manitoba.
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N

Named-Insured
Basically, the named-insured is the person insured, or in other words the person in whose name the policy is issued. The named-insured is often the policyholder.
Named-Peril
A peril is an event, danger or hazard, like a hail storm, theft or vandalism for example, behind a loss or damage. Named-perils are events, dangers or hazards specifically detailed and covered under a policy. If it's not "named" it's not likely covered.
No-Fault Insurance
No-fault insurance refers to the method of claims settlement used in some Canadian provinces where regardless of who is at fault in an accident, you deal with your own insurance company when making a claim.
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O

Optional Coverages
Optional coverages are not part of the standard insurance policy, but can be included if you want them. Often, with optional coverages, there is a deductible.
Occasional Driver
An occasional driver is a person who drives a car regularly, or from time to time, but does not drive it as often as the person considered the primary driver. A car's policy can have multiple occasional drivers.
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P

Peril
A peril is an event, danger or hazard, like a hail storm, theft or vandalism for example, behind a loss or damage.
Permanent Life Insurance
According to the Canadian Life and Health Insurance Association, permanent life insurance is a life insurance policy that provides insurance protection for your entire lifetime, so long as the policy is kept in force. There are three variations of it; whole life insurance, universal life insurance and variable life.
Premium
An insurance premium is the price you pay for an insurance policy. Typically, and depending on the type of insurance purchased, premiums are paid monthly, semi-annually or annually.
Primary Driver
A primary driver is the person who drives an insured vehicle the most often. Only one person can be designated a primary driver on a vehicle.
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Q

Quotation
A quotation is a quote or an estimate of how much an insurance policy will cost based on the details provided and the perceived risk of the insurance company.
Quote
A quote is an estimate of how much an insurance policy will cost based on the details provided and the perceived risk of the insurance company.
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R

Rate
An insurance rate is often used interchangeably with insurance premium. An insurance rate is the price you pay for an insurance policy.
Rate Group
As it relates to auto insurance, insurers put vehicles into rate groups based on their expected and actual claims loss experience for each make, model and model-year of car. The higher the expected claims, the higher the rate group and therefore the higher the insurance premium charged for that particular vehicle.
Rating Factors
Rating factors are the pieces that go into determining the insurance premium. With car insurance for example, some of the criteria used includes things like where you live, your insurance and driving history and the type of car you drive.
Renewal
If an insurance policy is renewed and the premium paid, it means both the insurer and policyholder have agreed to extend coverage for another term.
Replacement Cost
Basically, replacement cost is how much money it takes to replace an item without regard for appreciation or depreciation.
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S

Saskatchewan Government Insurance (SGI)
Saskatchewan Government Insurance, or SGI as it is more commonly called, is Saskatchewan's compulsory auto insurance program. SGI also operates the driver licensing and vehicle registration system for the province.
Sewer Back-Up Coverage
Sewer back-up coverage is an optional coverage that you can add to your home insurance that provides you with protection from damage caused to your home as a result of a back-up of a sewer, septic tank, eaves trough or downspout.
Specified Perils
As it relates to auto insurance, Specified Perils coverage is optional and will pay for damages to your vehicle resulting from things like fire, theft, attempted theft, windstorms, hail, earthquakes, and even riots. There is usually a deductible.

Note: A policy will not include both Specified Perils coverage and Comprehensive coverage; it would be one or the other because Comprehensive coverage includes all perils covered under Specified Perils coverage.
Sum Insured
As it relates to life insurance, the sum insured is the stated value of the policy that is paid on the death of the life insured or at the policy's maturity. Also sometimes called the face amount.
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T

Term Life Insurance
Term life insurance is a type of life insurance policy that covers the insured person for a period of time, the "term", usually 10, 20 or even 30 years. It pays a benefit to the beneficiary only when the insured dies while the policy is in effect. The premiums you pay on a term life insurance policy stays the same until the term period of the policy expires. Then when you renew the policy, the premium will increase.
Term to 100 Life Insurance
Term to 100 life insurance is essentially the same as term life insurance only it covers the insured person (assuming the premiums are paid and the policy is in force) until they turn 100, or till death, whichever comes sooner.
Third-Party Liability
Third-party liability is one of the components of an auto insurance policy and covers you if you are held legally liable for your vehicle injuring or killing someone else or damaging his or her property. If you are held liable for more than your coverage, you can be held personally responsible for the balance.

Availability, and extent of coverage, may vary by province.
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U

Uninsured Auto Coverage
Uninsured Auto coverage is one of the components of an auto insurance policy and provides payment if you are injured or killed through the fault of an uninsured driver, or by an unidentified vehicle like in a hit-and-run. It would also pay for property damage. Availability, and extent of coverage, may vary by province.
Universal Life Insurance
Universal Life Insurance is a type of permanent life insurance policy. It not only combines life insurance protection, but it also offers an investment component that comes with tax advantages. Universal Life Insurance policies typically have level of premiums; however, the cash value may fluctuate (as a result of investment returns and policyholder deposits), and the death benefits may fluctuate depending on the cash value of the policy.
Usage-Based Insurance
Telematics â€" or usage-based insurance (UBI) is huge in the UK and U.S. Using technology that's inserted into your car's computer, data is electronically collected about your driving habits that is then used to help determine the insurance premium you pay. The data collected can include details like the time spent driving, kilometres driven, speed, braking habits, acceleration etc.
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V

Variable Life Insurance
Variable Life Insurance is a type of permanent life insurance policy. It combines a lifetime of life insurance protection as well as a savings component that is determined by the performance of an investment fund or other index. Variable Life Insurance policies usually guarantee the level of premiums you pay. As for the death benefit, it may be guaranteed or may vary with the fund's (or other index's) performance.
Vehicle Identification Number (VIN)
The Vehicle Identification Number (VIN) is a series of letters and numbers that can be used t identify the make, model and model-year of the car. It can be found on the car, and usually also on the vehicle's registration and on the proof of insurance slip.
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W

Whole Life Insurance
Whole Life Insurance is a type of permanent life insurance policy. It combines a lifetime of life insurance protection as well as a savings component that often comes with tax advantages. Whole Life Insurance policies guarantee the level of premiums you pay, the death benefit and the savings within the policy.
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Z

Zero Deductible
For coverages that typically have a deductible (the amount you agree to pay toward the cost of an insurance claim), the idea behind a Zero Deductible is that you do not pay anything towards the cost of an insurance claim.

* Definitions have been compiled from a variety of sources including the IBC, FSCO, the CLHIA, sample policies and other online resources. Definitions may vary by policy, province and product. The definitions and information in this glossary is for general and educational purposes only. It is not intended to take the place of professional guidance, advice or interpretation.

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