Insurance jargon isn't always easy to understand. Unless you're an expert in the industry, some of the commonly-used insurance terms you'll encounter can be complicated and confusing.
Whether you’re shopping for insurance or simply perusing your policy to review your coverage, it helps to have an understanding of the unique insurance terminology you’ll see. Here’s a list of some popular insurance terms to help you get familiar:
Accident Forgiveness
Accident forgiveness means your insurer will not increase your rates after your first at-fault car accident. In such an event, when your policy renews, your premium will not be impacted based on that accident. Your rates might increase for other reasons, but the claim for your first at-fault accident will not impact your rates.
Actuary
A person with advanced mathematical skills who compiles and analyzes data and statistics to calculate insurance risks and premiums.
Adjuster
An employee at the insurance company, or affiliated with said insurance company, who investigates a claim and negotiates a settlement with the claimant on the company's behalf.
Binder
A document that acts as temporary proof of insurance. A binder is evidence of the insurance policy that the customer purchased. An insurance provider can issue a binder when proof of insurance is required before policy documents are ready.
Bodily Injury
A term used in auto and casualty insurance policies, bodily injury means a person’s body was injured. If an incident causes someone physical pain, illness or death, they’ve suffered bodily injury.
Bundle
A marketing technique commonly used by insurance companies. Insurers often offer discounts to customers who purchase two or more types of insurance from the same insurance company. For example, Onlia customers can enjoy a 15% discount on car insurance and a 20% discount on home insurance if they purchase the two policies from Onlia.
Car Insurance
In order to legally drive an automobile in Ontario, all automobile owners must purchase car insurance to protect them from financial losses that may come with any potential accidents. Car insurance can help protect policyholders if they’re found to be responsible for an accident that causes damage to another person or their automobile.
Claim
A request for indemnification made under an insurance policy either by an insured policyholder, or a third party against an insured person, as a result of a fortuitous event.
Collision Coverage
Car insurance coverage that helps repair or replace your car in the event you collide with another car or object, or if you’re involved in a single-vehicle accident, such as hitting a tree.
Comprehensive Coverage
Car insurance coverage that includes protection for damage or loss due to theft, vandalism, fire and more.
Condo Insurance
An insurance policy that protects your condo unit, and everything inside of it, from damage and/or theft. From fire and water damage to theft and break-ins, condo insurance covers the cost to repair or replace your property so that you don’t have to.
Condo insurance is required in order to purchase a mortgage for your condo — banks and mortgage lenders in Ontario require that you have insurance before approving a mortgage loan.
Cottage Insurance
Also known as seasonal Insurance, cottage Insurance protects your seasonal property, and everything inside of it, from damage and/or theft. Cottage Insurance coverage can vary based on the type of coverage purchased by the policyholder.
Coverage
Coverage is the protection that your insurance policy provides. An insurance policy can consist of several types of coverages, it all depends on which ones you select to complete your insurance policy.
Covered Loss
Also known as a “covered peril,” a covered loss is a financial loss due to an incident that is covered in your insurance policy. This means you can file a claim and seek reimbursement from your insurance provider.
Deductible
The portion of your insurance claim that you are required to pay before your insurance kicks in to cover the rest.
For example, if you have a policy with a $200 deductible and you suffered a covered loss totalling $800, you would be required to pay the first $200 before your insurance provider covers the remaining $800. Deductibles typically apply only to at-fault insurance claims, where you were found to be at fault for the incident that led to the claim, but deductibles can apply to certain non-fault claims as well.
Deductibles can be used to lower the cost of your insurance premium. If you choose a higher deductible, you would be paying less in your premium, but you’ll be required to pay more if/when you file a claim. On the flip side, if you were to choose a lower deductible, you would be paying more in your premium, but less when you file a claim.
Endorsement
An amendment to an insurance policy that is used to add or remove coverage, or to make a simple amendment, such as a policyholder changing their address. This is also commonly referred to as a “Rider.”
