Definitions

Question 1

Agent

Answer 1

A person who is employed to act on behalf of another.
An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public to and is paid a commission on or receives compensation for such business.

Question 2

Actual Cash Value ( ACV)

Answer 2

The new or replacement cost of the property at the time of loss, less depreciation

Question 3

Broker

Answer 3

An independent person or firm who acts on behalf of the insured in placing business with insurance companies. Typically, brokers search the market for coverage appropriate to their clients.

Question 4

Burglary

Answer 4

Forced entry into premises.

Some insurers require evidence of forced entry to paying claims for burglary.

Question 5

Bid Bond

Answer 5

Guarantees that, in the event his or her bid is accepted, a contractor will sign the contract to do the job per the bid and frequently will be able to furnish a performance bond as well

Question 6

Bailee

Answer 6

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)

Question 7

Absolute Liability

Answer 7

Liability that occurs where one has a duty to fill no matter what the circumstances may be.

Often found in cases involving explosives and many automobile laws. An insured of an insurance company may be responsible to a third party irrespective of any statutory faults, negligence or breaches on the part of the insured.

Question 8

Canadian Accredited Insurance Broker (CAIB)

Answer 8

A professional designation granted after the successful completion of 4 courses by examination.

CAIB was designed by brokers for brokers and focuses on the practical application of technical knowledge and business management strategies.

Question 9

Carrier

Answer 9

The insurance company which provides coverage or the risk.

Question 10

Canadian Professional Insurance Broker (CPIB)

Answer 10

A senior designation course of study designed for students who have complete CAIB or CIP, offered through regional brokers associations, including the Independent Insurance Brokers Association of Alberta.

Three stream of study are offered: Personal lines, Commercial Lines, and Brokerage management.

Question 11

Co-Insurer

Answer 11

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 companies, is a co-insurer whether the policies are written separately or together

Question 12

Code of Conduct

Answer 12

A formally adopted statement of applied ethics, or a statement of what is expected in practice from the members of a company, organization or association that has formally declared its operating vales and principles.

Most codes of conduct begin with a description of the principles and values to which the organization aspires. The code may also prohibit specific behavior’s or actions by those it covers.

Question 13

Co-Insurance Clause

Answer 13

A clause in an insurance policy requiring an insured to carry a certain percentages, (usually 80, 90, or 100 percent) 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 require. The formula for this is DID over SHOULD times the LOSS.

Question 14

Fiduciary

Answer 14

Person of higher trust, someone who holds position of trust

Question 15

Errors and Omission

Answer 15

Must be $500,000 per claim per person MIN.

Min $2 million max per claim.

Question 16

Broker

Answer 16

Sells for many

Question 17

Agent

Answer 17

Sells for one.

Question 18

Indemnify

Answer 18

To provide compensation for loss or expenses incurred. A contract, express or implied, to repay in the event of a loss. Insured neither gains nor looses.

Question 19

Defining Risk

Answer 19

Risk is simply described as the chance of financial loss or object of insurance.

Question 20

Speculative Risk:

Answer 20

This involves the possibility of either financial loss or gain.
Like playing the lottery.

Question 21

Pure Risk

Answer 21

This involves the chance of financial loss which does not; at the same time offer a chance of financial gain, for example; Loss of property. When there is no opportunity for a person to profit from a loss the risk is pure.

Only pure risk is insurable.

Question 22

Boiler and Machinery Insurance

Answer 22

Commercial insurance that covers damage caused by the malfunction or breakdown of boilers, and a vast array of other equipment including air conditioners.
Heating, electrical, telephone and computer systems.

Often called equipment breakdown, or system breakdown insurance

Question 23

Canadian Certified Insurance Broker (CCIB)

Answer 23

The highest designation awarded to brokers by the insurance brokers association of canada, after candidates successfully complete two written exams and one oral exam designed to test applied knowledge of property and liability coverage through risk analysis.

Question 24

Canadian Insurance Claims Manager Association

Answer 24

The canadian insurance claims managers association (CICMA) is an organization of insurance company claims managers that promotes a high standard of ethics in the handling of claims. One of its main functions is to administer the canadian inter-company arbitration agreement, which it sets up to arbitrate disputes among the companies who are signatories to the agreement. This avoids many possible cases of litigation between insurers.

Question 25

Cargo Insurance

Answer 25

A type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are lost or damaged. Also refers to goods shipped by various means- land, air inland water.

Question 26

Chartered Insurance Professional (CIP)

Answer 26

This ten course program places emphasis on the integration of both practical and theoretical knowledge and it features concentrations for underwriters, brokers/ agents and adjusters. The program is 10 courses. Five mandatory, three applied and two electives chosen from more than 20 available courses. Offers by the Insurance Institute of Canada

Question 27

Co-Insuer

Answer 27

Two o 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.

Question 28

Disclosure

Answer 28

Act of making something known. Example; everything you know about an insured must be disclosed to the insurance company.

Question 29

Direct Loss

Answer 29

Occurs when the peril insured against actually strikes or "attacks" the object of insurance

Question 30

Errors and Omissions Insurance

Answer 30

An insurance form that protects the insured against liability for committing an error and omission in the performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury or property damage Required in Alberta, Coverage at least $500,000 per claim with max payout $2 Million in a policy year.

Question 31

Endorsement

Answer 31

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

Question 32

Facility

Answer 32

A pooling agreement between all automobile insures that a market is guaranteed for all licensed drivers and registered owners. The results of the total industry pool are shared by all members of the agreement. Facility has recently been replaced in most provinces by the facility assosciation.

Question 33

Facility Association

Answer 33

Similar to Facility in intent. However, individual risks are written with selected carriers on behalf of the association, with the collective results then shared by all of the association.

Question 34

Co-Insurance

Answer 34

Requires an insured to share in a loss with the insurer if they are underinsured.

Question 35

Condominium Unit (Standard)

Answer 35

A condominium unit that is located within a multi-unit building. It's boundaries are the ceilings, floors and walls of the unit and everything inside that space.

Question 36

Bodily injury

Answer 36

Means physical injury or death

Question 37

Bodily injury (CGL policy)

Answer 37

Means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.

Question 38

Binder

Answer 38

Written confirmation that insurance coverage is in effect. It includes a summary of the coverage bound.

Question 39

Binding authority

Answer 39

The authority to bind an insurer to an insurance contract without first submitting the application to an underwriter and to confirm such insurance coverage to an applicant.

Question 40

Civil Authority

Answer 40

Any person acting under the authority of any level of government with respect to the protection of persons and property in the event of an emergency.

Question 41

Direct Loss

Answer 41

Physical damage to property caused directly by a peril.

Question 42

Endorsement

Answer 42

An amendment made to an insurance policy altering the provisions of the contract (policy).

Question 43

Direct Writer

Answer 43

An insurance company who deals directly with the public.

Question 44

Extra expenses

Answer 44

Additional expenses incurred to reduce the impact of a loss.

Question 45

Fiduciary

Answer 45

One who holds property or money in trust for another.

Question 46

Floater

Answer 46

Provides additional coverage beyond what is provided in a habitational policy for items that are moveable or float from location to location.

Question 47

Friendly Fire

Answer 47

One which is burning something intended to be burned or something burning within its intended confines.

Question 48

Fiduciary Duty

Answer 48

A duty to act in trust and in the best interests of another, particularly with respect to monetary matters.

Question 49

Fidelity Bond

Answer 49

A bond in which an insurer agrees to reimburse an employer for a loss arising out of an employee's dishonest act.

Question 50

Facility Association

Answer 50

An organization that exists for the purpose of providing insurance ( at least basic compulsory coverages) for risks which are unable to obtain insurance protection in the regular market.

Question 51

Grid Rating

Answer 51

Rating which applies to private passenger vehicles for basic coverage premiums.

Question 52

Hostile Fire

Answer 52

A fire which becomes uncontrollable or breaks out where it was intended to be or one which is burning property not intended to be burned.

Question 53

Indemnify

Answer 53

To return an individual after a loss to the same financial position he or she enjoyed immediately prior to the loss.

Question 54

Indirect Loss

Answer 54

A loss which results as a consequence of a direct loss.

Question 55

Insurable Interest

Answer 55

Exists if a person is financially disadvantaged if an object is damaged or destroyed and financially benefitted from the ongoing existence of it.

Question 56

Insured (PLP)

Answer 56

Person named on the coverage summary of the policy, including others living in the same household as specified on the policy.

Question 57

Loading

Answer 57

Is an additional charge included in an insurance rate to reflect a hazard not contemplated in the base rate.

Question 58

Legal Liability

Answer 58

Responsibility which courts recognize and enforce between persons who sue one another

Question 59

Law of large numbers

Answer 59

States that s sufficient number of past occurrences or cases must exist in order for predictions about the future to be statistically credible. As the number of events increases, the degree of certainty increases.

Question 59

Law of large numbers

Answer 59

States that s sufficient number of past occurrences or cases must exist in order for predictions about the future to be statistically credible. As the number of events increases, the degree of certainty increases.

Question 60

Intentional Tort

Answer 60

An act in which harm is intended from the viewpoint of the person committing the act. A deliberate, wrongful act.

Question 61

Moral Hazard

Answer 61

Arises from the characteristics or attitudes of the insured.

Question 62

Misrepresentation

Answer 62

An incorrect statement which may influence a party to enter into a contract. The statement may be innocent or deliberate.

Question 63

Named Perils

Answer 63

Direct physical loss or damage is covered only if caused by those perils that are named or listed in the insurance policy.

Question 64

Notice of loss

Answer 64

A form that is required under the conditions of an insurance contract. Its used to give immediate written notice to an insurer in the event of a loss.

Question 65

Occurrence (CGL Policy)

Answer 65

An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Question 66

Peril

Answer 66

An event that causes a loss.

Question 67

Physical Hazard

Answer 67

Arises from the physical condition of an object.

Question 68

Personal and advertising injury (CGL Policy)

Answer 68

Injury including consequential bodily injury arising out of defined actions such as libel, slander, malicious prosecution, false arrest and others.

Question 69

Products hazard

Answer 69

includes bodily injury or property damage arising out of the insured's product which is no longer in the insured's physical possession.

Question 70

Principle of indemnity

Answer 70

a principle which states that an insured should be put back in the same financial position as they were before a loss occurred.

Question 71

Pure Risk

Answer 71

Possibility of loss only, no gain.

Question 72

Safe burglary

Answer 72

The unlawful taking of property from a vault or safe, while all doors are closed and locked with a combination lock, by a person making unlawful entry into the safe or vault, evidenced by signs of forced entry. It includes unlawful taking of the safe itself from the premises.

Question 73

Risk

Answer 73

Uncertainty about outcomes, future occurrences or possible losses.

Question 74

Replacement cost value (RCV)

Answer 74

Means replacing an item with a new item of like kind and quality, without deduction for depreciation.

Question 75

Reinsurance

Answer 75

Is insurance for insurers. Insurance companies may share a portion of risk with a reinsurance company.

Question 76

Risk management

Answer 76

The minimization of the impact of accidental and business losses to an organization in a cost effective manner.

Question 77

Seasonal Dwelling

Answer 77

a dwelling which is expected to be unoccupied for extended periods of time throughout a year.

Question 78

Self insured retention

Answer 78

The amount of a loss that is payable to the insured.

Question 79

Speculative risk

Answer 79

possibility of loss or gain

Question 80

Subrogation

Answer 80

the right of an insurer, after indemnifying an insured (or agreeing to ) , to take over the insured's rights of recovery from the responsible party.

Question 81

Surety

Answer 81

A bond or an agreement that guarantees the actions of a third party. It is a three party contract

Question 82

Tort

Answer 82

A civil wrongdoing

Question 83

Tied selling

Answer 83

An illegal practice whereby an agent agrees to sell a customer a good or service only if the customer buys some other good or service.

Question 84

Treaty reinsurance

Answer 84

An agreement between an insurer and a reinsurer covering a whole class of risks for a defined period of time (usually placed on an annual basis)

Question 85

Tortfeasor

Answer 85

An individual who commits a tort or civil wrong.

Question 86

Underwriter

Answer 86

An insurance professional who determines risk acceptance or rejection on behalf of an insurance company.

Question 87

Unearned premium

Answer 87

Premium which has been collected for a portion of the policy which has no yet expired.

Question 88

Unintentional tort

Answer 88

A careless act that is not intended or deliberate.

Question 89

Utmost good faith

Answer 89

a high standard of honesty.

Question 90

Warranty

Answer 90

A clause in an insurance policy where an insured promises to do or not do something.

Question 91

Water hammer

Answer 91

A shock wave that may be created when closing a faucet and turning off the flow of water.

Question 92

Accident basis

Answer 92

The injury or damage must be due to an event that is sudden, unitended (not deliberate) and unexpected

Question 93

Accident Benefits

Answer 93

Provisions under an automobile policy for payment of limited medical expenses and death benefits without regard to fault

Question 94

Absolute Liability

Answer 94

Liability that occurs where one has a duty to fill no matter what the circumstances may be.

Question 95

Application

Answer 95

A signed statement of facts made by a person applying for insurance, which is used by the insurance company to decide whether or not to insure the risk

Question 96

Arson

Answer 96

The deliberate act of burning assets. Starting fires

Question 97

Automobile fleet

Answer 97

A group of automobiles under the same ownership and management which may, because of the number, justify a discount in the insurance premium. Usually a fleet is made up of five vehicles or more

Question 98

Automobile reinstatement clause

Answer 98

A provision in a property or liability policy which states that after a loss has been paid, the total original limits of the policy are once again in effect.

Question 99

Bid bond

Answer 99

Guarantees that, in the event his or her bid is accepted, a contractor will sign the contract to do the job as per the bid and frequently will be able to furnish a performance bond as well.

Question 100

Binder

Answer 100

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.

Question 101

Binding Authority

Answer 101

In a contract between an insurance company and an insurance broker this defines the terms and conditions of the insurance broker's power to bind an insurance company to the contract of insurance

Question 102

Black's Law Dictionary

Answer 102

A dictionary of insurance terms that the legal profession and the courts of Canada use in determining definitions of insurance terms.

Question 103

Blanket coverage

Answer 103

Policy which provides a single limit of insurance for all property falling within a specific class

Question 104

Bodily Injury

Answer 104

Physical damage to a person

Question 105

Aviation Insurance

Answer 105

Covers aircraft of all types as well as liability associated with the operations of aircraft, airstrips and airfields.

Question 106

Bond

Answer 106

A financial guarantee provided by an insurer on behalf of an insured/obige to perform a specified function. (Not insurance)

Question 107

Broad form

Answer 107

Coverage for numerous additional perils, such as those found in a Broad Form Homeowners policy.

Question 108

Broker's authority

Answer 108

same as binding authority

Question 109

Builders risk insurance

Answer 109

insurance contracts that provide coverage for property under construction

Question 110

Burglary

Answer 110

Forced entry into premises. | Some insurers require evidence of forced entry prior to paying claims for burglary

Question 111

Breach of contract

Answer 111

Failure of a party to perform in accordance with terms specified in a contract.

Question 112

Burden of proof

Answer 112

in law, the need to prove facts in dispute

Question 113

Burglary and theft insurance

Answer 113

insurance for the loss of property due to burglary, robbery or larceny. It is provided in standard homeowners policies and business multiple peril policies

Question 114

Bylaws coverage

Answer 114

Coverage for increased costs to rebuild following a loss, created by the requirement to adhere to updated bylaws.

Question 115

Carrier

Answer 115

The insurance company which provides coverage for the risk

Question 116

cede

Answer 116

to transfer all or part of a risk from an insurer (the ceding company) to a reinsurer

Question 117

Cession

Answer 117

amount of insurance ceded to a reinsurer by the original (ceding) company

Question 118

Casualty Insurance

Answer 118

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.

Question 119

Clause

Answer 119

Sentences and paragraphs in an insurance policy which describe and various coverage, exclusions, duties of the insured, locations covered and policy conditions

Question 120

Combined ratio

Answer 120

this is the sum of the insurer's loss ration and its expense ratio

Question 121

Commercial general liability insurance (CGL)

Answer 121

Broad coverage that provides cover for all liability exposures of a business not specifically excluded.

Question 122

All comers rule

Answer 122

means that any applicant requiring third party liability and accident benefits coverage cannot be refused by an insurer, broker or agent

Question 123

Appeal Bond

Answer 123

Is a bond filed with the court by the party against whom a judgement has been rendered, and such decision is being appealed. It is a guarantee that the judgement will be paid if the appeal is not successful

Question 124

Aggregate limit

Answer 124

the total amount of losses an insurer will pay during a policy period. Once the limit is exhausted, it is not automatically reinstated

Question 125

Binder

Answer 125

written confirmation that insurance coverage is in effect. It includes a summary of the coverage bound.

Question 126

Binding autority

Answer 126

the authority to bind an insurer to an insurance contract without first submitting the application to an underwriter and to confirm such insurance coverage to an applicant.

Question 127

Blanket basis insurance

Answer 127

the policy limit applied to all items or locations

Question 128

Brokerage agreement

Answer 128

contractual document that defines the terms under which a broker or agent will fulfill their obligations to a principal

Question 129

Cession

Answer 129

the portion of risk an insurance company transfers or cedes to a reinsurance company

Question 130

Claims- made policy

Answer 130

A policy which covers only claims made during the term of the contract

Question 131

Co insurance

Answer 131

Requires an insured to share in a loss with the insurer if they are underinsured

Question 132

compensatory damages

Answer 132

damages awarded by a court to compensate an injured party for harm suffered such as injury or economic loss which includes property damage and loss of use

Question 133

Contract

Answer 133

an agreement between two or more parties

Question 134

cover note

Answer 134

written confirmation that insurance coverage is in effect. It includes a summary of the coverage bound

Question 135

Data problem

Answer 135

means erasure, destruction, corruption, misappropriation, or misinterpretation of data. It includes errors in creating, amending, entering, deleting, or using data or the inability to receive, transmit, or use data