Click on a letter to jump to that part of this alphabetical list.

A  |  B  |  C  |  D  |  E  |  F  |  G  |   I   |  L  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  Y

Glossary - "A"

Actual Cash Value (ACV) - An amount equivalent to the fair market value of the stolen or damaged property immediately preceding the loss.

Actuary - Business professional who analyzes probabilities of risk and risk management including calculation of premiums, dividends and other applicable insurance industry standards.

Additional/Optional Coverage - This coverage is optional; includes all perils, collision, comprehensive and specified perils coverage.

Adjuster - A person who investigates claims and recommends settlement options based on estimates of damage and insurance policies held.

Age - A variable used by insurers in the rating process. Younger drivers are at greater risk of being involved in an accident. Frequency of at-fault accident declines with age then increases again as drivers advance in age.

Agent - An insurance agent sells the products offered by one insurance company. The agent can provide information about the insurance products and pricing for that one company.

At-fault Accidents - A variable used by insurers in the rating process. Insurance premiums may increase when a driver is involved in an at-fault occurrence. Most insurers consider at-fault accidents within the past six to ten years.

Automobile Insurance - A type of insurance that protects against losses involving automobiles. There is a variety of coverage that can be purchased depending upon the needs and wants of the policyholder. Third party liability for bodily injury and property damage, accident benefits, collision and comprehensive are the principal coverage offered under an automobile insurance policy.

Autonomous Vehicle (also known as a driverless car, self-driving car, robotic car) - a vehicle that is capable of sensing its environment and navigating without human input.

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Glossary - "B"

Basic/Mandatory Coverage - This coverage is mandatory for operating a motor vehicle; includes third party liability and accident benefits coverage.

Bodily Injury - Any physical injury to a person. The purpose of liability insurance is to cover bodily injury to a third party resulting from the negligent acts of an insured or a person operating the vehicle with the permission of the insured.

Broker An insurance broker has contracts to sell insurance for more than one insurance company.

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Glossary - "C"

Cancellation - A policy or contract can be cancelled by the insurance company under certain circumstances such as non-payment of the premium or by the policyholder at any time. There are two methods to determine refund premiums; pro-rata and short-term.

When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. When the policy is terminated prior to the expiration date at the policyholder's request, the earned premium charged would be more than the pro-rata earned premium.

Coverage on Vehicle

  • Mandatory Coverage - Third Party Liability Limit. Higher liability limits result in an increase in premium. The additional premium to increase the minimum $200,000 limit is relatively modest as most claims are within that limit. A large majority of Alberta drivers are insured for at least $1,000,000.
  • Additional Coverage - Deductibles. The deductibles that apply to collision, comprehensive and specified perils coverage represent the amount of a loss for which the policyholder is responsible before the insurance policy responds. A higher deductible reduces premium. In some situations, carrying collision coverage on older vehicles may not be warranted as the cost of the premium could be high relative to the value of the vehicle itself. Coverage for windshield glass can be expensive to purchase. Limiting this coverage can result in lower premiums; this can be done by purchasing an “SEF 13D Endorsement - Comprehensive Cover Limited Glass”.

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Glossary - "D"

Deductible - The amount of the loss that the policyholder is responsible to pay before covered benefits from the insurance company are payable. This is applicable to collision, comprehensive or specified perils coverage.

Direct writer - A direct writer insurance company has its own sales employees to sell its policies through an office or call centre. A number also sell coverage through the Internet.

Discount - A reduction in premium based on meeting certain criteria. Insurance companies offer a variety of discounts, though they vary from company to company. A few examples are:

  • Policyholder has more than one vehicle insured with the same company.
  • Policyholder has both their automobile policy and their property policy insured with the same company.
  • Vehicle is equipped with an anti-theft device. "Top 10 Stolen Cars" is a good reference for information on vehicle theft.
  • Vehicle is equipped with winter tires.
  • Vehicle is hybrid model.

Driver Training - Lower premiums may be available to those drivers who are newly licensed and have successfully completed a driver training course.

Driving Convictions - Driving convictions can increase the cost of a driver’s insurance premium. Driving convictions are categorized as minor, major or Criminal Code; the applicable premium surcharge is dependent on the number and type of conviction(s). Insurers consider minor and major convictions within the past three years and Criminal Code convictions within the past three or four years.

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Glossary - "E"

Earned Premium - The premium that represents the period of time for which coverage has been in force.

Effective Date - The date of inception of an insurance policy, or the date that coverage has been added or deleted from the policy. Unless a time is specifically requested, commences at 12:01 a.m. on the effective date.

Endorsement - A written agreement that changes the terms of an insurance policy by adding or subtracting coverage.

Exclusion - A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.

Expiry Date -The date at which an insurance policy ends. Unless a time is specifically requested, coverage ends at 12:01 a.m. on the expiry date.

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Glossary - "F"

First Party - The policyholder (insured) in an insurance contract.

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Glossary - "G"

Gender - A variable used by insurers in the rating process. Female drivers have a lower frequency of accidents and driving convictions which result in lower premiums.

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Glossary - "I"

Indemnity - Restoring an individual to the position they were in immediately prior to the loss. Deductions would be made where repair or replacement improved the condition of the property, e.g., where new tires replaced slashed tires that were 50% worn.

Insurable Interest - A right or relationship in regard to the subject matter of the insured contract such that the insured can suffer a financial loss from damage, loss or destruction to it.

Insured - The policyholder(s) entitled to covered benefits in case of an accident or loss.

Insurer - The insurance company that issues the insurance policy and agrees to pay for losses and provide covered benefits.

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Glossary - "L"

Lapse in Insurance Coverage - Lapses in insurance coverage of greater than a period of 2 years may affect premium.

Liability Limits - The maximum amount of insurance for which all third party claims for bodily injury or property damage as a result of one accident, would be paid.

License Suspension - A driver’s license suspension may affect premium, depending on the duration of the suspension(s).

Limits - The maximum amount of benefits the insurance company agrees to pay in the event of a loss.

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Glossary - "M"

Marital Status - Marital status can affect your insurance premium. This criterion tends to apply to drivers under the age of 25.

Mileage - How many kilometers a vehicle is driven may have an impacton the premium.

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Glossary - "N"

Named Insured - the individual defined as the insured in the policy contract.

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Glossary - "O"

Occasional Operators - Where an occasional driver under the age of 25 is insured on a vehicle, an additional premium may be applicable for third party liability and collision coverage.

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Glossary - "P"

Peril - A danger or hazard that can cause a loss, for example, collision with an object or a fire.

Policy - A contract that states the rights and duties of the insurance company and the insured.

Policyholder - The person or entity to which the policy is issued.

Premium - The price of insurance paid to the insurance company for a policy.

Property Damage - Damage to another person's property. The purpose of liability insurance is to cover property damage to a third party resulting from the negligent acts of an insured.

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Glossary - "Q"

Quotation/Quote - An estimate of the cost of insurance based on the information supplied to the agent, broker, or insurance company.

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Glossary - "R"

Rate Group - The majority of insurance providers employ an assessment system that assigns a numerical value based on its expected and actual claims loss experience for each make, model and model-year of car. The higher the expected claims costs, the higher the rate group and therefore the higher the insurance premium charged.

Rating Factors/Variables - Criteria that is used in determining the insurance premium for a driver. Examples of rating factors include where you live (territory), claims, driving convictions, age and use of vehicle.

Regulator - The federal, provincial or territorial government agency responsible for the control and regulation of the insurance industry under its jurisdiction.

Renewal - An offer to extend insurance coverage for another term subject to payment of premium.

Replacement Cost - The amount that it costs to replace lost or damaged property with new property of like kind and quality.

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Glossary - "S"

Salvage - Damaged policyholder property that is legally signed over to an insurer in a loss settlement. Insurance companies sell salvaged property in order to reduce the overall loss.

Subrogation - The process of recovering the amount of claims damages paid out to a policyholder from the legally liable party. When a company pursues the legally liable third party, they are required to include the policyholder's deductible in the recovery process.

Superintendent of Insurance - The chief officer of the Government Department which regulates insurance.

Surcharge - An extra charge applied to the premium by an insurance company, usually applied to as a result of driving convictions or an at-fault claim.

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Glossary - "T"

Term - period of time for which policy is in effect.

Territory - Where a driver lives makes a difference. Automobile insurance rates are generally higher for those drivers who live in urban areas than those in rural areas. Urban areas tend to be more congested which contributes to a higher frequency of collisions. Higher comprehensive premiums may apply in neighborhoods that experience a higher rate of vehicle thefts and vandalism.

Third Party - An individual other than the policyholder or the insurance company who has suffered a loss and may be able to collect compensation under the policy due to the negligent acts or omissions of the policyholder.

Total Loss - Damage or destruction to real or personal property to such extent that it cannot be rebuilt or repaired to its condition prior to the loss or when it would be cost prohibitive to repair or rebuild in comparison to the value of the property prior to the loss.

Type of Vehicle - The make, model and year of vehicle affect a driver’s insurance premium. A classification system ranks vehicles by their claims experience; therefore, the better the claims experience for the particular model, the lower the premium. Before purchasing a vehicle, find out how much it is going to cost to insure. Premiums vary based on the claims experience for the make, model and year of vehicle. "How Cars Measure Up" is a helpful reference to determine the claims experience.

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Glossary - "U"

Underwriter - A person, who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate.

Usage Based Insurance (UBI) - Usage-based insurance calculates your premium based on electronically collected data about your driving habits; this can include time spent driving, miles driven, braking habits, acceleration, etc.

Use of Vehicle - The use of a vehicle has an effect on insurance premiums (e.g. pleasure only, commuting to and from work, business use).

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Glossary - "Y"

Years Licensed - The length of time a person has held their driver’s license can affect premium.

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