AMF Damage Insurance key terms

A financial or legal stake in the person or property insured such that the policyholder benefits from its preservation and suffers loss from its damage. It must exist at the time of loss for property coverage.

The rule that a property claim payment restores the insured to roughly the same financial position held before the loss, no better and no worse. It supports limits, deductibles and depreciation adjustments.

The mutual duty of applicant and insurer to deal honestly and disclose material facts. Breach by the applicant may allow the insurer to void or rescind the contract or reduce a claim.

Information a reasonable insurer would treat as influencing acceptance of a risk or the premium charged, such as prior losses, occupancy, or a serious health condition. Applicants must disclose it without being asked.

A false or misleading statement by an applicant or insurer, whether innocent, negligent or fraudulent. Its effect on coverage depends on whether the statement was material to the risk.

The obligation of the insurer or its representative to explain coverage, exclusions, limits and obligations in clear terms before the contract is concluded, so the client can make an informed decision.

The risk that the existence of insurance changes behaviour, making a loss more likely or larger, for example through carelessness or deliberate damage. Underwriters screen for it and policies contain deterrence clauses.

The tendency for higher-risk applicants to seek or retain coverage more often than lower-risk ones. Insurers counter it through underwriting, exclusions, deductibles and experience rating.

The insurer's process of evaluating an application, classifying the risk and deciding whether to accept it, on what terms and at what premium, based on disclosed information.

The amount of each loss the insured bears before the insurer pays, expressed as a fixed sum, percentage or time period. It reduces premium and discourages small or inflated claims.

A property policy condition requiring the insured to carry a limit equal to a stated percentage of the property's value. If the limit falls short, each claim is reduced proportionally.

A valuation method equal to replacement cost less depreciation, reflecting the used value of damaged property at the time of loss. It is the default basis in many property contracts.

A valuation basis that pays the cost of repairing or rebuilding with new materials of like kind and quality, without depreciation, subject to the policy limit and any conditions.

A coverage approach listing the specific causes of loss insured, such as fire, lightning, windstorm or theft. Damage from an unlisted cause is not covered.

A coverage approach insuring accidental loss from any cause except those expressly excluded. The burden of showing an exclusion applies generally falls on the insurer.

A policy provision that removes specified losses, property or circumstances from coverage, such as wear and tear, intentional acts or pollution. Exclusions define the boundary of the insured promise.

A formal, usually sworn statement the insured submits describing the date, cause and amount of damage, with supporting documents. It is a condition precedent to payment under most property policies.

The insurer's right, after paying a claim, to pursue the party responsible for the loss in the insured's place, up to the amount paid. It prevents double recovery and spreads loss to the at-fault party.

Coverage for sums the insured becomes legally obligated to pay because of bodily injury or property damage caused to others, plus defence costs. The injured party is not a party to the contract.

Responsibility arising from law rather than agreement, based on fault such as negligence or on strict statutory rules. Liability policies respond only where such liability exists.

Failure to exercise the care a reasonable person would use in similar circumstances, causing foreseeable harm. Proof generally requires a duty, a breach, causation and resulting damage.

Money awarded to place an injured claimant in the position they would have occupied but for the wrong, covering items such as medical costs, lost income and pain and suffering.

An award intended to punish and deter especially reprehensible conduct rather than to compensate the claimant. Many liability policies exclude or restrict coverage for them.

An accident or continuous exposure to harmful conditions that causes injury or damage during the policy period. Occurrence-based liability coverage responds even if the claim is made later.

A liability coverage trigger under which the policy in force when the claim is reported responds, provided the wrongful act occurred after any stated retroactive date.

An optional or automatic extension allowing claims to be reported after a claims-made policy ends, for acts occurring during the policy period. It does not extend the coverage period itself.

A person or organization added to another's liability policy by endorsement, gaining protection for their own liability arising from the named insured's operations or premises.

A document summarizing the coverage in force, limits and dates of an existing policy. It is evidence only and does not amend, extend or create coverage.

The legally required minimum third-party coverage for bodily injury or death caused by a vehicle, and in some jurisdictions for property damage. Driving without it is an offence.

A no-fault arrangement under which an insured's own insurer pays for damage to the insured vehicle caused by another identified driver, without waiting for a liability determination against that driver.

Optional automobile coverage for damage to the insured vehicle from impact with another object or vehicle, or from upset, regardless of fault, subject to the deductible.

Optional automobile coverage for damage to the insured vehicle from causes other than collision, such as fire, theft, vandalism, hail or glass breakage, subject to the deductible.

A residual-market mechanism that provides compulsory automobile liability insurance to drivers who cannot obtain it voluntarily, with premiums and rules set by regulation.

The person or estate designated to receive the proceeds of a life insurance policy on the insured's death. A revocable designation may be changed by the policyholder.

The policy clause naming who receives death benefits, and how proceeds are divided. Its wording governs payment and can override a will, so clarity and currency matter.

Coverage replacing part of earned income when the insured cannot work because of illness or injury, defined by the policy's own occupation or any occupation test and a waiting period.

A situation in which a representative's personal or financial interest could improperly influence advice to a client, such as undisclosed commissions or placing business with a related firm.

Professional liability coverage protecting a broker or agent against claims that a negligent act, error or omission in providing services caused a client financial loss.