C14: Automobile Insurance Part 1 key terms

A contract that transfers the financial cost of owning and operating a vehicle, such as liability claims, injuries, and damage, from the policyholder to an insurer in exchange for a premium.

The minimum insurance a province or territory requires a vehicle owner to carry before the vehicle may legally be driven on public roads, typically including liability and accident benefits.

The amount of money an insured pays an insurer, usually in instalments or annually, in exchange for the coverage promised in the automobile policy for a stated policy period.

The span of time during which the insurance contract is in force, commonly one year, during which claims arising from covered incidents are handled under that contract's terms.

The opening section of a policy that identifies the insured, the described automobile, the coverage limits and deductibles selected, the policy period, and the premium charged.

The section of the policy that states the core promise of the insurer, describing which perils and losses are covered and the circumstances under which payment will be made.

A provision that removes specified persons, vehicles, uses, or loss situations from the coverage otherwise granted, so no payment is owed for those removed items.

A written amendment attached to an automobile policy that adds, removes, or alters coverage, such as adding a driver or changing a limit, without rewriting the entire contract.

Standard policy terms set by provincial insurance law that govern matters such as notice of claim, proof of loss, and cancellation, and that override conflicting wording in the contract.

Coverage that pays amounts the insured becomes legally liable to pay another person for bodily injury or property damage caused by the ownership or operation of a vehicle.

The part of third party liability coverage that responds to claims from others for physical harm, including medical costs, lost income, and pain and suffering awarded against the insured.

The part of third party liability coverage that pays for damage the insured causes to another person's vehicle or other property, such as a fence, pole, or building.

The maximum amount an insurer will pay for all third party liability claims arising from one accident, often shown as a single limit or split limits per person and per accident.

A liability limit format expressed as three numbers, showing the maximum paid per injured person, the total per accident for bodily injury, and the amount for property damage.

A liability limit format in which one total amount applies to all bodily injury and property damage claims combined arising from a single accident, without per-person subdivisions.

Legal expenses, investigation costs, and court fees an insurer pays to defend an insured against a liability claim, usually in addition to the liability limit.

No-fault coverage that pays medical, rehabilitation, income replacement, and related expenses for the insured and passengers injured in an accident, regardless of who caused it.

Coverage that pays reasonable medical and funeral expenses for the insured and passengers hurt in an accident, up to a stated limit, without requiring proof of fault.

A weekly accident benefit that replaces a portion of an injured person's lost earnings while they are unable to work because of accident-related injuries.

An accident benefit that pays for help with personal care tasks, such as bathing, dressing, and meal preparation, needed because of injuries sustained in a vehicle accident.

Coverage that pays to repair or replace the insured vehicle itself when it is damaged by a covered peril, subject to the deductible and any stated limit.

Physical damage coverage that responds when the insured vehicle strikes another object or vehicle, or overturns, paying repair costs less the deductible up to the vehicle's value.

Physical damage coverage for losses to the insured vehicle from perils other than collision, such as fire, theft, vandalism, hail, or impact with an animal.

A narrower physical damage option that pays only for the perils named in the policy, such as fire, theft, and lightning, rather than for all risks of loss.

The amount the insured must absorb on each covered physical damage claim before the insurer pays the remainder, often chosen at a higher level to reduce premium.

A settlement measure equal to replacement cost of the damaged vehicle minus depreciation for age and wear, reflecting what the vehicle was worth just before the loss.

A vehicle damage situation in which repair cost approaches or exceeds the vehicle's value, so the insurer settles by paying the vehicle's value rather than funding repairs.

The amount a damaged vehicle or its parts can be sold for after a total loss, which the insurer may credit against the settlement if the insured keeps the wreck.

Coverage that responds when the insured is injured or the vehicle damaged by an at-fault driver who has no insurance or who leaves the scene of a hit-and-run accident.

Coverage that pays the gap when an at-fault driver carries liability insurance but its limit is too low to fully compensate the insured's injuries or damage.

A collision in which the at-fault driver flees without identifying themselves, leaving the injured party to seek recovery through their own uninsured automobile coverage.

A condition in some uninsured motorist provisions requiring that the unidentified hit-and-run vehicle actually touch the insured vehicle or person before a claim is paid.

A residual market pool that provides automobile insurance to drivers who cannot obtain coverage from ordinary insurers, with costs shared among member companies.

The underwriting process of deciding which applicants an insurer will accept, decline, or rate differently, based on factors that predict the likelihood and size of claims.

The evaluation of an application to determine whether a risk is acceptable and what premium and conditions should apply, using information such as driving record and vehicle use.

A geographic area used in pricing automobile insurance, chosen because claim frequency and cost differ between areas such as dense cities and rural districts.

A change in circumstances, such as a new regular driver or a move to another province, that an insured must report because it would alter the insurer's decision to accept the risk.

A formal written statement, often sworn, that an insured submits to support a claim, detailing the circumstances, the property damaged, and the amount claimed.

The prompt written notice an insured must give the insurer after an accident, describing how, when, and where the loss occurred so the insurer can investigate.