7 Everyday Insurance Terms You Should Know
At some point in their lives, most Canadians will purchase a property insurance policy. It could be for their first home, a business, or personal belongings. However, some terminology in the insurance industry isn’t commonplace or may have a slightly different meaning in everyday life. We’ve compiled a list of 7 everyday insurance terms, to help you understand insurance better.
Premium, Loss & Deductible
- Premium. This is the amount you will pay for an insurance policy, which is usually calculated based on a term of one year.
- Loss. A loss refers to damage to insured property. For example: if a windstorm tears a section off of your roof and water gets into your house, you’ve suffered a loss. Therefore, you may be able to make a claim against your insurance policy.
- Deductible. A deductible is the portion of a loss that you are responsible to pay for under your policy. A standard deductible on a home insurance policy is $1,000. Assuming a $1,000 deductible, in the event of an insured loss, your insurance company would pay the determined amount of the loss, less $1,000.
Perils & Liability
- Peril. A peril is an event that can cause a loss. Examples of common perils include: fire or lightning, windstorm or hail, water damage and theft. There are multiple other perils that may be included in your insurance policy as well.
- Named Perils. A policy for named perils covers only the perils identified in the policy wording.
- All Perils, also referred to as all risk, is a policy which covers all perils, except those that are specifically identified as being excluded from coverage in the policy wording.
- Liability. Liability is the responsibility assessed against someone for injury or damage to another person, as a result of applying the law. Most property policies include liability coverage, up to a specified limit.
We recommend you speak with your agent or broker if you are unclear on any terms in your insurance policy.
Read more: learn the difference between replacement cost and actual cost value coverage.
This article is intended for informational purposes only. It is recommended that you speak with your Agent, Broker or Insurer for accurate information pertaining to your specific insurance policy and/or individual insurance needs.