Insurance glossary: common terms in plain language
Insurance has its own vocabulary. These short definitions explain the words you are most likely to see on a quote or in a policy. Meanings can differ slightly by insurer and province, so your policy's own wording is what counts.
Accident benefits
Payments for medical care, rehabilitation, income replacement and other costs after a car accident. In many provinces they come from your own auto insurance, whoever caused the accident.
Actual cash value
What an item is worth today after depreciation, which is usually less than what it costs to replace new.
Additional living expenses
Costs such as a hotel and meals if you cannot live at home after a covered loss, usually subject to limits.
Adjuster
The person who investigates a claim and works out what the policy pays. Adjusters work for insurers or independently.
Agent and broker
In general, an agent represents one insurer and a broker works with several. Titles and rules differ by province.
Beneficiary
The person or people you name to receive the payout from a life insurance policy.
Cash value
The savings part of some permanent life insurance policies, which builds over time inside the policy.
Certificate of insurance
A document from your insurer summarizing your coverage and limits. Clients and landlords often ask for one.
Claim
A request to your insurer to pay for a loss covered by your policy.
Collision coverage
Pays to repair or replace your vehicle after a collision, up to the policy's terms and less your deductible.
Comprehensive coverage
Pays for damage to your vehicle from causes other than a collision, such as theft, fire, vandalism or a falling object.
Conversion privilege
The right to switch group coverage to a personal policy, usually without new health questions and within a short deadline.
Coordination of benefits
How two plans that cover the same expense share the cost so the total paid does not exceed the expense.
Critical illness insurance
Pays a lump sum if you are diagnosed with a serious illness the policy lists and you meet its conditions.
Declarations page
The summary at the front of a policy listing who and what is covered, the policy period, coverages, limits, deductibles and premium.
Deductible
The amount you pay yourself on a claim before the insurer pays the rest.
Disability insurance
Pays part of your income if illness or injury stops you from working.
Elimination period
The wait between the start of a disability and the day benefits begin. Also called a waiting period.
Endorsement or rider
A change added to a standard policy that extends, limits or adds coverage.
Exclusion
Something the policy does not cover.
Grace period
Extra time after a premium is due when coverage usually stays in place. For life insurance it is often about 30 days.
Group insurance
Insurance arranged by an employer or an organization for its members, often with the cost shared.
Insurable interest
A real financial stake in the thing or person insured. You generally need one to buy a policy.
Lapse
When a policy ends because the premium was not paid.
Liability coverage
Pays for injury or damage you cause to other people, up to your limit, and the legal cost of defending a claim.
Limit
The most a policy will pay for a claim or in a period.
Loss assessment
A charge from a condominium corporation to unit owners to cover a shortfall after a loss. Some unit-owner policies cover it.
Named perils and all-risk
A named perils policy covers only the causes it lists. An all-risk policy covers every cause except those it excludes.
No-fault
A system where your own insurer pays certain benefits after an accident whoever caused it.
Overland water
Water that enters a building from outside, such as a river overflowing or heavy rain running across the ground. Often excluded from standard policies.
Peril
A cause of loss, such as fire, theft, wind or water.
Permanent life insurance
Life insurance designed to last your whole life. Whole life and universal life are common kinds.
Pre-existing condition
A health condition you had before a policy started. Policies treat these differently, so read the rules.
Premium
The amount you pay for insurance, monthly or yearly.
Proof of loss
The documents an insurer may ask for to support a claim, such as receipts, photos and a list of items.
Rating factors
The details an insurer uses to set a premium, such as where you live, your claims history and, for life insurance, your health.
Renewal
When a policy is extended for another term, often at a new price.
Replacement cost
What it costs to repair or replace something with new materials, with no deduction for depreciation.
Sewer backup
Water or sewage that comes back up through drains. Usually an optional add-on to home insurance.
Sublimit
A lower limit that applies to certain items within a policy, such as jewellery or electronics.
Subrogation
When your insurer pays a claim and then recovers the cost from the person or company responsible for the loss.
Tenant insurance
Insurance for people who rent. It covers your belongings and your liability, not the building.
Term life insurance
Life insurance that covers you for a set number of years and pays out only if you die during that time.
Third-party liability
Coverage for harm you cause to someone else, as opposed to damage to your own property.
Underwriting
How an insurer assesses a risk and decides whether to offer coverage and on what terms.
Uninsured automobile coverage
Coverage that helps if you are hurt or your vehicle is damaged by an uninsured or unidentified driver.
Waiting period
A set time after a policy or plan starts before some or all coverage begins.
General information, not advice or a recommendation. Rules differ by province and by insurer, so confirm with your insurer or a licensed advisor. This page was last checked in November 2026.