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Car Insurance Glossary

Definitions of terms commonly used in car insurance applications.

Car insurance glossary

A | C | D | F | G | H | I | L | M | O | P | R | S | U | W

A

  • Accident Benefits Coverage
    Coverage protecting you financially in the case of injury resulting from a car accident, regardless of who's at fault. It covers medical expenses and loss of income and is mandatory everywhere in Canada except for Newfoundland.
  • Accident Forgiveness Endorsement
    An option offered by some insurance companies where they wouldn't count your first at-fault accident against you.
  • All Perils Coverage
    The broadest coverage available, includes both collision and comprehensive coverage.
  • Anti-Theft Discount
    A discount on auto insurance offered by some insurance companies for having anti-theft devices (i.e. car immobilizer) in your vehicle.

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C

  • Certificate of Insurance
    A document confirming the purchase of insurance.
  • Claim
    Request by the policyholder to be reimbursed by the insurance company for loss covered under the insurance policy.
  • Collision Coverage
    Coverage protecting you financially in the case of damage to your car resulting from an accident where you're found at fault. It also covers damage to your vehicle caused by an unidentified person.
  • Comprehensive Coverage
    Coverage protecting you financially from damage other than collision damage done to your vehicle. (i.e. theft, fire, vandalism, etc.)

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D

  • Damage to Non-Owned Vehicle Endorsement
    Covers you in case you cause damage to another vehicle not owned by you.
  • Deductible
    A pre-determined amount that a policyholder is required to pay as part of a claim before payment is made by the insurance company.
  • Depreciation
    The reduction in the value of an asset (i.e. vehicle) over time.
  • Direct Compensation - Property Damages Coverage
    Coverage protecting you financially if you're involved in a car accident when you're not at fault. It covers damage to your vehicle and its contents and compensates you for the loss of use of your vehicle. Coverage is mandatory in Ontario, Quebec, Nova Scotia and New Brunswick.
  • Driver Training Course Discount
    A discount on auto insurance offered by some insurance companies for being a new driver and completing a recognized driver training course.

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F

  • Facility Association
    An insurance pool made up of all insurance companies. Facility Association provides coverage to high risk drivers who are unable to obtain auto insurance elsewhere. As a result it is considered an insurer of last resort.
  • Family Protection Endorsement
    Additional coverage if you're involved in an accident with a driver who has no insurance or less insurance coverage than you and who doesn't have enough coverage for your claim.

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G

  • Good Driver Discount
    A discount on auto insurance offered by some insurance companies for maintaining a clear driving record over an extended period of time.
  • Good Student Discount
    A discount on auto insurance offered by some insurance companies for being a student and maintaining a good grade point average.
  • Group Discount
    A discount on auto insurance offered by some insurance companies for belonging to a certain group, defined as an employee of a certain company or member, of a professional or non-profit association can result in a discount.

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H

  • High Risk Driver
    Someone who an insurance company feels has a high probability of being involved in a claim that the insurance company will have to pay out. A high risk driver can fall into one or several of the categories below:

    Has had several minor traffic violations
    Has had one major traffic violation (impaired driving, speeding over 50 km/hr, etc.)
    Has had several at fault accidents
    Had a previous insurance policy cancelled
    New driver
  • Hybrid/Electric Car Discount
    A discount on auto insurance offered by some insurance companies for owning a hybrid or electric car.

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I

  • Immobilizer
    An electronic anti-theft device that prevents unauthorized individuals from starting the vehicle.
  • Insurance Agent
    A licenced individual who generally sells only one company's insurance products.
  • Insurance Broker
    A licenced individual who sells several insurance companies' products.

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L

  • Lapse
    Termination of the insurance policy upon reaching the expiry date.
  • Liability Coverage
    Coverage protecting you financially if you're found legally responsible for the death or injuries to a person or damage done to their property while operating your vehicle. Coverage usually ranges from $200,000 to $2,000,000 and is mandatory across Canada.
  • Loss of Vehicle Use Endorsement
    Covers the cost of a rental vehicle while your vehicle is being repaired.
  • Low Mileage Discount
    A discount on auto insurance offered by some insurance companies for using your vehicle very infrequently.

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M

  • Misrepresentation
    Withholding or lying about a material fact. Misrepresentation can occur as part of the insurance application when incorrect information is provided by the applicant to arrive at the premium.
  • Multi-policy Discount
    A discount on auto insurance offered by some insurance companies for insuring your home and auto with the same company.
  • Multi-vehicle Discount
    A discount on auto insurance offered by some insurance companies for insuring more than one vehicle with the same company.

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O

  • Occasional Driver
    A driver who occasionally uses the vehicle. An occasional driver can be a child, spouse or partner of the primary driver.

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P

  • Premium
    The amount of money paid by the policyholder to the insurance company for the coverage provided.
  • Primary Driver
    Main driver who most often uses the vehicle.

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R

  • Red Book
    Canadian publication used throughout the insurance industry which lists vehicle values.
  • Reinsurance
    A way of sharing risk by insurance companies through the buying of insurance policies through each other.
  • Renewal Discount
    A discount on auto insurance offered by some insurance companies for staying with the same insurance company for a certain period of time.
  • Replacement Cost
    The cost of replacing an asset with an identical one.
  • Retiree Discount
    A discount on auto insurance offered by some insurance companies for being retired with no employment income while meeting certain other conditions (i.e. age).

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S

  • Specific Perils Coverage
    Coverage protecting you financially from specific perils identified in your policy (i.e. fire, earthquake, etc.).

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U

  • Underwriter
    An individual employed by an insurance company who determines who to insure based on the risk level.
  • Uninsured Automobile Coverage
    Coverage protecting you financially in the case of death or injury caused by an uninsured driver or as a result of a hit-and-run by someone else. It also covers damages to your vehicle by an identified uninsured driver. Coverage is mandatory across Canada.

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W

  • Waiver of Depreciation Endorsement
    Removes the insurer's ability to deduct depreciation on a vehicle when submitting a claim.
  • Winter Tires Discount
    A discount on auto insurance offered by some insurance companies for installing winter tires on your car.

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