As well as technical jargon, insurance industry practitioners often use some everyday words in a very precise way. We hope you find this glossary helpful; our comments and suggestions for future editions are cordially invited.
All risks: The term “all risks” describes insurance for losses due to a wide range of causes. Instead of listing each insured peril, such as fire, lightning, and so on, the policy covers all loss or damage to insured property that is the result of any “risk” that is not specifically excluded. “All risks” is a confusing insurance term and does, in fact, incorporate some listed exclusions which allow coverage to be tailored to individual needs and riced more fairly. Perhaps a better description would e “all common risks”!
A “risk” is a chance event that is unexpected and accidental as far as the policyholder is concerned. For example, if a dog’s tail sweeps an ornament off a table and onto the floor where it breaks, that is due to a risk”; the ornament would not otherwise have broken. The gradual wearing out of clothes, however, or the rotting of fruit, are quite natural and expected… and therefore are not insurable “risks.”
Business premises, equipment at home: Loss or damage to buildings or structures are not normally insured if they are used for business or commercial farming. Business equipment is covered only while at your home, usually only up to $2,000 in total. There is no coverage for samples and merchandise for sale. If these limits are a problem, you may wish to consider buying an insurance policy, or an endorsement to your home insurance policy that is designed for home-based businesses.
Direct loss: A “direct loss” arises when insured property or goods are damaged or lost. The term does not include other losses or expenses incurred as an indirect result of the age, such as having to rent a video camera if your own is destroyed by a fire shortly before you leave on a vacation or trip.
Dwelling: Your “dwelling” coverage applies to your home and “attached structures” such as a garage or carport. Permanently installed outdoor equipment on the premises, such as a swimming pool and the equipment attached to it, is included. Building materials for use in construction, alteration or repair of the insured dwelling or related structures on the premises are covered too if they are on the site or adjacent to it. Theft and vandalism losses during construction are usually not covered.
You may apply up to 10% of the amount of insurance on your dwelling to insure building fixtures and fittings, such as mirrors or air conditioners, that may have been removed temporarily for repair or seasonal storage.
You may apply up to 5% of your insurance to trees, plants, and shrubs; but there’s often a limit for any one item. Lawns aren’t insured, and trees, shrubs, and plants aren’t covered for weather-related damage.
Other buildings and structures: Separate structures and buildings on the same premises as the primary dwelling are also covered for specified amounts, usually up to 10% of the main coverage. This could apply to detached garages, tool sheds, retaining walls, and even landscaping. If 10% seems too low, consider buying additional coverage.
Personal property: Your home owner’s policy will cover the contents of your home and other personal property that you own, wear or use (including clothing, cameras, furniture, etc.) while on your premises. It may even cover uninsured personal property of others, excluding roomers or boarders who are not related to you. Your policy will normally cover personal property while it is temporarily away from your home anywhere in the world. Personal property not normally kept at home is not covered. Personal property in a warehouse is usually covered against theft without time limit; but other perils may not be covered, or may be covered only up to 30 days, so be sure to consult your agent or broker.
Relatively small dollar limits apply to negotiable securities, cash, garden tractors, watercraft, and computer software; read this section of your policy carefully!
Coverage limits apply also if the following are stolen: bicycles; jewellery and gems; watches; furs; coin, stamp, and card collections; and manuscripts. Many insurers no longer limit coverage of silverware. Check your policy.
Reasonably priced supplementary insurance is usually available. These “riders” or “floater” policies provide all-risk coverage for specific items – often fragile and/or valuable – subject to certain exclusions Coverage can be world-wide and there’s usually n deductible.
Subrogation: Your insurer may try to recover some or all of its cost in settling your claim by suing others responsible for the loss. The effect is roughly the same as if you yourself were to sue the responsible party, except that you are compensated more quickly by your own insurer, often on a replacement-cost basis.
Vacancy: Insurance coverage on dwelling and contents cease automatically when the premises have been vacant for more than 30 consecutive days without the insurer’ prior approval. Coverage for certain perils such a vandalism lapse immediately. A “vacant” building regardless of the presence of furnishings, is one that you’ve moved out of, not intending to return. Be sure to notify your insurer before you vacate your home.
“You” and “Your:” When the text of an insurance policy uses the word “you” or “your”, it refers to the insured person(s named on the coverage summary page. The policy also includes, while living in the same household, a name insured person’s legal, and sometimes a common-law spouse, the relatives of either, or any person under 2 in their care.
The nature of insurance requires consumers and claimants to supply some relevant personal information to insurance companies. Without such disclosure, insurers would find it difficult to asses premiums and pay claims fairly. If you have questions or concerns about how the information will be used, it is important to discuss them with your insurer or broker before applying for coverage o submitting a claim.
When you buy home insurance, you buy peace of mind. Insurance is a product like any other, and it works better when both sellers and buyers are knowledgeable. If you have questions that are not answered in this pamphlet, all you have to do is ask!