Insurance agency glossary
Short, plain-English definitions of the terms you'll meet when choosing a insurance agency provider in Toronto, Ontario.
- What is a beneficiary designation?
- A beneficiary designation is a legal instruction on a life insurance policy that names who will receive the death benefit when the policyholder dies.
- What is a CLEAR rating?
- CLEAR (Canadian Loss Experience Automobile Rating) is a vehicle rating system that insurers use to assess a car's claims and theft history, which affects the insurance premium charged for that specific vehicle.
- What is a co-insurance clause?
- A co-insurance clause is a provision in property insurance policies that penalizes claims if the property is not insured to a specified percentage of its replacement value, typically 80% or higher.
- What is a deductible?
- A deductible is the amount of money you must pay out of your own pocket toward a claim before your insurance company pays its share of the covered loss.
- What is a fire number designation (F-plate)?
- A fire number designation, indicated by an F-plate, is a classification assigned to commercial buildings in Toronto that reflects their fire safety rating and insurance underwriting risk category.
- What is a named perils vs all-risk policy?
- Named perils policies cover only specific, listed hazards, while all-risk policies cover all damage except what's explicitly excluded; the two basic structures Ontario insurers use to define home coverage.
- What is a RIBO license?
- A RIBO license is the Registered Insurance Brokers of Ontario credential required by law for anyone selling, negotiating, or servicing insurance contracts in Ontario.
- What is a segregated fund?
- A segregated fund is an insurance-linked investment product that guarantees a minimum percentage of your invested capital at maturity or upon death, regardless of market performance.
- What is a statutory accident benefits schedule?
- The Statutory Accident Benefits Schedule (SABS) is Ontario's mandatory set of no-fault benefits included in every auto insurance policy that covers medical treatment, rehabilitation, income replacement, and caregiver expenses following a motor vehicle accident.
- What is actual cash value vs replacement cost?
- Actual cash value (ACV) reimburses the current market value of damaged property minus depreciation, while replacement cost covers the full expense to repair or replace the item at today's prices without depreciation deduction.
- What is an insurance binder?
- A binder is a written or electronic certificate issued by an insurance broker or underwriter confirming that temporary coverage is in force while the formal policy documents are being prepared or approved.
- What is an insurance premium?
- An insurance premium is the amount a policyholder pays to an insurance company, typically monthly or annually, to maintain active coverage under an insurance policy.
- What is an insurance rider (endorsement)?
- An insurance rider, also called an endorsement, is a formal amendment to an insurance policy that adds, excludes, or modifies coverage to address specific risks or circumstances.
- What is condo insurance (unit owner) vs master policy?
- A condo master policy covers the building structure and common areas, while individual unit owner insurance covers the unit's contents and interior finishes; gaps between them are often filled by loss assessment or deductible top-up coverage.
- What is liability coverage limits?
- Liability coverage limits are the maximum dollar amounts an insurance policy will pay out for third-party bodily injury or property damage claims.
- What is loss of use coverage?
- Loss of use coverage reimburses additional living expenses, such as temporary accommodation and meals, incurred when a home is rendered uninhabitable by a covered peril.
- What is overland flood vs sewer backup coverage?
- Overland flood and sewer backup coverage are two distinct optional endorsements that protect against different sources of water damage: overland flood covers surface water that accumulates from intense rainfall, while sewer backup covers water that reverses through plumbing fixtures and drains during municipal sewer system overloads.
- What is proof of insurance (pink card)?
- A pink wallet-sized card issued by an insurer that documents a driver's current auto liability insurance coverage and must be carried in the vehicle at all times under Ontario law.
- What is term life vs whole life insurance?
- Term life insurance provides death benefit protection for a fixed period (typically 10 to 30 years), while whole life insurance offers permanent coverage for the insured's lifetime and includes a savings component that builds cash value.
- What is the difference between an insurance broker and agent?
- A broker represents multiple insurance companies and works on behalf of clients to find policies, while an agent typically represents a single insurer and sells only that company's products; in Ontario, brokers are regulated by RIBO (Registered Insurance Brokers of Ontario).
- What is the Facility Association (high-risk auto pool)?
- The Facility Association is a mandatory risk-sharing pool in Ontario that provides auto insurance to drivers who cannot secure coverage through conventional insurers, functioning as the market of last resort for high-risk motorists.
- What is the Financial Services Regulatory Authority (FSRA)?
- The Financial Services Regulatory Authority (FSRA) is Ontario's regulatory body responsible for overseeing insurance agents, insurers, and rate approvals in the province.
- What is underwriting?
- Underwriting is the process an insurance company uses to evaluate a customer's risk profile, determine whether to approve a policy, and set the appropriate premium rate.
- What is uninsured/underinsured motorist coverage?
- Uninsured/underinsured motorist coverage is optional or standard auto insurance protection that pays for your injuries and vehicle damage when struck by a driver who has no insurance or insufficient liability limits.