The glossary.
Every insurance term that’s ever confused you, defined in plain English. We’ll keep adding to this. If you spot something missing, email contact@toprates.ca.
Accident benefits
Coverage that pays for medical, rehabilitation, and income replacement after an auto accident, regardless of who was at fault. In Ontario, much of this becomes optional after July 1, 2026.
Adjuster
The insurance company employee (or third party) who investigates a claim and decides how much the company pays.
Aggregate limit
The maximum amount your insurer will pay across all claims in a policy period — common in liability and business policies.
Beneficiary
The person who receives the payout from a life insurance policy when the insured person dies.
Binder
A short-term confirmation of coverage issued before the full policy is printed. Treat it like temporary insurance — read it.
Broker
A licensed intermediary who shops insurance from multiple carriers on your behalf. Different from an agent (who sells one company's products).
Claim
A request to your insurance company for payment after a covered loss.
Coverage
The protection provided by a policy. Each line item in your declaration page is a separate coverage with its own limit.
Deductible
The amount you pay out of pocket on a claim before the insurance company pays. Higher deductible = lower premium.
Endorsement
A modification to a standard policy — adding, removing, or changing coverage. Sometimes called a "rider."
Exclusion
Something a policy specifically does not cover. Read these carefully — they're the part of the policy that decides whether a claim gets paid.
Liability
Coverage for harm or damage you cause to other people or their property. Required by law on every Canadian auto policy.
Named perils
A policy that covers only the specific risks listed (e.g., fire, theft). Different from "all risks" which covers everything except listed exclusions.
Premium
What you pay for the insurance. Annual or monthly.
Pro-rata
A refund or charge calculated proportionally to the time used. If you cancel a policy 6 months in, you usually get a pro-rated refund of the remaining 6 months.
Replacement cost
Coverage that pays to replace your damaged property with new equivalent items. The alternative is 'actual cash value,' which deducts depreciation.
Subrogation
Your insurer's right to recover money from a third party after paying your claim. If someone else caused your loss, your insurer can sue them to get the money back.
Underwriting
The insurance company's process of evaluating your risk and deciding what to charge — or whether to insure you at all.
Waiver
A clause where you give up a right — for example, the "waiver of depreciation" endorsement on a new vehicle ensures you get full replacement cost in the first few years.