insurance terminology

Actual Cash Value (ACV)

This is the fair market value of property at a given time and is calculated by deducting an amount for depreciation from the replacement cost of the property.  

Actual Loss Sustained: 

The actual loss, in dollars, caused either by a suspension of the customer’s business and the loss of income resulting from direct physical damage to the customer’s property or caused by the additional expenses that would not otherwise have been incurred had the physical damage to the property not incurred.

Additional Insured: 

This is a person or company other than the named insured (customer) who is protected by the terms of the policy.  

Business Interruption Insurances: 

This insurance protects against business expenses and loss of income resulting from a fire or other insured peril.


There are provisions in each insurance policy that allows either the insurer or the customer to terminate coverage during the policy period.  In some cases, a refund may be provided to the insured.

Certificate of Insurance: 

The certificate is a written document stating that the insurance coverage is in effect. It includes a general statement of the policy’s coverage, the issue date and expiry date.


A claim is initiated by the customer requesting to be compensated by their insurance company for losses covered by an insurance policy.


The Conditions are the terms of insurance contract that impose obligations that the insured person or company must satisfy in order to preserve insurance coverage.


This is a dollar amount assumed by the customer, which is deducted from the amount of the loss or the amount claimed.


This is the loss in value caused by physical wear and tear and/or obsolescence.


These are risks, perils or properties defined in the insurance policy that are specifically not covered.

General Liability Coverage: 

This insurance designed to protect business owners and operators from a variety of liability circumstances. These risks may include bodily injury or property damage sustained by customers of the business, due to the business owner's premises, operations or products.

Indemnity Agreement:

An indemnity agreement is a contract, express or implied, to repay a party/business in the event of a loss.

Insurance Policy/Contract: 

A contract between an insurance company and its customer is for a specific period of time. It protects the customer financially against a loss during that period only.  


The insured is the person or organization protected by an insurance policy.

Insured Perils: 

Insured perils are specific sources of loss (such as fire, liability or theft) covered by an insurance policy.

Insured Property: 

The insured property is the property covered by an insurance policy.  It is typically covered against damage caused by fire, smoke, weather events (there are exceptions such as floods, sewer backups, standing water etc), theft etc.  It also provides liability coverage in case someone other than the property owner or renter is injured while on the property, and takes legal action against the property owner.  They usually do not cover mold, earthquakes, nuclear events or acts of war, such as terrorism and insurrections.


The insurer is the insurance company that issues the policy.

Limits of Insurance: 

This is the maximum amount of coverage available under an insurance policy for any one occurrence, and may be referred to as limits of liability, amount of insurance, or sum insured.

Loss Payee: 

The loss payee is a person or business who is added to a policy because they have an insurable interest in the property insured, e.g. due to a loan or other financial agreement. 


Generally, the premium is the amount of money the customer pays to the insurance company for the insurance coverage or the financial protection against specific risks for a specific time-span. 

Property Coverage: 

Property coverage protects a customer’s property against damage, destruction or loss by a covered peril.


A quote is an estimate of the cost of insurance, based on information supplied to the insurance company.


The rate is the amount used to calculate the premiums to be paid on an insurance policy by the client.


This refers to the reactivation of suspended or cancelled insurance policies by the insurance company.


The renewal is the act of keeping an active policy in place and the certificate attests to the fact that an insurance policy has been extended for another term.

Replacement Cost: 

This is the cost of replacing damaged or destroyed property without taking a deduction for depreciation and applies in certain circumstances as outlined in the policy.

Statutory Conditions: 

These refer to a mandatory set of conditions that apply specifically to policies. 


The valuation is the means by which the value of property is determined at the time of a loss or damage.


A warranty is a statement stating that something the client says is true.  Insurance contracts are written on the principle of good faith, i.e. party must trust that the other is being truthful. For the contract to be valid, clients may have to warrant that an assumption the insurer is making is true.  If the insurance company discovers that the client made an untruthful warranty, it may void the contract and not honour any claims made.

The Chef Alliance is a leading foodservice association in Canada offering Chefs and Entrepreneurs a place to grow their business.  They can benefit from liability insurance to protect their clients and finances, peer support strengthen their business, discounts to lower their business costs, market their services and increase profits.  This leaves them time to concentrate on what they do best - cook great food!

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