– A –

ABANDONMENT

Relinquishment of ownership of property that has been lost or damaged and “abandoned” to the Insurance Company for the purpose of claiming a total loss.

ABNORMAL RETURN

Stock return beyond that predicted by general market movements. Many active portfolio managers seek out investment opportunities that offer abnormal returns.

ABOVE-GROUND SWIMMING POOL

Swimming pool built above ground level.

ACTIVE PORTFOLIO MANAGEMENT

A money manager (investor) attempts to earn a return above the risk-free rate or an index through forecasting of broad market trends or by identifying sectors or securities that are mispriced in the market.

ACTUAL CASH VALUE

The actual or current value at the time of the loss. Actual cash value takes depreciation into consideration.

ADDITIONAL INSURED

An individual or a corporation other than the one named in the insurance policy who is protected by the terms of the policy. Most automobile policies, for example, insure a specific individual as an insured, but also insure anyone driving with the insured’s consent. The additional insured may be “named” or “unnamed” in the insurance policy.

ADDITIONAL LIVING EXPENSE INSURANCE

Coverage applicable when an insured’s dwelling is damaged by an insured peril to such an extent that one cannot live in it until repaired. This insurance pays the extra amount it costs to live elsewhere until repairs are made, such as the cost of living in a hotel.

ADJUSTER An individual who represents an insurer on investigations and dealings with respect to settlement of claims. This may be a salaried employee of an insurer or one who operates as an independent adjuster.

AFTER-TAX

The final cost of an investment to an investor in a particular tax bracket, after calculating the effect of income tax.

ALARM SYSTEM

System guarding against theft and/or fire.

ALL-RISK POLICY

A name given to an insurance policy that covers against the loss caused by all perils except those which are specifically excluded by the terms of the policy.

AMERICAN DEPOSITORY RECEIPT

An instrument traded on the New York Stock Exchange (NYSE) that represents ownership in a foreign company (valued in American dollars).

AMORTIZATION

The paying back of a debt by spreading the payments (which include a portion of both principal and interest) over a period of time.

AMOUNT OF INSURANCE

The limit of payment for which an insurer is liable under a policy.

ANNUITY

A continuous disbursement of a fixed sum of money for a given period of time. It may be a fixed annuity, offering a constant rate of interest, or a variable annuity, which is adjusted according to the performance of its underlying assets.

APPLICANT

The person or firm requesting insurance.

APPRAISE

To set and state in writing the true value of property.

ARBITRATION

Referral of a dispute to one or more impartial persons chosen by the disputing parties to determine their rights and/or obligations. The parties agree in advance to abide by the arbitration agreement. Each party has a chance to be heard.

ARBITRATION CLAUSE

A clause in an insurance policy that provides arbitration in the event of a disagreement.

ARSON

The deliberate and intentional burning of property by its owner or by another person.

ASSET

What a firm or individual owns.

ASSET CLASS

A way of describing a group of investments with similar performance characteristics. Commonly used categories of assets include long-term equity, international equity, government bonds, corporate bonds, precious metals, and cash.

ASSET MIX (ASSET ALLOCATION)

The allocation of money to be used for investment purposes between different types of investments such as stocks, bonds, and treasury bills.

AUTOMOBILE FLEET

A group of automobiles under the same ownership and management which may, because of the number, justify a discount in the insurance premium. Usually five or more vehicles.

Top of page

– B –

BACK-END LOAD FUND

A type of mutual fund that charges the investor a fee when the fund is redeemed within a set period of time following purchase.

BAILEE

Person to whom goods or property are entrusted for a stated purpose, whether in exchange for payment (consideration) or not. Also called a Depository.

BALANCED FUND

A mutual fund that has both debt and equity holdings (stocks and bonds).

BASIS POINT (bps)

One one-hundredth (1/100 or 0.01) of one percent. A commonly used measurement of yield differences on assets. 100 basis points = 1%.

BEAR MARKET

A stock market whose index of representative stocks (such as TSE 300 Composite Index) is declining in value (usually 20% or more) for a period of time.

BENCHMARK

A predetermined set of securities that are used as a comparison for the performance of a fund. The benchmark serves as the starting point for the money manager who adjusts the proportions of the funds in the benchmark in an attempt to capture superior returns through market timing.

BENCHMARK ERROR

This occurs when an inappropriate benchmark or index is used as a comparison for the performance of a fund. For example, using the TSE 300 (a Canadian stock index) as a benchmark for a fund constructed completely of foreign stock.

BETA

Statistical term used to illustrate the relationship over time between the degree of price changes of an individual security or mutual fund unit to similar securities or financial market indices.

BID

Proposal made by the prospective policyholder to an insurance company to obtain the cost of a premium for a specific period.

BINDER

Temporary proof of insurance of property, pending issuance of a policy. The binder has the same value as the policy, and must be terminated in the same manner as an issued policy would be.

BLOCK SALE

A transaction that takes place with a minimum of 10,000 stocks involved. Block sales may sometimes be associated with either a better price or lower cost per share.

BOND

A financial instrument used to raise capital that represents an unconditional promise to pay a principal sum of money and interest payments at fixed dates.

BOND INDEX PORTFOLIO

A portfolio of bonds that closely resembles the available grades, coupons, and maturities in proportions or weights that resemble the actual bond universe.

BOND, DEBT INSTRUMENT

Document representing a debt, used to secure capital and accompanied by an unconditional promise of repayment of the principal, plus interest, on a determined date.

BOOK VALUE

A company’s common equity value as determined from the firm’s balance sheet.

BOTTOM-UP STRATEGY

A money management style where the manager focuses on individual stock selection and considers economic forecasts as only secondary in the decision-making process.

BREAK-AND-ENTER THEFT, “B&E”

Wrongful taking of property, without the consent of its owner, following forced entry into a building or property.

BROKER

A person who offers direct to the public a selection of various home, car and business insurance products from a number of insurers.

BUILDERS RISK INSURANCE

Insurance coverage on property under construction, including loss to buildings, machinery and equipment. Materials incidental to construction are also covered.

BULL MARKET

A stock market whose index of representative stocks (such as TSE 300 Composite Index) increases in value and is usually accompanied by higher profits, earnings and dividends, increased speculative activity, and a general feeling of prosperity.

Top of page

– C –

CANCELLATION

Termination of a contract of insurance in force. Also known as Termination, Dissolution.

CAPITAL GAINS (loss)

The amount by which the sale price of an investment exceeds (falls short of) the original purchase price.

CENTRAL VACUUMING SYSTEM

Vacuum-cleaning system integrated into a building’s structure.

CERTIFICATION

Compliance with criteria defined by safe standards.

CHIMNEY

Shaft for conveying gases outside, connected to a dwelling via either the exterior or the interior.

CLAIM

A requirement by an individual or corporation to recover a loss covered by an insurance policy.

CO-INSURANCE CLAUSE

Clause in an insurance policy requiring the policyholder to maintain insurance at least equal to a specified minimum percentage of the actual cash value, failing which the policyholder must bear, in addition to the deductible amount, a proportionate amount of any partial loss. Also known as Guaranteed amount clause, Average clause, Rule of apportionment.

COLLATERAL

An asset that is pledged as insurance against the default of payment of a debt.

COLLISION

Accident involving impact of a vehicle against another vehicle or an object of some kind.

COMMERCIAL OCCUPANCY

The portion of a building used for the transaction of business.

COMMERCIAL PAPER

A form of debt that is short-term and issued by large corporations.

COMMON STOCK

A security representing ownership of a corporation’s assets. Voting rights are normally accorded to holders of common stock.

COMPREHENSIVE COVERAGE

A type of automobile insurance coverage.

CONSUMER PRICE INDEX

A statistical device that measures the change in the cost of living for consumers. It is used to illustrate the extent that prices have risen or the amount of inflation that has taken place and therefore the change in purchasing power of currency.

CONVERTIBLE

A condition attached to a security such as a bond, debenture or preferred share that may be exchanged by the owner, usually for common stock of the same company in accordance with the terms of the conversion privilege.

CONVICTION

Conviction under the Highway Safety Code or any other legislation governing vehicular traffic, for an infraction such as, for example, failure in the duties of a driver involved in an accident; violation of the traffic rules pertaining to school buses.

CORD OF WOOD

Legal unit of measurement defined by the Weights and Measures Regulations as “128 cubic feet of stacked roundwood (whole or split, with or without bark) containing wood and airspace with all bolts of similar length piled in a regular manner with their longitudinal axes approximately parallel.” This is about a track of wood of 4 feet on 8 feet on 4 feet.

CORPORATION, LEGAL ENTITY, CORPORATE BODY, CORPORATE PERSON

Corporation that does not include a partnership and is considered a separate legal entity, empowered to enter into and be bound by agreements.

CORRELATION

A measurement that describes the relationship between the returns of two risky assets. A positive correlation means their returns move together (one goes down, the other goes down). A negative correlation means the two assets’ returns move in opposite directions (one goes down, the other goes up) offering diversification.

COST

Dollar value.

COVERAGE 1. The nature of protection afforded by a particular policy. 2. Amount of insurance applicable to a person or property. At times, interchangeable with the terms Insurance and Protection.

CREDITOR

Corporation or individual to whom a sum of money is owed.

CURRENCY RISK

The risk that the exchange rate on a foreign currency will fluctuate in a direction that damages the position of an investor.

Top of page

– D –

DAMAGE

Any material or bodily loss or harm.

DEATH BENEFIT

Amount stated in policy to be paid to a survivor upon proof of death of the insured.

DEBENTURE

A form of debt instrument that is not backed by any specific collateral.

DEBRIS REMOVAL

A provision in an insurance policy most commonly found in fire insurance, providing indemnification for the cost of removal of the debris after a loss.

DECK

Roofless platform, generally made of wood and equipped with a rail, adjoining a house, either overhanging or supported by pillars.

DEDUCTIBLE

The amount of money that the policyholder must pay when a claim is paid by the insurance company.

DEFAULT RISK

The probability that an organization will not be able to make scheduled payments on its debt (i.e. Not pay as promised on a bond).

DEFERRED PROFIT SHARING PLAN

A profit sharing plan designed to provide benefits to the participants upon retirement. Benefits at retirement are based upon the sum total of the contributions made by the participants and the investment results of the money contributed. The plan must provide a predetermined formula for allocating contributions made to the plan participants.

DEFINED BENEFIT PLAN

A pension plan where the employer agrees to pay each employee a defined benefit (income) at retirement (i.e. 2% per year worked of the employee’s average salary for the best five years). With this kind of plan, the exact amount of income that plan members receive at retirement is predetermined.

DEFINED CONTRIBUTION PLAN

A pension plan where the employer agrees to pay a defined contribution (i.e. 5% of each employee’s salary or wages) into the pension plan for the employees. The actual retirement income can only be estimated prior to retirement.

DEGREE OF RESPONSABILITY

Driver’s share of responsibility for an accident.

DEPENDENCIES

In civil law, constructions and installations that are accessory to a dwelling but separated from it by a completely free space, or connected to it only by a fence or electrical or other connection.

DEPRECIATION

Reduction in value of property through use, aging, deterioration and obsolescence.

DISMEMBERMENT

Accidental loss of (or of the use of) a body part.

DIVERSIFICATION

Allocating investment money among several asset classes to avoid excessive exposure to one source of risk. Diversification may be among types of securities, companies, industries, or geographic locations.

DIVIDEND

A portion of the profit of a corporation that is left over from operations and is disbursed to its shareholders. The amount of the dividend is decided upon by the company’s board of directors.

DOLLAR-COST AVERAGING

An investment strategy where assets are purchased at regular intervals for a constant dollar value (i.e. $200.00 per month) instead of a constant number of shares (i.e. 50 shares per month) reducing the average share cost by acquiring more shares at lower securities prices.

DRIVER’S LICENCE, DRIVER’S PERMIT

Official written authorization permitting the bearer to operate a motor vehicle.

DRIVING CLASS

A term used when rating automobile insurance. Driving class indicates age of the operator, and/or sex and/or vehicle use.

DRIVING RECORD

A driving record is given to each driver. The record is determined by the experience, prior accidents, traffic tickets (speeding) and driver training. The better the driving record, the lower the risk.

Top of page

– E –

EAFE INDEX

The European, Australian, Far East index complied by Morgan, Stanley. It is a common benchmark for portfolios containing foreign equities.

EARNED INCOME

Any wages, salary, and income from employment.

EARNINGS RETENTION RATIO (plowback ratio)

Amount of money withheld from shareholders (not paid out as dividends) that the company reinvests. A high earnings retention ratio may decrease the amount of money an investor receives today in the form of dividends, but if the company can reinvest the money and earn a higher rate of return, it may result in an increase in the share value of the stock (price appreciation).

EARTHQUAKE

Rare phenomenon involving movements of the earth’s crust that may be violent enough to cause damage to property or dwellings.

EFFECTIVE DATE

Date on which a transaction comes into force.

EFFICIENT FRONTIER

A graph with risk and return on the horizontal and vertical axis that illustrates the return characteristics of a portfolio given different weightings of its assets. The ideal portfolio lies on the upper line of the graph. Anything below the Efficient Frontier is inefficient, as a portfolio exists with either a higher return at the same level of risk, or lower risk at the same level of return. An investment advisor may help to identify which portfolios lie on the efficient frontier for an individual with a certain level of risk tolerance.

EFFICIENT MARKET HYPOTHESIS

A theory stating that prices of securities reflect all information available. It assumes individual investors are aware of the same events as the management of a corporation.

ENDORSEMENT

An amendment added to a written document, particularly an agreement between parties, such as an insurance policy, altering its provisions.

EQUITY

Value of a property in excess of claims or liens against it.

EXCLUSIONS

Risks, perils or properties defined in the policy as not covered.

EXTERIOR FINISH

Material used to build the outer walls of a dwelling. Also referred to as Exterior cladding.

Top of page

– F –

FACE VALUE

The amount of money the issuer agrees to pay upon the maturity of a debt instrument.

FIFO

The first-in, first-out accounting method of valuing inventory. It assumes that the first units in are the first to be sold and the units sold are costed at the initial price.

FINANCIAL RISK

Economic risk that is associated with the use of borrowed funds (leveraged funds).

FIRE HYDRANT

Pipe, on the side of a street or wall of a building, with a valve for drawing water, used by firefighters.

FIRE STATION, FIRE HALL

Building housing firefighting equipment and firefighters.

FIREPLACE

Type of heating used in some dwellings.

FRAUD

An act of willful deception and dishonesty carried out with a view to securing some advantage, to which one is not entitled.

Top of page

– G –

GENERAL PROVISIONS

Portion of an insurance policy that specifies the obligations of the insurer and insured.

GLASS INSURANCE

Insurance against breakage of windows in an automobile or building.

GROWTH STOCK

Stock of a company, which has reinvestment opportunities yielding a higher return than the market (fundamental to the growth strategy of stock selection for a portfolio).

GROWTH STRATEGY

An active portfolio management style that seeks out stocks with future investment opportunities with anticipated rates of return greater than other stocks.

GUARANTEED INVESTMENT CERTIFICATE (GIC)

An investment that offers a guaranteed rate of return for a defined period of time.

Top of page

– H –

HEATING

Type of heating in a dwelling.

HIT-AND-RUN

The failure of the driver of any kind of vehicle to stop knowing that he or she is the direct or indirect cause of an accident.

HYPOTHECARY CREDITOR

Corporation or person to whom a sum of money is owed and who has registered its security on the properties (movable or immovable) given as a guarantee by the hypothecary debitor.

Top of page

– I –

INCOME FUND

A mutual fund that invests primarily in fixed income securities such as bonds, mortgages and preferred shares. The primary objective is to produce income for investors while pursuing capital.

INCREASE IN PERIL, INCREASE IN HAZARD

Circumstances causing greater peril.

INCREASE IN PREMIUM

Charging of a higher premium following alterations to a contract or renewal of a policy.

INDEMNITY

Amount paid out as compensation for a loss incurred.

INDEX FUND

A mutual fund that is constructed from similar stocks with similar weights as a market index. This may be used as an investment vehicle by itself or it may be used as a benchmark against which a portfolio’s performance can be measured.

INITIAL PUBLIC OFFERING (IPO)

First sale of stock by a private company (usually through a broker) seeking to become publicly held.

INSTITUTIONAL INVESTORS

Large-scale buyers and sellers of financial instruments such as pension funds, trust companies and mutual funds.

INSURANCE CERTIFICATE

Document issued by an insurance company or broker attesting that a particular piece of property is insured.

INSURANCE LIMITS

Amount of indemnity limited to a fixed amount according to category of property.

INSURED

Corporation or individual underwritten by an insurance policy against the consequences of an event which could damage his assets, life, health and physical well-being.

INSURED PERILS, RISKS COVERED

Perils identified in the insurance contract as being covered.

INSURER

The company providing the insurance coverage.

INTEREST RATE RISK

Risk associated with fluctuations in interest rates that have the effect of making one financial instrument more appealing than another.

ISSUE DATE

Date on which an insurance contract comes into force.

Top of page

– J –

JEWELLERY

Watch, ring, necklace, chain, bracelet, brooch, etc.

Top of page

– L –

LAY-UP

Suspension of some coverage while a motor vehicle or other belongings are in storage.

LEASEHOLD IMPROVEMENTS

Physical improvements beyond simple maintenance or repairs that increase the value of a property.

LEGAL LIABILITY

Liability imposed by law to pay for harm (material damage or physical injuries) done to others.

LESSOR, LANDLORD

Corporate or private individual who leases property.

LIABILITY INSURANCE

Insurance which warrants the insured against the monetary consequences of the obligation to indemnify the third party as a result of an act of negligence.

LIFO

The last-in, first-out accounting method of valuing a company’s inventory. It assumes that the most recent additions to inventory are the first ones to be sold and values them at current market prices.

LIMITED LIABILITY

The nature of stocks restricts the amount of money an investor may lose to the amount they have invested in case of company bankruptcy. Shareholders are not liable for the debts of the corporation.

LIQUIDITY

The ease with which an instrument may be bought or sold at a price that is close to its fair market price.

LIQUIDITY RISK

The risk that an individual or firm will meet in raising funds to satisfy commitments associated with financial instruments. It may be caused by an inability to sell a financial asset quickly and close enough to its actual value.

LOAD

Commissions charged to holders of mutual fund units.

LOSS FREQUENCY

Number of consecutive losses.

LOSS OF USE

Inability to use property that has destroyed or damaged by an insured peril.

LOSS RATIO

Losses incurred expressed as a percentage of premiums. Also referred to as Claims ratio.

Top of page

– M –

MAKE AND MODEL

Manufacturer and model names of a motor vehicle.

MANAGEMENT EXPENSE RATIO (MER’s)

The sum of all the expenses associated with managing a mutual fund divided by the fund’s average net assets.

MANUFACTURER (VEHICLE)

Name of the manufacturer of a make of automobile.

MARKET CAPITALIZATION

The total dollar value of all outstanding shares of a company.

MARKET TIMER

An individual who believes he or she can predict the direction of future movements of the markets and exploit them for profit.

MARKET TIMING

The allocation of investment funds between the money market (i.e. T-Bills, GICs, savings accounts) and the stock markets. Money is invested in money markets when stock market performance is anticipated to be lower and in stock markets when the return on money market products is expected to be lower.

MARKET VALUE

The current price in a fair market of financial instruments.

MATURE AGE DISCOUNT

Reduction of premium payable according to the age of the insured.

MISREPRESENTATION

The assertion of a material fact which the insured knowingly distorts.

MISREPRESENTATION, FALSE REPRESENTATION

Intentional provision of false information to an insurer by an insured when giving a notice of loss.

MONEY MARKET FUND

A mutual fund constructed of short-term, highly liquid, low-risk debt instruments.

MORTGAGE BOND

A bond that has property pledged as security of payment.

MORTGAGEE

A person to whom property is mortgaged.

MOTION SENSOR

Component of an alarm system.

MOVABLE PROPERTY

Property owned or used by an insured which does not qualified as real estate.

MUTUAL FUND

A pooling of the money of a group of investors with similar investment objectives in order to provide increased diversification at a lower cost. The cost of professional money management is split among all investors in the fund

Top of page

– N –

NEGLIGENCE

Failure to use the degree of care expected from a reasonable and prudent person.

NET ASSET VALUE PER SHARE

The market value of one unit of a mutual fund as quoted daily in the papers. It is calculated as the total assets less liabilities divided by the number of shares outstanding.

NEW BUSINESS

New insurance policy covering a particular risk.

NEW VALUE, REPLACEMENT VALUE

Cash value equivalent to what it would cost to purchase a new item similar to one lost if it were new. In this case the insurer applies no deduction for depreciation.

NO LOAD FUND

A mutual fund that does not charge an investor a fee for buying or selling.

NUMBER OF UNITS, NUNBER OF APARTMENTS

Number of units in a residential building.

Top of page

– O –

OCCASIONAL DRIVER

An operator, who is not the principal operator but will occasionally operate the vehicle (such as a son or daughter of the insured).

OUTBOARD MOTOR

Motor attached to the outside of a boat.

OVERINSURANCE

Insurance amount that is greater than the full value of the insured property. Also referred to as Pyramiding.

OVERTURNING

Overturning of a motor vehicle.

OWNER

Person who owns property.

OWNER OCCUPANT, HOMEOWNER

Person who owns a dwelling and resides there permanently.

Top of page

– P –

PAPER

A term used to describe any short-term debt instrument.

PASSIVE STRATEGY

The investing of funds in a market index portfolio without attempting to find underpriced (value) securities or growth securities. This investment strategy reduces the management costs associated with it, as there is little research performed and fewer brokerage fees.

PENSION PLAN

A formal arrangement through which the employer, and in most cases employee, contributes to a fund to provide the employee with a lifetime of income at retirement.

PERIL

The event that caused a loss covered by the policy and which could imply the intervention of the insurance company.

PERSONAL LIABILITY

A form of liability insurance for individuals in the event that they become liable to pay money for damage or injury caused to others. This form does not include automobile liability.

PLUMBING

System of pipes for the conveyance of water or gas in a building. Also, the work performed to install such a system.

POLICY

Contract between the insured and the insurer setting out the terms and conditions of the insurance and specifying the rights and obligations to which each party has agreed.

POLICYHOLDER

Person in whose name an insurance policy is written and who pays the premiums. Not necessarily synonymous with “insured.”

PORCH, VERANDA

Roofed gallery attached to the exterior of a building and used for sitting out of doors. May be open or closed.

PORTFOLIO

The entire set of stocks, bonds, real estate, and other assets an individual possesses.

POWER OF ATTORNEY

Generally speaking, legal say over the affairs of another person’s assets and the ability to execute legal documents on their behalf.

PREFERRED STOCK

Stock in a company that usually has no voting rights but that generally provides an income stream through dividends and receives priority of payment before common stock in the event of bankruptcy.

PREMISES

Location and/or building insured.

PRICE-EARNINGS RATIO

The ratio of a firm’s stock price to its earnings per share, which is commonly used as a valuation tool of the stock.

PRINCIPAL OPERATOR

The person who drives the vehicle the most, usually the named insured.

PROFESSIONAL THIRD PARTY LIABILITY INSURANCE

Insurance designed to indemnify the insured for loss incurred through legal liability resulting from actions performed as part of the practice of a profession.

PROOF OF LOSS

A formal statement made by a policyholder to an insurance company regarding a loss. It is intended to give information to the insurer to enable them to determine the extent liability of the financial compensation to be paid for a covered loss.

PROPERTY

A thing owned. Also, the right of ownership.

PROPERTY & CASUALTY (P & C) INSURANCE

Insurance covering property (e.g. home, car). Also called General insurance, Damage insurance, Non-life insurance.

PROSPECTUS

A report that mutual fund companies are required by the securities acts to issue to investors and/or people wishing to review the content of a mutual fund before they invest in it. They normally contain past fund performance, asset selection criteria, individual asset weightings within each fund and expense ratios for the funds.

PUBLIC LIABILITY

Legal obligation to pay for damages caused to other individuals or firms.

Top of page

– R –

RATE

Fixed price for a certain coverage amount for a given period. May be expressed in dollars, cents or as a percentage.

REAL RATE OF RETURN

The rate of return adjusted for inflation. A negative real return indicates wealth destruction as the assets are worth less today than yesterday.

RECONSTRUCTION COST

Appraisal enabling determination of the replacement cost of a dwelling.

REFUND

Repayment of a portion of the insurance premium.

REINSTATEMENT

Restoration of insurance following lay-up.

REINSURANCE

Placing of a part of the insurance (i.e. a portion of the risk) with another insurance company (the reinsurer), which assumes the responsibility in return for a percentage of the premium paid by the insured.

REINVESTMENT RISK

The risk that future returns will be less than they are today and future proceeds will have to be reinvested at the lower rate.

RENEWAL

Automatic continuation of an insurance contract upon payment of the premium.

RENTAL VALUE, LEASING VALUE

Value of rental amounts lost following loss.

REPLACEMENT COST

The cost to replace or repair an item without deduction for depreciation.

REPLACEMENT COST (AUTO)

Claim settlement without deduction for depreciation, but not exceeding the vehicle purchase price.

REPLACEMENT VALUE

Cash value established for the replacement of an item according to its current cost, without depreciation.

RETIRING ALLOWANCE

An amount received upon retirement from employment in recognition of long service or, with respect to loss of employment.

RETURN

A measure of performance that takes into consideration the initial value of the investments, the end value of the investments and includes earnings from reinvesting dividends.

RIOT

Disturbance of the peace by a crowd of people.

RISK (Insurance)

An estimate of the probability that certain perils will occur.

RISK (Investment)

The degree to which an investment may lose its original value.

RISK PREMIUM

Additional rate of return offered by assets that are risky (the return is uncertain) in nature. The higher the risk, the higher the risk premium. Historically the risk premium on T-Bills is less than bonds, which is less than the risk premium on stocks.

RISK TOLERANCE

The degree of risk an investor is willing to bear.

RISK UNDERWRITING

Analysis, as part of an insurability evaluation, of the circumstances surrounding a risk for the purpose of assessing its chances of being realized.

RISK-FREE RATE

A guaranteed rate of return on an essentially risk-free investment asset (e.g. T-Bills).

ROOF ASSEMBLY

Covering and supporting framework on top of a building.

Top of page

– S –

SALVAGE

The remaining value of property after severe damage by fire or other peril. The overall loss is reduced by the salvage value. Damaged property may be quite saleable and some property may be partially damaged, but repairable and then saleable.

SHARE

Represents one unit of ownership in a corporation.

SHORT CORD

Unit of measurement not recognized in Canada for the sale of woodheat.

SHORT RATE CANCELLATION

The cancellation by the insured of a policy before its intended expiration. The insurance company pays a return premium that is less than the amount that actually remains unearned. In this way the policyholder has paid a penalty for a mid-term cancellation.

SLOW COMBUSTION STOVE

Means of heating a dwelling. Sometimes referred to as Slow burning stove or simply Stove.

SPECIAL CONDITIONS

Specific criteria of a policy applicable to the specific situation or needs of the insured and that determine, as the case may be, the purpose of the insurance, the coverage conditions, and the premium payable. Also known as Particular conditions, Particulars, Schedule.

SPECIFIC INSURANCE

Refers to a policy covering items that are individually or specifically described.

STANDARD CONDITIONS

Conditions valid for all insured who own the same type of policy; basic conditions applicable to an insurance policy.

STANDARD DEVIATION

A statistical measure of the dispersion or spread of returns of an asset over a period of time. A higher standard deviation indicates higher volatility (risk) because actual returns vary over a larger range than assets with lower standard deviations.

STARTER KILL

Device that prevents a vehicle engine from being started.

STATEMENT OF CLAIM

A written statement by a plaintiff detailing the facts that support the claim against the defendant and the compensation sought.

STORAGE

Safekeeping of property in a warehouse.

SUBROGATION

Process by which an insurance company pursues rights or recovery against a third party responsible for insured loss or damage after it has paid for the said loss.

SUBSIDIARY COVERAGE

Coverage consisting of accessory elements that support other, more important elements.

SURCHARGE

Increase in premium amount according to perils.

Top of page

– T –

TAX DEFERRAL

The postponing of taxes until a later date through various legal methods.

TENANT, LESSEE

Individual or corporation who leases property from a lessor.

TERM DEPOSIT

A cash deposit for a specified period of time at a guaranteed interest rate.

TERM LIFE INSURANCE

A form of life insurance providing coverage for a defined period of years. It pays out a death benefit only (money received upon the death of the insured if within the term of the policy). It does not have a cash or surrender value.

TERRITORY

Underwriting element of an insurance premium relative to a specific geographical area.

THEFT

Wrongful taking of property without the consent of its owner.

THIRD PARTY

Person other than the insurer and the insured who is involved in a loss.

THIRD-PARTY LIABILITY AUTOMOBILE INSURANCE

Third-party liability automobile insurance is designed to indemnify the insured for financial loss incurred through legal liability for bodily injury and damage to property of others caused by an accident arising out of ownership or operation of an automobile.

TOP-DOWN MANAGEMENT STRATEGY

Stock selection is based on forecasts about the economy and sectors within it. Equities that are expected to benefit from the anticipated events in the economy are chosen.

TOTAL DISABILITY

Complete loss of physical capacities.

TOTAL LOSS

Loss value greater than replacement value of the property.

TRAILER

Motorless vehicle designed to be pulled.

TRAILER FEE

A percentage fee, based on the value of a client’s portfolio, that investment fund companies may pay to the advisor that sold the funds.

TRANSPORTED GOODS

Goods transported in any type of vehicle.

TREASURY BILL (T-Bill)

A short-term debt instrument issued by governments with a maturity of less than one year.

TRUST

An asset established by one party for the benefit of another.

Top of page

– U –

UMBRELLA POLICY

A special form of liability policy designed to protect the policyholder for certain unknown contingencies over and above normal coverage and to provide a higher limit of insurance.

UNDERINSURANCE

Insurance amount that is less than the full value of the property insured.

UNDERWRITING FILE

Underwriting component of an automobile insurance premium; depends on the number of years of driving experience and the driving record.

UNIT

One of the equal parts into which ownership of a mutual fund is divided.

UNIVERSAL LIFE INSURANCE

A life insurance policy that allows for a varying death benefit and premium level over the term of the policy with flexible investment options for the cash balance value of the policy.

UNOCCUPIED BUILDING

A building with contents, but no occupant (occupant does intend to return).

UTMOST GOOD FAITH

A basic principle of any insurance contract. Both parties to the contract are bound to exercise good faith and do so by a full disclosure of all information relevant to the proposed contract. Also known by its Latin equivalent Uberrimae fidei.

Top of page

– V –

VACANT

Status of a dwelling whose occupants have left it with no intention of returning; also, status of any newly built dwelling between the time the work is completed and the time the first occupants move in.

VACANT BUILDING

A building with no occupants or furnishings.

VALUABLES

Articles of personal property having great worth.

VALUE MANAGERS

Money managers who actively search out stocks that are under-valued in hopes that, once the market recognizes the true value of the stocks, the stock value will appreciate.

VANDALISM

Intentional destruction or damaging of property motivated by malice or revenge, referred to as Malicious mischief.

VEHICLE REGISTRATION NUMBER

Number appearing on a vehicle licence plate.

VIOLATION, INFRACTION

Breach of a law or of a regulation.

VOLATILITY

The degree to which instruments/markets vary in price. Lower volatility results in less price variance.

VOLUNTARY MEDICAL PAYMENTS

Coverage in the second part of the home insurance contract providing for voluntary payment to the insured, for bodily injury suffered by a person other than the insured and for which medical expenses are incurred.

VOLUNTARY PROPERTY DAMAGE PAYMENT

Coverage in the second part of the home insurance contract providing for voluntary reimbursement to the insured, for repair/replacement of property other than the insured’s.

Top of page

– W –

WATERCRAFT, BOAT

Craft designed for navigation on water.

WHOLE LIFE INSURANCE

A form of insurance that provides coverage until the death of the policy holder. It combines a death benefit with a savings plan. The savings portion of the policy can be received before death.

WINDSTORM

Weather phenomenon characterized by very strong winds capable of damaging property or dwellings.

WOOD STOVE

Means of heating a dwelling.

WRAP ACCOUNT

An account offered by investment dealers whereby investors are charged an annual management fee based on the market value of invested assets.

Top of page

– Z –

ZERO-COUPON BOND

A bond that is sold below face value, offers no interest payments, appreciates over time and distributes only one payment at maturity. The return is the difference between the price paid for the bond and the face value.