Glossary of Terms

Car insurance has many terms that you will hear throughout the life of your policy and even when you’re researching the market before you purchase. It is critical to become familiar with each of these terms and to know what they mean to you. This glossary will give you a better understanding of the common car insurance definitions.

Accident Benefits

Accident benefits coverage is money paid in an accident if you are injured or killed in an accident. It is paid regardless of who is at fault for the accident. Accident benefits can cover expenses such as:

  • Funeral Expenses
  • Death
  • Income Replacement
  • Dependent Care Expenses
  • Medical or Dependent Care Benefits

There are limitations to accident benefits, such as a person driving without insurance. While there are minimum amounts of coverage that must be carried, these amounts can be raised to higher amounts.

All Perils

All Perils covers collision and comprehensive coverage.


At-fault means the person that is responsible for causing an accident to occur.


An insurance broker is an agent who helps find the best coverage for your needs from the different insurance companies that they are contracted with.

Chargeable Loss

Chargeable loss is the percentage of fault that each of the drivers involved in the accident are accountable for. Fault determination rules set in place by the Insurance Act are used to determine these percentages. This helps insurance companies deal with claims quicker and more efficiently.

Collision Coverage

Collision benefits cover damages to your vehicle after an accident, with another car or an object.

Comprehensive Coverage

Comprehensive coverage pays for losses not covered in collision coverage. The coverage will pay for any “Act of God”, such as flood, vandalism, theft, or fire.


The deductible is the amount that you choose when starting a policy that you must pay out of pocket before insurance benefits will cover costs of an accident. Driver’s can choose a higher deductible amounts to help lower the cost of their insurance premiums.

Direct Compensation & Property Damage Coverage

This type of coverage pays benefits to you if another car causes damages to your vehicle or contents inside. You may claim benefits under this coverage even if you are at-fault for the accident. If another person causes the damages, you collect benefits directly from your insurance agency.

Driving Convictions

Driving convictions are moving violations on your driving record. This is anything under the Criminal Code of Canada and can include, but is not limited to, speeding tickets, improper passing, following to closely, and impaired driving. Driving convictions can increase the price you will pay for your insurance premium with each conviction.

Driving Record

This is your past driving history, including the number of years you are licensed to drive, convictions and accidents. Your driving record can be used by insurance companies to determine the amount you will pay for your insurance premiums based on the information provided in the record.


An endorsement is an attachment to your insurance policy that allows for additions or deletions of coverage. It takes place over the original policy.

Facility Association

Facility Association is a group of insurers that all insurance companies belong to. Certain insurance companies are assigned directly to the Facility Association. This is done to ensure that all drivers, particularly those considered to be high-risk drivers, may still have a chance of obtaining insurance.

Fault Determination Rules

Fault determination rules are used to determine who is at fault for an accident and what percentage of fault they have. Rules are set in place by the Insurance Act, and can help insurance companies more quickly and fairly deal with auto accidents.


Premiums are the amount of money paid to the auto insurance company to provide coverage to you.

Private Passenger Automobile

A vehicle that is owned and used by individuals or families for personal use.

Property Damage

Damaged caused by a car to others property. This can include fences, mailboxes, telephone poles, etc.

Serial Number

See “VIN”

Specified Perils

This coverage pays for losses to your vehicle that are caused by fire, theft or attempted theft, wind storm, hail, lightning, explosion, riot, earthquake, falling or forced landing of aircraft or parts of the aircraft, or the stranding, sinking, burning, derailment or collision of any kind of transport in or which an insured car is being carried on land or water.


Underwriting is the process of reviewing, accepting or rejecting insurance risks in drivers. Risks are categorized and the appropriate premium is charged based on risk.


Stands for vehicle identification number. A VIN is a unique 17 digit number consisting of letters and numbers designed to identify a car based on year, make, and model of the vehicle. It is usually found underneath the driver’s side dashboard, and is also known as a serial number.

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