Glossary of Insurance Terms

Printed with permission from the Insurance Institute of Canada.

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A B C D E F G H I J L M N O P Q R S T U V W

Malicious Mischief
Malpractice
Manufacturer's and Contractor's Liability Policy
Market Value
Masonry Construction
Material Fact
Medical Payments Insurance
Mercantile Risk
Merchandise
Merit Rating
Minor
Misrepresentation
Money and Securities (Broad Form) Rider
Moral Hazard
Mortgage Clause
Multiperil Policy
Mutual Insurance Company
Mysterious Disappearance

Malicious Mischief
Injury to the rights or property of another with a wicked or perverse intent.

Malpractice
A performance by a professional which is deficient in skill from what might ordinarily be expected of a professional person. The standard of performance to which a professional person will be held is necessarily higher than the standard which an unskilled person would be expected to display.

Manufacturer's and Contractor's Liability Policy
A policy which provides coverage against the liability arising from the ownership of property or the carrying out of operations. This type of policy does not provide any coverage with respect to the hazards of products or completed operations.

Market Value
The value of an asset based on a current market valuation, e.g., the amount for which the item could be sold on the open market.

Masonry Construction
A form of construction identified by self-supporting walls of masonry, e.g., brick, stone or hollow concrete block, but with floors and roofs which may be constructed of combustible materials, usually wood.

Material Fact
Something affecting a contract of insurance important enough to change the agreement between the company and the policyholder. Material facts must be disclosed if asked about. Failure to do so may result in a voiding of the policy involved. An exception to this general rule is that, with respect to ocean marine insurance, all material facts must be disclosed whether the insurer asks the appropriate question or not.

Medical Payments Insurance
A provision in an insurance policy to pay certain specified medical expenses of others irrespective of the insured's legal liability.

Mercantile Risk
Hazard or peril of a merchant in selling his stock of goods.

Merchandise
Those goods which a commercial enterprise ordinarily sells to its customers.

Merit Rating
A system of rating in which the loss experience of a particular risk is a factor in determining the rate for that risk.

Minor
A person under the age of being legally capable of transacting business on his own behalf.

Misrepresentation
An incorrect statement made about a material fact. Misrepresentation can be innocent, e.g., arising from an oversight; fraudulent (in other words, a deliberate untruth with intent to deceive) or the result of extreme carelessness where a statement is made without regard to whether it is true or false. When a misrepresentation is discovered, the insurer may either continue the contract or treat the contract as void with a full return of any premiums paid. In order for the insurer to successfully treat a policy as void, the misrepresented fact must be material to the risk.

Money and Securities (Broad Form) Rider
A broad form of policy protecting against loss of money or securities. There is no coverage for losses caused by, among other things, employee infidelity.

Moral Hazard
Danger of loss arising from the nature of the insured rather than from the physical nature of the risk. This would encompass those instances where the chance of loss is increased by an insured's carelessness, incompetence, recklessness, indifference to loss or an insured's fraudulent nature.

Mortgage Clause
A clause in an insurance policy which stipulates the rights and obligations of the insurer and the mortgagee. The main characteristics of this clause are that the mortgagee is granted protection in the event a loss is denied due to the actions of the insured (provided that the mortgagee was not aware of the insured's wrongful action) and, in return, the mortgagee accepts responsibility to advise the insurer of any misrepresentation or change in risk of which the mortgagee is aware.

Multiperil Policy
A policy which is a combination of fire and casualty (or fire, casualty and inland marine coverages) in a single contract such as the Homeowner's Policy.

Mutual Insurance Company
An insurance company which is owned by its policyholders who formed an association for the purposes of insuring one another against the possibility of fortuitous loss. Each policyholder pays a premium for his or her own policy. If at the end of the fiscal year the mutual insurance company declares a profit, the profit is shared amongst all the policyholders. If the company declares a loss there is also provision for the policyholders to be assessed a levy to make up for this shortfall. See Cash Mutual, Farm Mutual.

Mysterious Disappearance
The disappearance of insured property in an unexplained manner. For example, if a ring is left in a public place and the owner returns later to find the ring gone, it is reasonable to assume that the ring has been stolen. However, there is no direct evidence that this is in fact what happened. This would be an example of mysterious disappearance.