Insurance Terms

Additional Insured
Anyone besides a policyholder who is covered by an insurance policy.

Aggregate Limits
The maximum amount of money that an insurer is contracted to provide the policy holder in a specific policy period. For example, on a particular business liability policy an annual aggregate limit would be the total amount the insurance company would pay for all claims on that policy in a given year.

Additional Insured
Anyone besides a policyholder who is covered by an insurance policy.

Appraisal
A professional assessment of property’s value on the current market (including real estate and other types of property).

Arbitration
A way for two parties to end a dispute out of court.

Assessed Value
The value of commercial property as determined by city hall or a municipal assessor.

Blanket Insurance
A policy that allows a business owner to insure multiple property types at one location, or one property type at multiple locations, all under one policy.

Builders Risk Insurance
Provides protection for all building materials – on-site, off-site, and in transport – that a builder uses during the course of a construction process.

Business Interruption Insurance
If your business must shut down due to a covered loss, this form of coverage can provide reimbursement for the expenses that would have normally occurred if the business had been operating.

Business Owners Policy (BOP)
A combined policy where property insurance and liability insurance are packaged together at a cost savings for small businesses.

Certificate of Liability Insurance
A document that proves your business has liability insurance.

Claim
A formal request for compensation that you file with your insurance provider.

Claimant
A person who files a claim in order to receive benefits.

Claims Adjuster
An investigator often employed by the insurance company to verify Property Insurance claims.

Coinsurance
Coinsurance can refer to two different things: Insurance that is provided by more than one insurance company.; Coverage rules set by your insurer.

Commercial Property Insurance
Meant to protect the building and other business property that you own or lease. Note that equipment insurance is typically a separate policy.

Commercial Auto Insurance
Covers you, your employees and company vehicles for injuries and damages, whether the vehicles are leased, owned, or rented. Passengers are also covered.

Commercial Earthquake Insurance
Provides coverage for property damaged in an earthquake. Typical business property insurance will not pay for these damages.

Cyber Liability Insurance, First Party
Insurance coverage for the cost to respond to a hack or data breach on your computers.

Cyber Liability Insurance, Third Party
Liability insurance for businesses sued after their customers are hacked.

Deductible
The sum of money you, the insured, must pay out of pocket before your insurance benefits kick in.

Directors and Officers Liability Insurance (“D & O”)
If the directors or officers of a company are accused of wrongful or negligent acts, this coverage can protect the company’s financial assets from legal settlements and the cost of legal defense.

Employer’s Liability Insurance
If an employee files a lawsuit after being injured on the job, this insurance protects the employer. If an employee has workers compensation benefits, the right to sue is limited.

Employment Practices Liability Insurance
Provides company protection if someone is accused of an employment-related claim, such as harassment.

Errors and Omissions Insurance (“E & O”)
Provides liability protection in the event that an employee or the business commits a professional error or act of negligence that results in a client’s personal loss or injury. This can be anything from a physician’s error to advice from a financial adviser that leads to a monetary loss.

Exclusions
These are certain risks that aren’t covered by your insurance policy. You may need to purchase extra coverage for further protection against excluded risks.

Expiration Date
The day your insurance coverage ends.

Fidelity Bonds
A type of insurance that protects an employer from dishonest employee acts.

Fiduciary
An employee or contractor of the company that has been entrusted with the handling of benefit funds.

General Liability Insurance
Protects businesses from most situations where the company could be held liable for bodily injury or property damage. It does not include commercial vehicle or professional liability coverage, which are covered separately.

Grace Period
Extra time after a policy’s expiration date when a small business can still be covered.

Group Health Insurance
Medical insurance that an employer offers to employees, who are covered or reimbursed for healthcare services according to the specific health plan chosen.

Group Life Insurance
Insurance offered by an employer that allows the employee to select a death benefit, which is distributed to named beneficia- ries at the time of the employee’s death.

Hired and Non-Owned Auto Insurance
Auto coverage for rental cars and employee vehicles.

Homeowner’s Insurance
A policy that protects your personal real estate.

Indemnity
The compensation you owe an injured or damaged party.

Inland Marine Insurance
Coverage that protects your business equipment and tools in transit.

Insurance Agent/Broker
People who sell insurance policies – they do not provide insurance.

Insurance Company/Provider
Entities – also known as “insurance providers” and “insurance carriers” – that provide insurance to businesses and individuals.

Insured
A person or organization covered by insurance.

Key Person Insurance
Provides business life insurance on one key person in a business. It issues benefits to help offset earnings loss and find a replacement for the key person.

Legal Liability
A responsibility to pay debts, which is a part of both criminal and civil law.

Liability Insurance
A general term for the type of “risk financing,” which can protect your business when someone files a lawsuit against it.

Loss Control
A risk management tool that aims to reduce the amount of loss a company experiences.

Marine Insurance
Provides protection for company equipment or goods in transport. It also provides coverage if the vehicle transporting the goods is damaged, and provides liability coverage for third parties. You can choose between ocean marine coverage and inland marine coverage.

Mediation
A way for two parties to resolve a dispute out of court with the help of a neutral third party (the mediator).

Named Peril
An event or hazard that is listed as covered on your business insurance policy, and will be covered if it occurs.

Performance Bond
A type of surety bond that ensures the policyholder will complete a contract.

Peril
Any exposure to risk.

Personal Liability Insurance
Your personal liability coverage is part of your homeowners or renters insurance policy. This coverage protects you against personal financial losses if you are responsible for another person’s bodily injury or property damage. Legal defense cost is also covered.

Premium
The amount that you pay for insurance coverage.

Professional Liability Insurance
Liability Insurance that covers lawsuits when you are sued for professional errors or omissions.

Proof of Loss
A formal statement that you, the insured, send to your insurance provider in the event of a loss.

Property Insurance
Insurance coverage that helps businesses replace and repair damaged property.

Qualifying Event
Any significant change to your business that affects your insurance needs.

Quote
An estimate of your premium cost for a specific type of insurance policy.

Replacement Value
The value of purchasing a new replacement for lost or damaged property.

Rider
Also referred to as an endorsement, this is an addendum that will alter or enhance the current policy’s terms. For example, you may be able to add an equipment rider to your property insurance to protect your equipment.

Risk Management
The method of identifying and minimizing risks that threaten your business.

Settlement
A voluntary resolution between the parties in a lawsuit.

Small Business Insurance
Insurance protection designed specifically for the risks of freelancers, independent contractors, and owners of small businesses.

Surety Bonds
A surety bond is a three-party bond that guarantees the principal will perform the obligations set forth by the obligee or else the surety will step in to help the obligee recuperate losses.

Third Party
Someone other than the insured and the insurance provider.

Umbrella Insurance
An umbrella policy is extra liability coverage that can dramatically increase a firm’s ability to settle claims or cover the cost of court judgments in the event of a sizable lawsuit. Typically sold in increments of $1 million, umbrella liability is available at a relatively low cost.

Underwriting
Underwriting is the process that takes place with most insurance applications. Underwriters review potential insurance risks and set the appropriate premiums.

Workers Compensation Insurance
Provides compensation for an employee’s medical bills, lost wages, rehabilitation and disability coverage in the event of a work-related illness or injury.