A
Accident
A sudden, unexpected or unintentional event.
Accidental Death and Dismemberment
(AD&D)
This coverage pays a lump sum benefit for accidental
loss of life, limb or sight.
Accounts Receivable Coverage
Pays for the cost of replacing or restoring
your accounts receivable records if they're
damaged by fire, windstorm, vandalism or any
other covered incident. It also may pay for
amounts due from your customers that you are
unable to collect, subject to the policy limits.
Actual Cash Value
There is two ways to calculate the value of
your property. Replacement cost valuation is
the full amount necessary to replace your property
today with property of like kind and quality.
The other valuation method is actual cash value,
which is the cost to replace your property today
with materials of like kind and quality, less
depreciation.
Advertising Liability
Your business can incur liability from advertising
and associated activities. Advertising liability
includes publishing information that is inaccurate,
slanders or libels someone; violates their right
of privacy; copies their advertising ideas or
style of doing business; or infringes on their
copyright, title or slogan.
Aggregate Limit
A type of policy limit in liability policies
that restricts coverage to a specific sum for
covered losses that occur during the policy
period.
Auto
A land motor vehicle, trailer or semi-trailer
designed for travel on public roads, including
attached machinery or equipment, but excluding
mobile equipment. Mobile equipment is land vehicles
that are not required to have motor vehicle
registration.
Automatic Sprinkler
A property protection device to prevent damage
by fire. The sprinkler head is made of a substance
that melts at a low temperature and releases
a spray of water or dry chemicals to extinguish
or control the fire. Some insurers discount
property insurance rates if your business has
automatic sprinklers.
Automobile Collision Coverage
Covers damage to your vehicle from an accident
involving another vehicle or a stationary object
such as a building, telephone pole or guardrail.
Automobile Comprehensive Coverage
Covers physical damage to your vehicle caused
by a variety of risks, including fire, lightning,
theft, vandalism, hail or flood, but not caused
by a collision.
Automobile Liability Insurance
Protects your business against loss if someone
claims that you or someone driving your car
with permission is legally liable for injuring
a third party or causing property damage.
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B
Bailees Customer Coverage
This coverage is used to insure against loss
to property of others that is in your possession,
regardless of your legal liability. It is needed
since standard Property and General Liability
policies limit or exclude exposures of this
kind.
Binder
A document you can use to show evidence of your
insurance coverage until you receive your insurance
policy. If you have a valid binder you are insured.
Blanket Coverage
Coverage under a single amount of insurance
for two or more properties or exposures.
Bodily Injury Liability
Liability for injury or death of someone (other
than you or your employee), including the cost
of care, loss of services and/or restitution
for death.
Boiler and Machinery Insurance
Protects your business in case of the sudden
and accidental breakdown of your steam boilers,
steam pipes, steam engines and turbines, machinery,
electrical equipment and mechanical equipment.
Sometimes these items are excluded from standard
property insurance policies. Some carriers now
use the term "Systems Breakdown Coverage"
or "Equipment Breakdown Coverage"
to refer to Boiler and Machinery coverage. Since
the terminology can have different meanings,
a policy should be carefully reviewed to determine
if traditional boiler and machinery coverage
is included in Systems Breakdown or Equipment
Breakdown.
Brands and Label Coverage
Pays for the cost of removing the brands and
labels from your damaged stock so it can be
salvaged.
Builder's Risk Coverage
Insures your commercial buildings under construction
against damage from fire, windstorm, theft and
other exposures. The coverage also applies to
property and building materials while in transit
and during temporary storage. The coverage may
apply to a single location or may be written
to cover multiple locations.
Building Coverage
Protection against physical loss or damage to
your building and other structures at the same
location due to fire and other covered incidents,
to the policy limit.
Burglary
Breaking and entering into someone else’s property
with the intent of committing a crime and with
visible signs of forced entry.
Burglary and Theft Insurance
Protects you from property losses due to burglary,
theft or larceny.
Business Income from Dependent
Properties
Provides coverage for loss of income resulting
from damage to the property of another business
on which the Insured depends to continue operations.
The other business is typically a supplier or
purchaser of the Insured's products. If the
other (dependent) property suffers a covered
loss and the Insured cannot obtain required
products or component parts from that facility,
the resulting loss of income is covered. Also
known as Contingent Business Income or Contingent
Business Interruption.
Business Income/Business Interruption/Extra
Expense Coverage
Reimburses your business for lost profits, fixed
expenses and the cost of restoring operations
if the business has to shut down due to direct
damage to your property. Reimbursement is usually
up to a year following the covered loss. Examples
of extra expenses include renting equipment
or another office space.
Business Owner's Policy (BOP)
A single policy that combines protection for
both property (buildings, personal property,
business interruption/extra expense) and general
liability coverage’s. Buying a BOP can be a
good deal for a business owner. The policies
often provide more complete coverage at a lower
price than separate policies would for each
kind of coverage.
Business Personal Property Coverage
Protects you against physical loss or damage
to your business' equipment, stock, furniture,
fixtures, and/or improvements caused by a fire
or other covered incident, to the policy limit.
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C
Cancellation
The termination of a policy before its specified
expiration date. The policyholder or the insurance
company can request cancellation, according
to the policy’s terms.
Casualty Insurance
Covers your legal liability for property damage
and bodily injury to others.
Catastrophe
An incident or series of related incidents involving
a substantial loss of property or causing substantial
liability across a wide geographic area.
Certificate of Insurance
A statement of coverage issued to an interested
third party that outlines insurance coverage’s,
limits, insurers, policy numbers and policy
terms. A certificate of insurance often is used
as proof of insurance in legal transactions
such as property leasing and obtaining a mortgage.
Claim
A request for payment of a loss that may be
covered under the terms of an insurance policy.
Claims-Made and Reported Coverage
Covers only claims that are made against the
Insured and reported to the carrier during the
policy period. Coverage is triggered by the
date a claim is made against the Insured, not
by the date of the actual wrongful act. Claims-made
is the typical coverage form for Professional
Liability, Directors' & Officers' and Employment
Liability policies. (See also Retroactive Date.)
Collision Coverage
(See Automobile Collision Coverage.)
Commercial Auto Insurance
Covers claims for which your business becomes
legally liable arising out of your business?
use of autos. It may include protection for
physical damage to an auto that is titled to
your business. Commercial auto insurance can
cover company-owned cars, trucks, buses and
other types of vehicles.
Commercial General Liability
Insurance
Covers claims brought by third parties against
your business alleging bodily injury, property
damage, personal injury or advertising injury,
subject to policy terms and conditions.
Commercial Package Policy
A Commercial Package Policy ("CPP")
is a coverage plan that includes a wide range
of essential liability and property coverage’s
for a commercial enterprise that may otherwise
be purchased separately. The package policy
usually features common policy conditions, common
declarations, and two or more coverage sections.
Compensatory Damages
Generally monetary damages sought by a claimant
to pay the costs of medical bills, lost income,
defense expenses, pain and suffering, etc. arising
out of an injury.
Comprehensive Coverage
(See Automobile Comprehensive Coverage.)
Computer Coverage
Reimburses you for any physical loss or damage
to your computer hardware, software, or data
and includes coverage for the cost to reconstruct
software or data.
Concealment
Withholding material facts from an insurance
company when applying for an insurance contract
or making a claim, with the intention of deceiving
the insurance company. This action may be grounds
for voiding the policy.
Consequential Loss
Loss arising indirectly or as a consequence
of a direct physical damage loss, including
time element losses such as business interruption.
Contingent Business Income (or
Contingent Business Interruption)
(See Business Income from Dependent Properties)
Contract
A legal agreement between two or more parties.
Contractor's Equipment Coverage
Reimburses you for the cost of renting tools
or equipment if yours are not available due
to a covered loss.
Contractor's Equipment and Tools
Coverage
Insures your equipment and tools used at your
job site, being transported between jobs, and
being transported from your primary location
to the job site. It may also cover the cost
of renting equipment and tools following a covered
loss to your own equipment and tools.
Contractual Liability Coverage
Provides coverage for certain liabilities you
assume in a written contract, subject to the
policy terms and conditions.
Counterfeit Money Order and Paper
Currency Coverage
Reimburses you for financial loss if a customer
pays you with a counterfeit money order or counterfeit
paper currency.
Crime Coverage
(See Employee Dishonesty Coverage.)
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D
Declarations
The portion of the insurance policy that contains
specific information, such as your name and
address, the coverage, limits of liability,
deductible, premium and policy term.
Deductible
The specific dollar amount you must reimburse
the carrier when a covered loss is paid on your
behalf by the insurance carrier.
Defense Costs Outside the Limit
Some liability policies provide coverage for
defense costs in addition to the policy limit.
Thus, the entire limit of liability is available
for loss costs.
Defense Costs Within the Limit
Many specialty liability policies, such as Professional
Liability, Directors' & Officers' Liability
and Employment Practices Liability, provide
defense cost coverage within the policy limit.
The limit of liability applies to both loss
and defense costs.
Depreciation
A decrease in the value of property over a period
of time as a result of use, wear and tear, or
obsolescence.
Design Services Liability Coverage
Protection for contractors against damages that
arise out of errors in design by the insured
contractor in conjunction with projects the
insured constructs. Most standard Business Owner’s
Policies exclude this coverage.
Directors and Officers Liability
A Directors and Officers Liability ("D&O")
policy provides protection against claims alleging
wrongful acts committed in the capacity of a
director or officer. A traditional D&O policy
covers only the directors and officers, and
provides no protection for the corporate entity.
However, there are policies available that extend
coverage to all employees and provide some protection
for the entity. Many D&O policies can also
be expanded to include Employment Practices
Liability coverage.
Directors and Officers Liability
Insurance ("D&O")
Covers your company’s directors and officers
from liability claims arising out of judgment
errors, breaches of duty and wrongful acts related
to their organizational activities. Shareholders,
employees and potential business partners may
file claims. Generally the coverage excludes
intentional and dishonest acts, and allegations
of bodily injury and property damage. D&O
insurance is written on a Claims-Made and Reported
coverage form.
Directors and Officers with Employment
Practices Liability (D&O/EPL) insurance
covers a not-for-profit organization, the directors,
officers, trustees and other individuals for
allegations involving business management decisions
and employment practices actions. These policies
are written on a claims-made and reported coverage
form.
Disability
A physical or mental impairment that substantially
limits one or more major life activities. The
disability may be partial or total.
Disability Benefits
Payments that compensate a disabled employee
for loss of income or earning capacity.
Discrimination
Unfair treatment or denial of rights to a person
on the basis of the group, class, or category
to which the person belongs.
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E
ERISA
(See Employee Retirement Income Securities Act
of 1974.)
ERISA Compliance Bond
According to ERISA, all persons who handle plan
assets must be bonded for 10% of the plans'
aggregate assets. The minimum required amount
is $1,000 and the maximum is $500,000 (required
amounts are subject to change). This requirement
can be easily complied with by adding an ERISA
endorsement to an Employee Dishonesty policy.
Each Claim Deductible
A deductible that must be satisfied for each
separate claim. Premium discounts may apply
if this option is selected for certain policies.
Effective Date
The inception or starting date and time of an
insurance policy.
Electronic Data Processing (EDP)
Coverage
Covers damage to your computer equipment, data
systems and information storage media. Also
covers your expenses to reconstruct lost electronic
data because of a covered loss.
Embezzlement
Fraudulent use or theft of property or money
not belonging to the person entrusted with its
care.
Employee Benefits Liability Coverage
Protects your business from losses arising from
the administration of employee benefit programs,
such as not properly enrolling a new employee
in a health plan. This coverage can be endorsed
to a General Liability policy and is often included
in a Fiduciary Liability policy. It is important
to note that Employee Benefits Liability coverage
does not cover the liabilities imposed by ERISA
on the benefit plans' fiduciaries. Please refer
to Fiduciary Liability Coverage.
Employee Dishonesty Coverage
Reimburses you for financial loss to your business
due to dishonest or fraudulent activities of
one or more employees. Also known as a Fidelity
Bond. The coverage can be extended to comply
with the bonding requirements imposed by ERISA.
(See ERISA Compliance Bond.)
Employee Retirement Income Securities
Act of 1974 (ERISA)
Prescribes federal standards for funding, participation,
vesting, termination, disclosure, fiduciary
responsibility and tax treatment of private
pension plans. ERISA is intended to ensure that
individuals who are entitled to pension and
benefit plans are able to collect those benefits.
ERISA also requires that the plans' assets be
protected from dishonest acts. (See also Fiduciary
Liability and ERISA Compliance Bond.)
Employee Tool Coverage
Covers your employees? tools while at any job
site or in transit to or from a job site.
Employers Liability Coverage
Provides liability protection for employers
for damages arising from employment-related
accidents or diseases. This coverage also applies
if your business is sued by a third party affected
by a workplace injury, such as a family member
of the injured worker. However, an injured worker
or anyone else seeking to recover damages under
this coverage must prove that the employer was
legally responsible for the injury or disease.
This coverage is generally in a workers compensation
policy as Part Two or Coverage B. (See Workers'
Compensation Insurance.)
Employment Practices Liability
Insurance
Employment Practices Liability Insurance ("EPLI")
is coverage against claims by employees alleging
that they suffered damages as a result of the
employer's discrimination, wrongful termination,
sexual harassment, or various other employment-related
offenses.
Endorsement
A written amendment added to and made a part
of an insurance policy to change the original
insurance policy language. The change may restrict
or broaden the coverage.
Equipment Breakdown Coverage
Pays to repair or replace various types of due
to breakdown, rupture or bursting, or artificially
generated electric current. Covers computers,
scanning equipment, phone systems, air conditioners,
refrigeration systems and many other types of
equipment. Some carriers use the term "Systems
Breakdown Coverage" to be inclusive of
Equipment Breakdown Coverage and traditional
Boiler and Machinery insurance (e.g., steam
boiler explosion). Other carriers do not include
steam boiler explosion in the definition of
Equipment Breakdown Coverage.
Errors and Omissions Insurance
("E & O")
Protects you against liability for committing
an error or omission in the performance of professional
duties. E&O policies are designed to cover
financial losses rather than liability for bodily
injury or property damage. For example, E&O
coverage would protect an architect who is sued
because he made a mistake in his drawings for
a new building or an accountant who failed to
tell a client to submit quarterly estimated
tax payments. E&O policies are written on
the Claims-Made and Reported coverage form.
Excess Accident Medical
This coverage pays last. The medical bills must
be first submitted to the individual’s other
insurance plan, and then the Excess Accident
Medical policy will consider the unpaid balances,
after a deductible, up to the benefit limit.
Excess Liability Insurance
Provides coverage above the limits of primary
liability insurance policies, after the primary
policy limits have been exhausted. (See also
Umbrella Liability.)
Exclusion
A written provision in an insurance policy that
denies coverage for certain events, hazards,
people, property or locations.
Experience Rating
A method of calculating premiums based on prior
claims experience and exposures such as payroll.
Expiration Date
The date specified in an insurance policy as
its termination date.
Exposure
The risk of loss due to some potential hazard.
Also used to measure the rating units or the
premium base of a risk.
Extra Expense Coverage
Covers additional costs of continuing your business
following a covered loss or damage to your insured
property. This coverage could include the expense
of renting an alternative office and buying
new office supplies. This coverage is important
if you can't close your business in the event
of a loss, but must quickly find alternative
office space to continue your business operations.
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F
Fidelity Bond
(See Employee Dishonesty Coverage.)
Fiduciary Liability Coverage
ERISA designates the people who administer and
manage pension and benefit plans as "fiduciaries."
Fiduciaries are personally liable for breaches
of duty, as defined by ERISA, while administering
the plans. An example of a breach of fiduciary
duty is failing to prudently invest the plan
assets, resulting in financial loss to the plan
beneficiaries. Fiduciary Liability insurance
protects the individual fiduciaries' personal
assets from claims alleging breaches of duty.
Fiduciary policies are written on a Claims-Made
and Reported coverage form. Employee Benefits
Liability coverage is often included on Fiduciary
policies.
Fine Arts Coverage
Covers your works of art that are damaged due
to perils, subject to the terms and conditions
of the policy. The coverage is written on a
valued basis.
Fire Damage Liability Coverage
Pays for fire damage caused by your business
to the property of others in your building.
It also covers fire damage to other parts of
the building you occupy, due to negligence by
you or an employee. Also known as Fire Legal
Liability coverage.
First Dollar Defense
Provides coverage for defense expenses related
to a claim from the first dollar. Allows the
deductible to be applied to the loss only.
Flood Insurance
Covers your property in the event of a flood.
Flood is commonly excluded from property insurance
policies.
Food Storage Coverage
Reimburses you for the cost of your food inventory
damaged due to spoilage caused by an insured
incident. Also called Spoilage Coverage or Temperature
Change Coverage.
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G
Garage Liability Insurance
Covers the legal liability of automobile dealers,
garages, repair shops and service stations for
bodily injury and property damage claims arising
out of business operations. Damage to customer’s
vehicles is excluded from this coverage. (See
Garage keepers? Legal Liability.)
Garage keeper’s Legal Liability
Coverage
Provides coverage to owners of vehicle garages,
parking lots and vehicle repair shops for damage
to your customers' vehicles left in your custody
for safekeeping or repair. Coverage is applicable
only if you are at least partially responsible
for the loss.
General Liability Insurance
Liability only coverage that protects business
owners and operators from claims brought by
third parties alleging bodily injury or property
damage.
Glass Coverage
Pays to replace or repair glass on your property
that is damaged by a variety of factors, including
vandalism. You may need this coverage even if
you don't own your building, when your lease
specifies that you are responsible for building
glass.
Group Accident Medical
This policy provides medical expense coverage
for members of a group who are injured by an
accident while participating in scheduled, sponsored
and supervised activities of the group. Injuries
sustained during direct travel to and from the
covered activity are also covered. Covered expenses
can include physician treatments, hospital services,
LPN or RN services, use of an ambulance, ambulatory
surgical or medical center services, home health
care expenses, prescription medicines, and dentist
visits.
Growth Guard Coverage
Property Growth Guard Coverage provides a means
by which property limits may be automatically
increased over the course of the policy period.
If, for example, the initial property limit
is $1,000,000 and the insured selects a growth
guard of 50%, the property limit will increase
to $1,500,000 ($1,000,000 + 50%) by the end
of the policy period.
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H
Hazard
A condition that creates or increases the chances
of a loss arising from an insured peril. Examples
include slippery floors and unguarded property.
Hired and Non-Owned Auto Liability
Coverage
Protects your business from liability due to
your employees? job-related use of vehicles
your company does not own. This coverage includes
hired or rented vehicles and employees? own
vehicles. It is important to note that while
an employee is driving his or her own personal
car on company business that their personal
auto policy will respond on a primary basis
for an accident. The company's Non-Owned Auto
coverage will respond excess of the personal
auto policy.
Hold Harmless Agreement
A hold harmless agreement is normally included
in a written contract whereby one party agrees
to assume the other party's liability arising
from specified actions. For example, if you
contract with another party to do work for you,
you agree in writing that the other party will
pay for any liability you incur because of his
work.
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I
Inland Marine Insurance
Covers your goods in transit, except across
oceans. The coverage also applies to items that
are used at locations other than at your insured
property.
Installation Coverage
Covers your building materials that will become
a permanent part of a structure and the cost
of labor involved in completing your project.
Also applies to your materials while at the
job site, while stored in temporary locations
or while in transit between your primary business
location and the job sites.
Insurance Department
A government entity in each state or territory
administers insurance laws and licenses and
regulates insurance agents and companies. A
state insurance department can be a stand-alone
government agency or a division of another department.
Insured
The person or organization named, defined and
protected by an insurance policy.
Insured Contract
A definition in a liability policy that describes
the types of contracts in which liability is
assumed by the insured and included for coverage
in the policy.
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J
Jeweler's Block Coverage
A separate policy form that covers damage to
the Insured's stock of jewelry, precious and
semiprecious stones, watches, precious metals,
and similar merchandise. Also covers similar
'property of others' in the Insured's care,
custody, or control.
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K
Kidnap and Ransom Coverage
Provides financial protection in the event you
or any of your employees are kidnapped and a
ransom is demanded. Coverage may extend to reimbursement
for extortion demands for threats to your property.
Policies typically include the services of Crisis
Management professionals to assist in the negotiations,
coordination of law enforcement agencies, and
resolution of the situation.
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L
Liability
Your company’s legal responsibility to make
financial restitution for bodily injury or property
damage to a third party because of your company’s
action or inaction. May also refer to a company's
debts and future obligations.
Liability Insurance
Provides financial protection in case your business
is sued or held legally responsible for bodily
injury or property damage to a third party.
Typically, covered expenses include:? The amount
the insurer spends to investigate or defend
the claim or lawsuit;? Other costs incurred
directly by the insurance company, such as attorneys?
fees, witness fees and police report costs?
Court costs or other costs assessed against
you;? Reasonable expenses you incur at the insurance
company's request to aid in your defense against
a claim, such as your loss of income for a day
spent in court;? A judgment or settlement arising
from a covered lawsuit;? Any required interest
on the judgment if the defense is unsuccessful;?
Medical expenses for injured parties. * The
policy may include coverage for premises, personal
injury, products and completed operations and
contractual liabilities.
Libel
Written defamation conveying an unfavorable
impression about an individual and harming that
person’s reputation.
Limits of Liability per Occurrence
The maximum amount of money an insurer agrees
to pay for any one occurrence under a particular
insurance policy.
Liquor Liability Coverage
Provides your business with protection from
bodily injury and property damage claims arising
from selling or serving alcoholic beverages.
Livery Vehicle
An automobile that is used to transport people
for a fee, such as a limousine or a taxi.
Loss
The amount sought by a policyholder in connection
with a claim or the amount paid by an insurance
company for a claim. Also means a negative financial
result of a business.
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M
Materials On-Site Coverage
Protects your business from financial loss due
to theft, vandalism or other damage to materials
being stored or used at a job site.
Medical Payments Coverage
Covers reasonable medical costs of an individual
other than the insured due to an accident, regardless
of the Insured's legal liability. This coverage
can be part of an automobile policy or a general
liability policy.
Misrepresentation
Making written or verbal statements that are
untrue or misleading, with the intention of
deceiving the insurance company. This activity
may be grounds for voiding the insurance policy
that was issued based on the untrue or misleading
statements.
Money and Securities Coverage
Subject to policy provisions, protects your
money and securities against theft, disappearance
or destruction while they're on your business
premises or off-site, such as while being transported
to the bank.
Monopolistic States
States in which state-operated funds are the
only entities allowed to underwrite workers
compensation insurance. The five monopolistic
states are: North Dakota,
Ohio,
Washington,
West Virginia
and Wyoming.
In these states, employers must buy workers
compensation coverage from the state fund. However,
these funds do not offer employers liability
coverage. Employers' Liability coverage for
the monopolistic states can be added to the
Insured's Workers' Compensation or General Liability
policy via the Stop Gap Liability endorsement.
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N
Named Insured
Any people or entities specifically named in
the policy declarations as covered by an insurance
policy. There may be others who also are covered
by the policy but are not named.
Named Perils Policy
A property insurance policy that covers only
losses caused by the perils specifically listed
in the policy. This coverage contrasts to special
form coverage, which covers property losses
from all causes not specifically excluded.
Negligence
Failure to use the degree of care considered
reasonable under the circumstances.
No-Fault Insurance
A law enacted by many states allowing a victim
of an automobile accident to collect medical
and hospital expenses from his or her own insurance
company.
Non-Owned and Hired Automobile
Liability Coverage
(See hired and Non-Owned Auto Liability Coverage.)
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O
Occurrence
An accidental event that results in loss or
damage.
Occurrence Coverage Form
Covers claims that happened during the policy
period, regardless of when the claim is made
against the Insured or when the claim is reported
to the carrier.
Ocean Marine Coverage
Covers your cargo being transported by ship
or over water.
Off-Premises Power Failure Coverage
Reimburses you for your loss of business income
if an off-premises power failure temporarily
shuts down your business operations because
of a covered loss.
Off-Premises and In-Transit Coverage
Extends protection of your business personal
property away from your principal business site.
Other Business Structures Coverage
Extends protection to other business structures
on your property, such as a greenhouse, business
car garage or storage shed.
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P
Package Policy
A single insurance policy that includes property
and liability coverage’s, and possibly others.
Peak Season Coverage
Automatically provides you with a specified
percentage increase in insurance coverage during
peak inventory periods when you insure your
inventory for its average monthly value.
Peril
The cause of a possible property loss, such
as fire, windstorm, theft, explosion or riot.
Personal Injury Coverage
Protects your business from liability due to
injury (other than bodily injury) to a third
party that arises out of false arrest, detention
or false imprisonment, malicious prosecution,
wrongful eviction, wrongful entry, invasion
of privacy or slander, except in the course
of advertising, publishing, broadcasting or
telecasting. (See Advertising Liability.)
Personal Injury Protection
The bodily injury and other automobile insurance
coverage’s required under state no-fault insurance
laws. These benefits may include basic medical
expenses, rehabilitation, lost earnings, funeral
expenses and survivors? benefits. (See No-Fault
Insurance.)
Personal Property Coverage
(See Business Personal Property Coverage.)
Policy
The printed legal document stating the terms,
definitions, exclusions, and conditions of the
insurance contract that an insurance company
issues to the policyholder.
Policy Term
The length of a policy period.
Policyholder
The person or entity that owns an insurance
policy; the "Named Insured."
Pollution Liability Coverage
A specialized insurance policy that covers liability
associated with your business? contamination
of the air, ground or water. It may also provide
coverage for clean-up costs.
Premises
The property described and designated in an
insurance policy's declarations or schedule
of covered properties.
Premises Liability Coverage
Protects your business against liability damages
due to an injury that occurs on your premises
to a third party. An example would be a customer
slipping or falling at your business.
Premium
The dollar amount an insurance company charges
to provide the coverage in an insurance policy
or bond.
Primary Accident Medical
This coverage responds to covered expenses regardless
of other available insurance the individual
may have. The expenses are subject to a deductible.
Products Liability and Completed
Operations Coverage
Products Liability covers third-party bodily
injury or property damage occurring somewhere
other than your premises from a product your
company made, distributed or sold, or a service
your business provided. Completed Operations
covers bodily injury or property damage resulting
from completed work when the injury or damage
takes place away from your premises. In the
event of a lawsuit, your business also is covered
for related defense costs.
Professional Liability (PL) Insurance
Protects you against liability for committing
an error or omission in the performance of professional
duties. Professional Liability policies are
designed to cover financial losses rather than
liability for bodily injury or property damage.
For example, Professional Liability coverage
would protect an architect who is sued because
he made a mistake in his drawings for a new
building or an accountant who failed to tell
a client to submit quarterly estimated tax payments.
Also known as Errors and Omissions ("E
& O") insurance.
Property Damage Liability Coverage
Protects your business against liability damages
arising from physical loss or damage to someone
else's property, other than your employees'.
It usually includes damages for loss of use
of the property.
Property Insurance
Provides financial protection against physical
loss or damage caused by fire, windstorm, vandalism
or other covered incidents to many kinds of
business property that you own. Covered business
property can include your building, equipment,
tools, supplies, furniture, fixtures and improvements.
Property of Others Coverage
Covers you for damage to the property of others
that is in your possession and for which you
are legally liable while it is in your possession.
Punitive Damages
Damages awarded in addition to compensatory
damages. Punitive Damages are intended to financially
punish the wrongdoer.
Punitive Damages Coverage
Insurance coverage for punitive damages is available
in some jurisdictions in the US.
In other jurisdictions it is considered against
public policy to insure punitive damages because
reimbursement from an insurance company would
negate the intended punishment. Some policies
provide Punitive Damages Coverage "where
insurable by law."
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Q
Quote
A proposal from an insurance company to underwrite
a certain risk at a specific price.
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R
Rate
A charge per unit used in calculating insurance
premiums.
Real Property
Real estate property that includes buildings
but excludes land.
Rental Reimbursement for Tools
and Equipment Coverage
Reimburses you for the cost of renting tools
or equipment if yours are not available due
to a covered loss.
Replacement Cost Value
The dollar amount it costs today to replace
or repair your damaged property with that of
like kind and quality, without any deduction
for depreciation.
Research and Development Property
Research and Development Property is property
directly related to the development of new products
or enhancement of existing products, such as
records, formulas, test samples or a prototype.
Retention
The dollar amount that an Insured assumes as
its own liability and which is not insured ("self-insured
retention"). A retention functions similar
to a deductible as in the retention is the amount
of the loss that the Insured is responsible
to pay.
Retroactive Date
A provision found in all Claims-Made and Reported
policies that restricts coverage to injuries
or damages ("wrongful acts") occurring
on or after this specified date. Typically the
Retroactive Date will be the effective date
of the first Claims-Made policy purchased by
the Insured.
Rider
An attachment to an insurance policy or a bond
that expands or restricts coverage, or makes
some other policy change. The term "rider"
is most frequently used in surety bonds and
can be considered a synonym for "endorsement."
Risk
A chance of loss. Also used to mean the insured,
or the property the insurance applies to.
Robbery
Theft of personal property, either by force
or with a threat of force.
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S
Seasonal Inventory Increase Coverage
( See Peak
Season Coverage.)
Self-Insured Retention
(See Retention)
Sewer and Drain Back-Up Protection
Protects your business against losses caused
by water backing up through your sewers or drains,
or by water overflowing from a pump.
Sexual Harassment
Unwelcome sexual advances, requests for sexual
favors, or other verbal or physical conduct
of a sexual nature that are made a condition
of employment, used as a basis for employment
decisions or create a work environment that
interferes with job performance. Most standard
Business Owner’s Policies exclude coverage for
sexual harassment claims. (See Employment Practices
Liability Insurance.)
Sign Coverage
Insures your outdoor signs against theft, fire,
vandalism and other losses.
Slander
Spoken defamation conveying an unfavorable impression
about an individual and harming that person’s
reputation.
Spoilage Coverage
(See also Temperature Change Coverage and Food
Storage Coverage.)
State Fund
There is various types of state-owned and operated
entities that are designed to protect policyholders
in the event of an insurance company becoming
insolvent. These entities are called "insolvency
funds" or "guarantee associations."
There are also state-operated entities that
write workers? compensation insurance.
Subrogation
The assignment to an insurer, after payment
of a loss, of an insured’s right to recover
the amount of the loss from someone who is legally
liable for the damages.
Surety
A company, usually an insurance company, which
issues a surety bond. The surety company agrees
to fulfill the obligation of the bonded party,
according to the terms of the surety bond.
Surety Bond
A guarantee by a surety company that the bond
buyer will fulfill a certain obligation he or
she has made to a third party. Unlike other
forms of insurance, the entity protected by
the bond is a third party, not the buyer; the
surety bond buyer is the one doing the work
that is guaranteed.
Systems Breakdown Coverage
Insurance companies use this term for a variety
of different coverage’s, so care must be taken
to determine the extent of coverage actually
provided. Some carriers include Equipment Breakdown
and Boiler & Machinery under Systems Breakdown.
Other carriers provide only Equipment Breakdown;
still others use Systems Breakdown to mean Boiler
and Machinery coverage. (See also Equipment
Breakdown Coverage and Boiler and Machinery.)
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T
Temperature Change Coverage
Protects perishable stock you have on your premises
in case of damage caused by a temperature change
due to an equipment breakdown or power failure.
Also called Spoilage Coverage.
Terrorism Coverage
Provides coverage under the Terrorism Risk Insurance
Act of 2002, limited by the terms, conditions,
and exclusions provided by the carrier. Terrorism
coverage’s is partially reinsured by the
United States of America.
Theft
Any act of stealing, including burglary, robbery
and larceny.
Third Party Coverage for Employment
Practices Liability
EPL policies typically cover claims filed by
employees alleging employment-related wrongful
acts. Some policies can be extended to include
Third Party Coverage that covers claims filed
by non-employees for discrimination and harassment.
These "third party" claimants can
be customers, clients, vendors or suppliers
of the Insured.
Title Agency Coverage Endorsement
Coverage available for a separate title agency
that is 51% or more owned by an insured law
firm.
Tort
A wrongful act against another person, other
than breach of contract, that results in injury
or damage on which a civil lawsuit may be based.
Transit Insurance
Protects shipments of goods you make by car,
truck, rail, or air from the time they leave
your business location to the time they are
delivered to your customer.
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U
Umbrella Liability Coverage
Provides additional protection for your business
over and above the liability limits of primary
insurance policies such as Business Owner’s
Policies, commercial automobile policies and
Employers' Liability. Subject to the policy
terms and conditions, coverage begins after
the policy limits of a primary policy have been
exhausted. Also called Excess Liability Coverage.
Underinsured Motorists Coverage
Coverage available on your own auto insurance
policy to protect you from a loss caused by
a negligent driver who has inadequate auto insurance.
Underwriter
The insurance company that insures a particular
risk, or the person at an insurance company
who evaluates applications for insurance coverage,
decides whether to accept or reject the risk
and sets a price for the coverage.
Underwriting
The process of evaluating applications for insurance
coverage, deciding whether to accept or reject
the risk and setting a price for the coverage.
Uninsured Motorists Coverage
Coverage available on your own auto insurance
policy to protect you from a loss caused by
a negligent driver who does not carry any auto
insurance. In some states the term Uninsured
Motorists is inclusive of Underinsured Motorist
Coverage.
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V
Valuable Papers Coverage
Pays for the cost to research, reproduce, replace
or restore your valuable business records if
they are not duplicated but are damaged or destroyed
by a covered loss. Coverage includes printed
or written documents, books, films and more.
Vandalism
The malicious or ignorant, often random, destruction
or spoilage of another person's property.
Vicarious Liability
The liability of one person for the acts of
another. Vicarious liability can result from
the acts of independent agents, partners, independent
contractors and employees.
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W
Warranty (of a Product or Service)
A warranty product protects customers from financial
loss associated with the breakdown or underperformance
of a product or service.
Warranty Statement (on an insurance
application)
Some policies, such as Professional Liability,
D&O, or EPLI, require that the Insured sign
a warranty statement on the insurance application
attesting to the accuracy and truthfulness of
the information provided on the application.
If a policy is issued based on a false material
fact, the coverage may be considered null and
void.
Water Damage Coverage
Protects your business from losses resulting
from flooding and surface water, and the backup
of sewers, drains or sump pumps.
Workers Compensation Insurance
Provides benefits, as specified by state law,
to employees for work-related injuries or illnesses,
regardless of who is at fault. Typical covered
expenses include medical benefits, such as medical,
hospital and surgical costs; related healthcare
costs such as physical therapy and prosthetic
devices; disability income benefits, including
services such as vocational rehabilitation that
help an injured worker return to productive
work; and death benefits. (Also see Employer's
Liability Coverage.)Workers? comp is a no-fault
system, meaning that injured employees do not
have to sue their employers to receive compensation.
Compensation is automatic for covered benefits;
benefits vary by state.
