Business insurance glossary
52 terms from policies, certificates and contracts, each defined in one plain sentence.
A
Actual cash value
Actual cash value (ACV) is what damaged property was worth when it was lost, usually its replacement cost minus depreciation for age and wear.
Additional insured
An additional insured is a person or company, such as a landlord or client, added to your liability policy so it can protect them from claims tied to your work.
Aggregate limit
An aggregate limit is the most a policy will pay for all covered claims combined during one policy period, no matter how many claims you have.
B
Business interruption
Business interruption insurance replaces income you lose, and helps pay ongoing expenses, when covered physical damage forces your business to close or slow down.
Business personal property
Business personal property (BPP) is the movable property your business owns and uses, such as equipment, furniture, inventory and supplies, as covered by a commercial property policy.
C
Care, custody or control
Care, custody or control is a common general liability exclusion for damage to other people’s property while it’s in your possession, being stored by you or being worked on.
Certificate holder
A certificate holder is the person or company that receives a certificate of insurance as proof of your coverage, without gaining any coverage under your policy.
Certificate of insurance
A certificate of insurance (COI) is a one-page summary that proves your business has insurance, listing your policies, limits, insurers and policy dates.
Claims-made policy
A claims-made policy covers claims first made against you during the policy period, for work or incidents that happened on or after the policy’s retroactive date.
Class code
A class code is a number insurers use to classify what your business does, so your rates reflect the typical risks of businesses doing similar work.
Coinsurance
Coinsurance is a property policy condition that reduces your claim payment if you insure your property for less than a set percentage of its value, such as 80%.
D
Declarations page
The declarations page is the summary at the front of an insurance policy listing who’s insured, what’s covered, the limits, deductibles, premium and policy dates.
Deductible
A deductible is the amount you pay toward a covered loss before your insurance pays, usually subtracted from the claim payment.
Direct coverage
Direct coverage is a garagekeepers option that pays for covered damage to customers’ vehicles in your care whether or not your shop was at fault.
E
Employer’s liability
Employer’s liability insurance helps pay legal costs and damages when an employee, or their family, sues your business over a work-related injury or illness.
Endorsement
An endorsement is a written change to an insurance policy that adds, removes or modifies coverage, such as adding an additional insured or a new location.
Exclusion
An exclusion is a provision in an insurance policy that removes coverage for specific causes, types of loss, property or activities the policy would otherwise cover.
Experience modification rate
An experience modification rate (EMR) is a workers’ comp factor that raises or lowers your premium by comparing your past claims with those of similar businesses.
Extended reporting period
An extended reporting period (ERP) gives you extra time after a claims-made policy ends to report claims about work done while the policy was in force.
Extra expense
Extra expense coverage helps pay the reasonable added costs of staying open or reopening sooner after covered property damage, such as renting a temporary space.
F
H
I
Independent contractor
An independent contractor is a self-employed person or business you hire for a job who controls how the work gets done, rather than working as your employee.
Inland marine insurance
Inland marine insurance covers business property that moves or is kept away from your main location, like tools on job sites, goods in transit and property held for others.
Insurance binder
An insurance binder is a temporary document confirming that coverage has started while the insurer finishes issuing the full policy.
Insurance carrier
An insurance carrier is the company that issues your policy, takes on the financial risk it describes and pays covered claims.
Insured contract
An insured contract is a type of agreement, defined in general liability policies, under which liability you take on for someone else’s injury or damage claims can still be covered.
L
Legal liability coverage
Legal liability coverage pays for damage to customers’ property in your care only when your business is legally responsible for it, such as through negligence.
Loss run
A loss run is a report from your insurer listing the claims filed under your policies over a set period, with dates, amounts paid and whether each is still open.
M
N
Named insured
The named insured is the person or business listed on the declarations page as the policyholder, with the main rights and duties under the policy.
Named perils
A named perils policy covers damage only from the causes of loss it specifically lists, such as fire or windstorm, so anything not on the list isn’t covered.
O
Occurrence policy
An occurrence policy covers injury or damage that happens during the policy period, even if the claim is filed after the policy has ended.
Open perils
An open perils policy covers direct physical loss from any cause unless the policy specifically excludes it, making it the broadest common form of property coverage.
P
Per-occurrence limit
A per-occurrence limit is the most a liability policy will pay for all claims arising from a single incident, however many people are hurt or claims are filed.
Period of restoration
The period of restoration is the time business income coverage pays for after covered damage, from the end of the waiting period until your property should reasonably be repaired.
Personal and advertising injury
Personal and advertising injury is the part of general liability that can cover claims over offenses like libel, slander, false arrest, privacy violations and copying another’s advertising.
Policy period
The policy period is the span of time between a policy’s start and end dates, usually 12 months, during which its coverage is in force.
Premium
A premium is the amount you pay an insurance company for a policy, usually set for a 12-month policy period and paid upfront or in installments.
Premium audit
A premium audit is the insurer’s review of your actual payroll, sales or other figures after a policy ends, used to replace estimates and set your final premium.
Primary and noncontributory
Primary and noncontributory is policy wording that makes your insurance pay first for a covered claim, without asking the additional insured’s own insurance to share the cost.
Products-completed operations
Products-completed operations is the part of general liability that covers injuries or damage caused by your finished work, or products you sold, after the job is done.
R
Ransomware
Ransomware is malicious software that encrypts a business’s files and systems so criminals can demand payment to unlock them, often while threatening to leak stolen data.
Replacement cost
Replacement cost is a way of valuing property losses that pays to repair or replace damaged items with new ones of like kind and quality, without subtracting depreciation.
Retroactive date
A retroactive date is the earliest date of work or events a claims-made policy covers, so anything that happened before it isn’t covered, even if the claim is new.
S
Social engineering fraud
Social engineering fraud is a scam where criminals pose as someone you trust, such as a supplier or coworker, to trick you into sending money or sensitive information.
Sublimit
A sublimit is a smaller cap within a policy’s overall limit that applies to one specific type of loss or coverage, and it doesn’t add to the overall limit.
Subrogation
Subrogation is an insurer’s right, after paying your claim, to pursue the person or company that caused the loss to recover what it paid.
T
U
W
Waiting period
A waiting period is the stretch of time after a covered loss before coverage, such as business income, starts paying, working like a deductible measured in hours or days.
Waiver of subrogation
A waiver of subrogation is an agreement, usually added to your policy by endorsement, that stops your insurer from recovering claim payments from a specific client, landlord or contractor.
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