Actual Cash Value
A dollar amount determined by an insurance provider for lost, damaged, or stolen property. It equals Replacement Cost minus depreciation. Some policies can provide coverage for Replacement Cost rather than ACV. (See Replacement Cost)
Sometimes referred to as an interested party, is a person or organization with a financial interest in the property you're insuring. Additional interests are added to insurance policies and notified when changes to the policy are made.
A licensed transactor of insurance who represents the Insurance Company and helps insurance customers obtain coverage.
The maximum amount an insurance carrier will pay to the policyholder within a specified policy period for all claims.
A loss valuation is when the insured and the insurer agree upon an amount for a loss, usually with the help of a professional appraisal.
A process used to determine the replacement value of damaged, destroyed, or lost items or property. (See Arbitration)
Non-judicial resolution of a dispute. Arbitration usually (in auto insurance) concerns matters of at-fault parties in an accident, resulting in liability for injury and levels of such injury. Arbitration is conducted by a single neutral arbitrator. If the parties cannot agree on an arbitrator, then each shall select and the two so selected shall appoint the single neutral arbitrator. In Auto Insurance, if the dispute involves the value of the vehicle or the amount of damage the resolution may be accomplished by appraisal which is conducted by three vehicle appraisers. (See Appraisal)
When the holder of the policy has property replaced with a new version after a loss is incurred.
The act of effecting coverage.
A temporary contract of insurance is used to provide coverage to a policyholder until a formal policy can be issued.
A type of policy that allows a business owner to insure multiple property types in a single location or one property type at several locations under a single policy.
Bodily Injury refers to the physical injury caused to a third party by the insured. This includes sickness, disease, pain and suffering, emotional distress, loss of income, and even death. (See Third Party)
A licensed individual who can act as an agent and broker representing one or more insurance companies.
Builders Risk Insurance
This type of insurance covers all building materials used during construction, even when the goods are off-site and in transit.
This type of insurance covers physical loss or other types of damage (i.e. fire) to a building or structures at the building’s location.
Business Auto Coverage Form (BACF)
This is a common contract for business auto liability insurance. Although the form refers only to “autos,” autos are defined to include cars, trucks, trailers, vans or other vehicles designed for use on public roads.
Business Equipment Protection
Also referred to as Inland Marine Insurance, helps cover business equipment that you own, rent, or borrow while it is away from your premise.
Business Income from Dependent Properties
This type of policy covers loss of income due to damage(s) to the business property which the insured relies upon to conduct its operations.
Business Interruption Insurance
Also referred to as Business Income Insurance, helps reimburse the insured for continuing business expenses after the business shuts down because of a covered loss.
Business Owners Policy (BOP)
Consist of three different types of coverages bundled together and designed for small businesses. A BOP includes commercial property insurance, general liability insurance, and business income insurance.
Business Personal Property Coverage
Provides coverage in the case of physical loss or damage to the business's personal property as a result of fire or other covered incident. Personal property refers to every movable object owned by a business (i.e. equipment, furniture).
The act, of either party in an insurance contract, of ending the contract prior to its expiration. Both parties are required to give written notice to the other party to effect such cancellation. The insurer is required to give at least ten days (10) notice prior to written warning of such cancellation.
This type of policy covers the legal liability of the insured for property damage and/or bodily injury to another party.
Certificate of Insurance (COI)
Proof that you have a general liability insurance policy to protect your business. Clients or customers may request this before agreeing to work with your business.
A request by a policyholder to an insurance company to pay for something covered under your insurance policy. After a policyholder files a claim, the insurance company will either approve or deny the claim.
(a) Impact of an automobile with another object or person outside the vehicle or the upset (overturning) of such vehicle; (b) That coverage which pays for damage to the insured's vehicle, in the event of the above. This coverage is usually subject to a deductible. (See Deductible)
Collision Deductible Waiver (CDW)
That coverage which, in the event the insured's car is damaged in an accident which is the fault of an identified Uninsured Motorist, waives (or eliminates) the deductible requirement under the collision coverage when repairing the auto. (See Collision; Deductible)
Combined Single Limit (CSL)
A limits structure for Bodily Injury and Property Damage Liability or Uninsured Motorist Bodily Injury coverage provides one single limit, which is the maximum payable for all damages in any one occurrence. Most commercial auto insurance is written CSL. (See Split Limits)
Commercial Auto Insurance
A policy that covers injuries and damages for vehicles (owned, rented, or leased) that are used as part of business operations.
Commercial Earthquake Insurance
This type of insurance is the only kind that will cover property damage in the event of an earthquake.
Commercial Flood Insurance
This type of insurance covers flood damage due to natural disasters, including high waters and excessive rain.
Commercial Package Policy
This insurance plan provides a range of liability and property coverage.
Commercial Property Insurance
This insurance policy protects the owner’s owned or leased business property but not any equipment.
Compensation to the producing agent, broker, or agency for writing and servicing the policy from the insurance company. Generally a percentage of the Premium. (See Premium)
Reimbursement for damages caused by injury or loss as a result of a covered act committed by the insured party.
Coverage to help pay for direct and accidental damage to the insured's automobile, other than that caused by Collision. All losses not specifically excluded are covered and such coverage usually has a deductible.
Also referred to as Terms and Conditions. These are typically circumstances that must be present for the coverage to apply.
A promise or series of promises that are enforceable under the law.
Many commercial insurance policies limit protection to incidents that take place within a specific geographic location.
Also referred to as Cyber Security Insurance, protects your business from the financial consequences of viruses, data breaches, ransomware, and other cybercrime.
Also known as the "Dec Page", is a page of an insurance policy that describes the terms of the coverage. It contains the insured's name, address, description of the property insured, maximum amount that will be paid out under the policy, the premium, etc.
An amount of money which, in the event of a covered loss, the insured is required to pay prior to the insurer being liable for any damages. The purpose of a deductible is to eliminate the expense of processing small claims.
Coverage is provided in most liability policies, which pays for the cost of defending the insured in the event of a lawsuit regarding a covered loss. Defense cost, in the auto policy, is said to be " unlimited," in that the policy requires the insurer to pay whatever is necessary, however, it is actually limited in that the insurer can pay policy limits in damages and thereby avoid the defense requirement entirely.
Directors and Officers Liability Insurance (D&O)
In the event that directors or officers of the insured company are accused of wrongful doing or negligence, this type of insurance covers legal costs and can protect the assets of the company from legal action.
An amount of money (usually a percentage of the premium plus any fees) that the insured must pay in order for the coverage to be bound. (See Bind)
The date and time (usually at 12:01 a.m.) in which the policy contract begins. Actual coverage may begin earlier than this due to a Binder. (See Binder Date)
Employee Benefits Liability Coverage
This type of insurance protects a business in the event that a new employee is not enrolled in a health plan properly.
Employee Dishonesty Coverage
This type of coverage reimburses a business after a loss due to the dishonest activity of one or more employees.
Employer’s Liability Insurance
This coverage protects an employer in the event that an employee files a lawsuit after getting injured at work.
Employment Practices Liability Insurance (EPLI)
This type of insurance protects the business against employee claims of discrimination, wrongful termination, harassment, breach of contract, and more.
A written agreement that adds or subtracts coverage or changes an insurance policy.
Errors and Omissions Insurance (E&O)
Also referred to as Professional Liability Insurance, provides liability coverage against claims alleging your advice or professional services resulted in an injury or personal loss. This insurance helps with legal defense, even if the claims are false or fraudulent.
Equipment Breakdown Coverage
This covers repairs or replaces equipment due to specific malfunctions (bursting, rupturing, etc.). The policy also covers computers, office equipment, phone systems, and many other types of equipment that are a part of business operations.
Coverage that applies only after some other policy has paid its full policy limit. This may result from policy structure, such as in the case of an Excess Liability or Umbrella policy, or as a result of two policies applying to the same loss. (See Primary)
Excess Liability Coverage
Liability coverage that is written to provide higher Limits than those available in the Primary policy. This policy is only liable after the Primary policy has paid its full Limits for a covered loss. It is used where higher Limits of liability are needed, but the primary insurance company is unwilling or unable to provide such Limits. The Primary policy may provide Limits of 15/30/5 and the Excess policy 85/270/45 to provide total Limits of 100/300/50.
Language in a policy (or which may be endorsed onto a policy) specifies that a given circumstance is not covered. An example would be the intentional acts of the insured. If an insured were to damage property or cause bodily injury on purpose, the policy will not provide coverage due to the intentional acts exclusion. Another example would be the Named Driver Exclusion, which states that if a designated person specified by name is driving the automobile at the time of loss, the policy will not provide coverage.
Extra Expense Coverage
This added coverage takes care of the costs of continuing business operations after a covered loss or damage to insured property. This coverage would pay for rent in an alternative office and anything else necessary to keep operations running.
This is insurance that covers an employer from employees’ dishonest deeds which may affect that business.
The person who handles benefit funds in a company.
Fiduciary Liability Coverage
This type of policy covers the person who handles benefit funds in a company in the event that there is a breach of duty.
The insured. A first party loss is a loss that involves injury and/or damage to the property of the insured. (See Third Party)
General Liability Insurance
One of the most fundamental insurance coverages a business can purchase. This type of insurance protects a business from lawsuits having to do with bodily injury, property damage, or advertising injury. This policy is separate from commercial vehicle insurance which also provides liability coverage.
Usually, this term refers to any autos the insured leases, hires, rents, or borrows from someone in the policy declarations.
Hold Harmless Agreement
Usually, in a written contract, this agreement holds a contracted third party liable if the agreed-upon work they perform causes a loss.
The objective in a property-and-casualty contract to restore the insured’s financial situation to what it was previous to the loss.
This term in commercial property insurance means a financial stake in a piece of property.
The contractual transfer of the financial consequences of loss.
Anyone named on the declarations page or driving the insured vehicle with the permission of an insured. (See Permissive User)
A promise made by the insurance company, which outlines its duties. Exclusions, Conditions, and definitions that appear later in the policy modify this promise.
Key Person Insurance
This type of life insurance provides coverage for the person in a business whose absence would greatly impact the company.
The legal responsibility for injury done by the insured to a Third Party, or damage done to their property. (See Third Party)
The maximum amount payable under a given coverage. May be per person, per occurrence, per day, or per year. (See Split Limits; Combined Single Limit)
Liquor Liability Insurance
A type of insurance policy that provides coverage for property damage or bodily injury resulting from the serving or consumption of alcoholic beverages.
In the event of a total loss, the insurer's actual cash value (ACV) payment may or may not be sufficient to pay off the loan or lease. With this coverage, the insurance company will pay additional funds needed to end the contract.
Loss Payable Clause
A clause that authorizes insurance to pay a third party (loss payee).
Typically the finance company holds the title to a vehicle. A loss payee gets paid from a loss claim.
This type of insurance covers the damage (or loss) of ships, equipment, cargo, terminals, or any property that is being held, transferred, or acquired between two locations.
Falsification of fact(s) that allows an insurance company to refuse to rescind a contract.
Optional auto coverage that pays for the medical expenses of the Named Insured, members of his/her family, and passengers of his/her car if injured in a Collision accident. The Named Insured and Relatives are also covered if struck as a pedestrian. This coverage is Excess to any other medical insurance. (See Excess)
Money and Securities Coverage
This type of coverage protects money and securities while on-site, off-site, or in transport to/from the premises of the business.
That person so listed on the Declarations and his/her spouse if a resident of the same household.
An event, risk, or hazard that is listed on and covered by your policy.
A borrowed or rented automobile.
An event or series of events that causes Bodily Injury and/or Property Damage. This may include repeated or continuous exposure to the same injurious condition.
Occurrence Coverage Form
This form covers a claim that occurred during the policy period regardless of when it is reported.
In auto insurance, that person is seated immediately behind the steering controls of the automobile and no other person.
This type of surety bond is also called a contract bond. It is issued by the insurance carrier to a bank to guarantee the completion of a contract.
Personal and Advertising Injury
This policy covers malicious prosecution; wrongful eviction; wrongful entry, or invasion of private occupancy; libel, slander, or disparagement of goods, products, or services; copyright infringement in advertising and more.
Personal Injury Protection (PIP) Coverage
This type of coverage protects a business in the event that a third party suffers an injury (not bodily injury) due to false arrest, wrongful eviction, slander, and a whole host of other reasons.
Personal Liability Insurance
This coverage is part of a homeowners or renters insurance policy. This type of policy covers legal fees and protects a business owner against personal financial loss if at fault for another’s bodily injury or property damage.
A legal contract contains the agreement between the Insurer and the Named Insured. A Policy is made up of five (5) parts:
- The Declarations
- The Insuring Agreement(s)
- The Exclusions
- The Conditions
- The Definitions
A preprinted brochure that contains all policy language except that contained in the Declarations Page and Endorsements. In the Policy Jacket, you will find the Insuring Agreement(s), Exclusions, Conditions, and Definitions.
Premises Liability Coverage
This type of policy protects the insured in the event that a third party suffers an injury on the premises of the business.
Consideration paid by the insured for the policy. The cost of the policy.
The party who must pay first in the event of a loss. This would be due to the wording of the policy as in the case of an Excess Liability policy or where two policies apply to the same loss. (See Excess)
Product Liability Insurance
A type of insurance policy that protects makers against injury or damage arising after the sale of a product.
Professional Liability Insurance
See Errors and Omissions Insurance.
Proof of Non-Fault/ No B/I
Documentation is required by the insurer to support not charging for an accident or not assigning points for bodily injury in an accident. Acceptable forms include a police report, a letter from the previous insurer, or a letter from the insurance company of the other party in the accident. The insurer may accept a copy of the claims check stub if it contains sufficient information.
Damage or destruction including loss of use of a Third Party's property. Reduction in value is the measure of Property Damage.
This may be awarded in a civil lawsuit that seeks compensation for injury, negligence, libel, or breach of contract.
An estimate of the cost of insurance given to a prospective client. This estimate does not constitute an offer and therefore is not enforceable. It is literally an invitation to the prospective client to make an offer. The offer, which may be accepted or rejected, is the policy application.
Reinstate with Lapse
The act of re-activating a policy that has ceased to be valid due to expiration or cancellation. There is a period between the cessation of coverage and its reinstatement during which the insurance company provided no coverage. (See Cancel)
Helps reimburses the insured for the expense of renting a vehicle while his/her vehicle is in the shop due to a covered loss. Coverage is usually written with a per-day limit and a maximum number of days per occurrence. (See Limit; Occurrence)
Repair or Replacement Cost
The cost of repairing or replacing the damaged property with new property of like kind and quality without deduction for depreciation. (See Actual Cash Value)
Another method an insurance provider uses to determine how much to reimburse the policyholder. When a property is damaged and replaced with new property or something of the same quality, this is the amount it cost. Unlike Actual Cash Value, Replacement Cost does not factor depreciation.
Also called an endorsement, this is an additional document to a policy that alters or enhances the insurance policy’s terms.
Rideshare refers to the taxi-like service that people provide through companies that connect passengers to drivers via a smartphone app. Examples of these companies are, but are not limited to Uber, Lyft, Sidecar, etc. Click here to learn more about Rideshare Insurance.
Stated Value or Stated Amount
A term used to value property and commonly used in auto insurance. It means that in the event of a loss, the insurer will pay the actual cash value, the repair or replacement cost, or the amount stated on the declarations page, whichever is least. This, in effect, places a "ceiling" on the amount to be paid in the event of a loss.
The transfer of the insured's legal right against an injured Third Party to the insurance company. (See Third Party)
This is a three-party bond that guarantees that the guarantor will pay the obligee an agreed-upon amount if the principal fails to meet his/her obligation.
Someone not protected by the Insurance Policy. Typically the other party is in an auto accident. (See First Party)
The optional auto insurance coverage will reimburse the insured for the expense of towing or repairs at the place of disablement in the event the vehicle becomes disabled. Coverage is written with an occurrence Limit. (See Occurrence; Limit)
Trailer Liability is always provided by the towing vehicle. (See Liability)
This type of coverage protects your shipments by car, truck, rail, or air from the moment the goods leave the business premises to the time they are delivered to the intended destination.
The review process by an insurance company. They will determine potential risks and premiums.
A broad liability coverage form that provides another layer of liability coverage so the business can settle claims and cover the cost of legal judgments. The form also provides coverage for some exposures that are not covered by the underlying policies such as coverage for libel and slander (Personal Injury). (See Liability)
Uninsured Motorist Bodily Injury (UMBI)
In the event the insured is injured in an accident which is the fault of an Uninsured Motorist, covers the Bodily Injury expense of the Named Insured, Relatives, and passengers in his/her auto. The coverage is generally written with a per-person and occurrence limit. (See Occurrence, Limit; Named Insured)
Uninsured Motorist Property Damage (UMPD)
In the event the insured's car is damaged in an accident which is the fault of an Uninsured Motorist, pays the cost of repairing the auto. This coverage is only written when the policy does not cover collision and has a variable maximum Occurrence Limit. (See Collision Deductible Waiver)
Voluntary relinquishment of a certain right.
Water Damage Coverage
This type of policy protects your business from losses due to floods and surface water. It covers the backup of sewers and drains/pumps.
Workers Compensation Insurance
A type of insurance policy that provides benefits for an employee’s lost wages, medical expenses, disability costs, and death benefits to their family as a result of a work-related illness or injury. It forfeits the employee’s right to sue the employer.