Coverage Definitions
Every industry has its own unique language – and insurance is no exception. Insurance can be complicated, but our list of common insurance terms will give you everything you should know about insurance policies, coverages, and basic terminology. Browsing the glossary of definitions below can give you the knowledge to better understand your policy and other important information about all types of insurance.
This policy can provide a combination of liability protection and physical damage coverage for loss due to damage to vehicles owned, maintained, or used by you. Additional coverages such as medical payments and uninsured motorist protection can be purchased to customize the policy to fit your business.
This coverage is used to protect against claims alleged for bodily injury and property damage arising from the ownership, maintenance, or use of any covered auto.
This coverage is used to insure against loss or damage to a covered vehicle resulting from collision or upset.
Combined single limit coverage specifies that regardless of the number of covered autos, insureds, or claims occurring in any one accident, the most that you can recover is the limit of liability shown on the policy’s declaration page. This includes damage associated with bodily injury, property damage and pollution costs or expenses.
This coverage is used to insure against loss or damage to a covered vehicle resulting from loss other than collision or upset.
This endorsement is used to protect employees or other specified individuals when they borrow or rent cars for personal use and do not have the protection of a Personal Auto policy.
This coverage is used to protect against claims arising out of the use of vehicles leased, hired, rented or borrowed by you or your employees while in the course of business.
This coverage is used to pay for medical expenses incurred by a covered person injured while driving or riding in your automobile. It provides coverage, regardless of fault, for all reasonable medical costs incurred for up to one year from the date of the accident. It does not cover injury to employees.
This coverage is used to provide liability protection for autos used in your business that are not owned, leased, hired, rented, or borrowed. This includes autos of employees and subcontractors that are used on your behalf.
Provides insurance for loss of net profits and continuing expenses (including necessary payroll) due to suspension or interruption of business due to a loss from an insured peril.
A form of business interruption coverage which provides a monthly limitation.
This coverage pays for the additional costs of keeping a business in operation after a loss, either at the insured location or at a substitute location.
Rent insurance protects building owners against the loss of income where rentals have been interrupted or rental value impaired by occurrence of any of the hazards insured against. This is Business Interruption insurance for the landlord, assuring continuous income while the building is untenantable.
Indemnifies for loss due to embezzlement or wrongful abstraction of money, securities or other property by employees.
Inside Coverage: Provides coverage for loss of money and securities caused by theft, disappearance, or destruction. Coverage also applies to any banking premises.
Outside Coverage: Provides coverage for loss of money and securities in the care and custody of a messenger caused by theft, disappearance, or destruction.
Covers acts or omissions of individuals who have discretionary responsibility involving a designed pension or profit-sharing plan or newly created plan
Covers loss resulting from forgery or alteration of any checks, drafts, promissory notes, or similar promises.
- Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services.
- Oral or written publication of material that violates a person’s right of privacy.
- Misappropriation of advertising ideas or style of doing business.
- Infringement of copyright, title, or slogan.
Coverage is provided for Bodily Injury and Property Damage arising out of liability assumed under written or oral contracts.
This form excludes property damage to property owned, occupied, or rented by the insured but covers property damage to property in the care, custody and control of the insured with the exception of property upon which the operation is being performed.
This coverage will provide protection for only those claims reported or first made during the policy period or during any previous policy period that is stated in the Prior Acts or Retroactive Date option of your policy. This option allows you to keep coverage in force under consecutive Claims-Made policies.
Coverage is extended to all employees as additional insureds.
Fire damage to structures while rented or leased to the named insured.
Provides in a single contract insurance needed to cover liability for injuries or property damage sustained by members of the public. It covers accidents occurring on your premises or away from your premises as a result of business operations. It automatically covers certain hazards which do not now exist, but which may develop during the life of the policy.
Coverage is provided for the insured serving alcoholic beverages at functions incidental to the insured’s business provided he is not in liquor, or related, business.
Coverage is provided for rendering – or failure to render – medical care to others.
Provides protection against catastrophic liability claims. Coverage is excess over your primary liability policies and is subject to policy conditions and exclusions.
Independent Contractor’s Liability Insurance provides for payment on behalf of the insured of all sums which the insured shall become legally obligated to pay damages because of Bodily Injury or Property Damage caused by an occurrence and arising out of (1) operations performed for the named insured by independent contractors or (2) acts or omissions of the named insured in connection with his general supervision of such operations (other than (a) maintenance and repairs at premises owned by or rented to the named insured and (b) structural alterations at such premises which do not involve changing the size of or moving buildings or other structures).
Covers liability arising out of the activities of the named insured and his employees while temporarily outside the United States, its’ territories or possessions or Canada, provided the original suit for damages is brought within the United States, its’ territories or possessions or Canada.
Pays for medical expenses for bodily injury caused by accident on your premises or because of your operations regardless of fault. Payments not to exceed applicable limit of insurance.
Extends coverage to cover boats used by but not owned by the named insured, nor used to carry persons for a charge.
This form provides coverage for claims arising out of an accident which results in bodily injury or property damage neither expected nor intended. The form covers such claims that occur during the policy period regardless of when the claim is made against you.
- False arrest, detention or imprisonment.
- Malicious prosecution.
- Wrongful entry into or eviction of a person from a room, dwelling or premises that the person occupies.
- Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.
- Oral or written publication of material that violates a person’s right of privacy.
Products and Completed Operations includes all bodily injury and property damage occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’ except products that are still in your possession and work that has not yet been completed or abandoned.
Covers accounts receivables on a special coverage “all risk” basis. Includes sums due the insured from customers which are uncollectible due to loss or damage to records of accounts receivable, collection expenses in excess of normal, and other reasonable expenses to re-establish records of accounts receivable.
This insurance provides coverage against direct physical damage to the buildings or structures you own or are required to insure by reason of contract or agreement.
This insurance covers office contents (furniture, equipment and supplies), your inventory, materials, supplies, fixtures, equipment, machinery, tenant’s improvements and betterments at the described premises against risks of direct physical loss from external causes.
Perils covered under Basic Form include Fire, Lightning, Explosion, Windstorm or Hail, Smoke, Aircraft or Vehicles, Riot or Civil Commotion, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action.
Perils covered under Broad Form Causes of Loss include the identical perils as the Basic Form with the addition of Breakage of Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage, Collapse.
The covered causes of loss under this form are “risks of physical loss” unless the loss by the peril is excluded or limited. Standard exclusions under this form include Ordinance of Law, Earth Movement, Government Action, Nuclear Hazard, Power Failure, War and Military Action, Water – Flood, Backing Up of Sewers, etc, Artificially Generated Electric Current, Delay, Loss of Use of Market, Wear and Tear, Dishonest or Criminal Acts, Rain, Snow, Ice or Sleet to Property in the Open.
An agreement in a policy wherein the insured agrees to insure a stated percentage of the value at risk, in return for which a reduction in rate is granted. It is used on both property and time element policies.
Covers electronic data processing equipment, other machines related to data processing operation, and media on a special coverage basis.
Covers described glass, lettering, and ornamentation, for loss caused by breakage or accidental or malicious application of chemicals. Limited protection is provided in your Property policy, but the additional coverage is needed to ensure that adequate insurance is available. Besides covering the scheduled glass, this insurance will pay for the costs to repair or replace the frames, installation of temporary glass or the removal of obstructions in the event of loss.
This endorsement provides coverage on the basis of full replacement cost without deduction for depreciation on any covered loss sustained subject to the limits, terms and conditions of the policy including the co-insurance clause. In arriving at the proper amount of insurance to comply with the co-insurance clause no deduction is taken for depreciation.
This insurance provides coverage against direct physical damage to structural or painted signs, whether or not attached to the building.
Valuable papers and records are covered on a special coverage “all risk” basis. Coverage applies on the insured’s premises and is extended to cover while being conveyed outside the premises. Coverage will be specific for irreplaceable items or blanket for items which can be reproduced.
Workers’ Compensation insurance provides benefits to employees who become ill or injured on the job. Through this program, workers are provided with benefits and medical care, and employers have the assurance that they will not be sued by the employee.
The cost of workers’ compensation benefits is based on the gross payroll and the number and severity of illnesses and injuries that type of employer experiences.
Accounts Receivable coverage protects against loss arising out of destruction to your accounts receivable records. Coverages include amounts due from customers that you cannot collect, collection expenses in excess of normal collection expenses, expenses incurred in reconstructing accounts receivable records, and interest charged on loans to offset uncollectible amounts pending loss settlement. This coverage may be available.
The Commercial General Liability form excludes coverage for the ownership, maintenance or use or entrustment to others of any aircraft, including the use of unmanned aircraft or drones. If the excluded exposure exists, coverage may be available.
Coverage may now be available for the exposure of terrorism related damage for biological, chemical, radioactive and nuclear events. Please let us know if you would like a quote.
Business Income and Extra Expense coverage protects against the loss of income, loss of rental income, payment of necessary continuing expenses, and costs in excess of normal operating expenses due to direct property damage from an insured peril. This coverage may be available.
This provides coverage for your loss of business income as a result of a loss sustained at the location of a buyer, a supplier, or another store which attracts business for you. This coverage may be available.
Business Income and Extra Expense coverage typically ends on the date that damaged property is or should be repaired or replaced and business operations are or should be resumed. This option extends coverage for loss of income for a specified number of days after operations are resumed. This coverage may be available.
This provides coverage for your loss of business income as a result of a loss sustained to a covered scheduled property (vehicles and mobile equipment) from an insured peril. This coverage may be available.
This endorsement is used to afford Liability, Medical Payments, Uninsured Motorists, and Physical Damage for specifically named individuals while they are using a non-owned auto for their personal use. If you or your officers or employees are furnished a company auto and they have no personal auto coverage, this coverage may be available.
Liability policies exclude coverage for damage to property of others in your care, custody, or control. This coverage may be available.
Property policies usually cover contractors’ equipment and tools only while located at a described premises. Coverage ceases once the property is transported from the premises and while it is located at a jobsite. Should you have these exposures, specific coverage may be available.
In the course of business operations, you may sign a lease, contract, or other agreement which could transfer financial risk to you. Those agreements should be reviewed by your attorney. Also, we need to be made aware of such agreements to evaluate the proper insurance treatment for an assumed obligation. It is becoming more common for contractual liability coverage to be limited only to those situations where your actions or premises have contributed to the injury or damages. If you sign a contract where you agree to indemnify a party for its sole acts of negligence, you may not have insurance coverage for that obligation.
Directors and Officers can be held personally liable if their negligent acts result in loss to the company or its shareholders. Claims can be initiated by shareholders, employees, customers (restraint of trade, deceptive trade practices), competitors (copyright, patent or business interference), and government regulators. This coverage may be available.
Property policies do not include coverage for damage to your building or contents caused by earthquake. If you are interested, coverage may be available.
There are specific policies designed to cover computer hardware and software with broader coverage than afforded in a standard property policy.
This provides coverage for negligent acts, errors, and/or omissions in management and administration of employee benefit plans. This coverage may be available.
Policies exclude coverage for losses caused by dishonest acts of your employees.
Employee Dishonesty Insurance covers losses caused by the dishonest acts of your employees.
Crime Insurance can also cover losses caused by forgery and alteration, theft, disappearance and destruction, robbery and safe burglary, computer fraud, and funds transfer by third parties. Coverage for all of the above may be available.
This endorsement is used to afford Liability and Physical Damage for your employees while operating an auto, hired or rented in their individual names, which is used in the conduct of your business. This coverage may be available.
Coverages include sexual harassment, employment discrimination, wrongful termination, and other coverages. It is important that you understand your exposures to loss in these critical areas. This coverage may be available.
Property policies traditionally exclude coverage for boilers, machinery, air conditioning equipment, and electrical panels for damage due to mechanical breakdown, explosion of objects under pressure, and artificially generated electricity. This coverage may be available.
Your policy of Workers Compensation and Employers Liability insurance affords no coverage for workers compensation mandated by federal law including, but not limited to, the U. S. Longshore and Harbor Workers Compensation Act and the Jones Act. If your business has this exposure, coverage may be available.
This provides coverage for ERISA (Employee Retirement Income Security Act) exposure of fiduciaries for specifically designed plans to the extent that the exposure is caused by a “wrongful act.” This coverage may be available.
There are policies specifically designed to insure painting, pictures, valuable rugs, statues, antique furniture, rare books, etc. with broader coverage than afforded in a standard property policy. This coverage may be available.
Property policies do not include coverage for flood losses. A high percentage of flood losses occur to properties located in non-flood hazard zones. Flood coverage for your building and contents is available at a reasonable cost through the National Flood Insurance Program (NFIP). NFIP flood insurance provides commercial property coverage on an Actual Cash Value basis with no coverage for Business Income or Extra Expense.
There is a mandated 30 day waiting period, unless required by loan closings, for any new flood policies and for an increase in coverage on any existing policies. Excess flood and business income may be available.
If your business operates or sells products outside of the United States, foreign coverage may be available.
This is specifically designed to protect businesses whose operations involve auto sales, auto servicing and repair, service stations, storage garages, valet services, and delivery and towing operations. This coverage may be available.
This provides coverage for your business in the event a vehicle rented, leased, or borrowed by the business is damaged by a covered peril. If your business has this exposure, this coverage may be available.
Coverage for outdoor fences, lights, radio and television antennas, satellite dishes, trees, shrubs, and plants, including debris removal, is provided solely for the perils of fire, lightning, explosion, riot or civil commotion, and aircraft but only up to $1,000 per occurrence. If broader coverage and/or high limits are desired, such coverage may be available.
This provides protection to individuals and corporations on a reimbursement basis for ransom payment, loss of income, medical and psychiatric care, and crisis management expenses resulting from kidnap, extortion, wrongful detention, and hijacking. This coverage may be available.
In today’s litigious society, many businesses have found it necessary to increase the limits of liability to adequately protect their assets in the event of a covered loss. Higher limits of liability may be available. Please carefully review your limits to ensure your level of comfort with them.
The Commercial General Liability form excludes liquor liability exposures if you are in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. Separate liquor liability coverage may be available.
New mandatory reporting requirements went into effect on July 1, 2009, for losses involving Medicare and Medicaid claimants. Self-insured companies and insurance carriers now must electronically report to the Center for Medicare Services (CMS) any payment made to a Medicare/Medicaid eligible claimant. The reporting requirements include all bodily injury and medical payment claims, including settlements, judgments, awards, and other payments. Employers who pay small medical only claims or employers with deductible insurance programs must register as a Responsible Reporting Entity (RRE).
(RRE’s) are liability insurers, no-fault insurers, workers compensation insurers, self-insureds, and policyholders. Each RRE, including self-insureds, must register with CMS’s Coordination of Benefits Contractor. Registration can be done electronically at www.section111.cms.hhs.gov/MRA.
Further information and computer based training is also available through the CMS website at www.cms.hhs.gov/mandatoryisnerep.
Motor Truck Cargo coverage applies if you transport property of others. Coverage may also be provided for your goods being transported by your own vehicles. This coverage may be available.
Liability policies exclude coverage for a variety of liability exposures resulting from the use of email, maintenance of a customer database, and/or use of a company website. These exposures include, but are not limited to, copyright infringement, defamation of an individual or competitor, invasion of privacy, and unauthorized access by a hacker to obtain customers’ information including, but not limited to, Social Security numbers, credit card numbers, etc. from your database. This coverage may be available.
This coverage applies to damage resulting from an off-premises interruption of power or other utility service. This coverage may be available.
Coverage for loss of income resulting from an off-premises interruption of power or other utility service is excluded. This coverage may be available.
Property policies exclude losses or increased costs due to the enforcement of any ordinance or law regulating the construction, use, or repair of any property. You should research all laws to determine if Ordinance or Law coverage is needed. Coverage for loss to the undamaged part of the building, as well as demolition costs and the increased cost of construction, may be available.
Your policy of Workers Compensation and Employers Liability insurance provides coverage only for work performed in the states shown in this summary. If you begin work in a state not listed, coverage may be available.
Partners, officers, and others can elect to exclude themselves from Workers Compensation benefits assuming that a combination of either individual or group life, health, or disability policies will afford them equivalent coverage if they are injured. Prior to selecting or renewing such as exclusion, you should check with your life, health, or disability carrier(s) to understand the coverage afforded you for a work related injury or disease.
All policies exclude almost all coverage for incidents involving pollutants. Coverage for this exposure may be available.
Professional Liability insurance protects you, as a professional, against claims made by your clients alleging that you were negligent in providing or failing to provide professional services. If your operations include these exposures, coverage may be available.
Product Recall insurance provides protection for your business in the event you must recall any of your products. Coverage can include recall expenses and liability to third parties seeking damage because your product recall could cause a loss of income or damage their reputation. If your operations include these exposures, coverage may be available.
This coverage is for specified autos and pays rental costs of substitute autos after a covered loss to a covered auto. This coverage may be available.
Coverage for outdoor signs and building glass is extremely limited under the Building and Personal Property form. Separate coverage may be available.
This covers damage to perishable personal property and stock caused by a change in temperature or humidity resulting from mechanical breakdown on premises or from complete or partial interruption of electrical power on or off premises. This coverage may be available.
Trade credit coverage is a financial tool which manages both commercial and political risks that are beyond your control. It is protection against your customers’ failure to pay their trade debts due to insolvency or failure to pay within a set timeframe. This coverage may be available.
If you have underground storage tanks, separate insurance covering this exposure may be available.
Valuable Papers and Records coverage protects your business against accidental loss or damage from a covered cause of loss to valuable papers and records that belong to you or are in your care, custody, or control. This coverage may be available.
Property policies contain a loss provision, which excludes or reduces coverage for certain covered perils while a property is vacant or unoccupied. A building generally is considered vacant when it does not contain enough business personal property to conduct customary operations or if less than 25% of its total square footage is rented to others to conduct customary operations. We recommend that you carefully review this provision, and if your property is going to be vacant or unoccupied for longer than 30 consecutive days, you should contact us. This coverage may be available.
A warranty is a statement or stipulation about the extent of a fact or a condition of the subject of insurance, which, if untrue, will void the policy. In the event the warranty needs to be terminated to perform maintenance or because of weather conditions, you are required to bring the situation to our attention so that we can communicate with the insurer to see if the warranty can be waived while the condition is resolved.
The Commercial General Liability form excludes coverage for watercraft owned, operated by, rented, or loaned to any insured. If your operations involve this exposure, there may be coverage available, which includes Hull Insurance, Protection and Indemnity, Loss of Charter, and Cargo Insurance.
The coverage and considerations summarized in this section are common exposures that exist for many businesses. They should not be interpreted to be an all-inclusive list of every potential exposure and coverage needed.
