Insurance Glossary

We partner with business owners at every depth, and that starts with understanding. Our insurance glossary simplifies industry terminology so you can make informed coverage decisions and continue building your business with confidence.

A-E

ACORD Certificate of Liability Insurance

An ACORD certificate of liability insurance is a standardized document that proves your business carries insurance coverage. It summarizes key policy details and is often required by clients, landlords, or contractors before work begins.

Actual cash value is the replacement cost of damaged property minus depreciation. In a claim, this means you are reimbursed for the item’s current value, not what it would cost to buy brand new.

An adjuster is the insurance professional assigned to investigate and evaluate a claim. They review damage, determine coverage, and recommend payment amounts based on the policy terms and documented losses.

An additional insured is a person or organization added to your policy for liability protection. This is common in contracts and allows another party to receive coverage under your policy for specific situations.

An admitted carrier is licensed and regulated by the state, while a non-admitted carrier operates in specialty markets. Both can provide legitimate coverage, depending on the risk and business needs involved.

Advertising injury refers to certain legal claims related to marketing activities, such as copyright infringement, defamation, or misuse of another company’s slogan in your advertising materials.

The aggregate limit of liability is the maximum amount an insurance policy will pay during the policy period, regardless of the number of claims filed.

Assessed value is the dollar amount assigned to property by a tax authority for taxation purposes. It is not always the same as market value or the insured value listed on your policy.

Bailee insurance provides coverage when your business temporarily holds or stores property belonging to someone else, protecting you if that property is damaged, lost, or stolen while in your care.

Blanket insurance provides coverage across multiple properties, locations, or categories under one overall limit, rather than assigning individual limits to each item or site.

Bodily injury liability covers medical expenses, legal costs, and damages if someone is injured due to your business operations, products, or premises.

Business insurance limits refer to the maximum amount your policy will pay for covered losses. Choosing the right limits is critical to ensuring your business is properly protected against financial exposure.

Business interruption insurance helps replace lost income and cover certain ongoing expenses if your operations are temporarily shut down due to a covered property loss.

Care, custody, and control refers to property that belongs to someone else but is in your possession. Many liability policies exclude damage to property under your direct supervision unless specifically endorsed.

A claimant is the person or business that files a claim seeking payment for damages or injuries under an insurance policy.

A claims-made policy provides coverage only if the claim is reported during the active policy period, regardless of when the incident occurred, subject to the policy’s continuity date.

Coinsurance is a policy provision requiring you to insure property to a certain percentage of its value. Failing to meet this requirement can reduce claim payments.

The continuity date is the earliest date from which a claims-made policy will respond to covered incidents. Claims arising from events before this date are typically excluded.

Contractual liability insurance covers certain obligations you assume under a written contract, such as agreeing to defend or indemnify another party.

Cyber extortion coverage helps protect your business from financial loss related to ransomware threats or demands for payment to prevent data exposure or system disruption.

Data breach insurance provides financial protection if sensitive information is compromised, helping cover notification costs, legal expenses, credit monitoring, and regulatory penalties where permitted.

The declarations page is the summary section of your insurance policy outlining coverage types, limits, deductibles, named insureds, and policy effective dates.

A decline occurs when an insurance carrier chooses not to offer coverage for a risk based on underwriting guidelines, claims history, or exposure concerns.

A deductible is the amount you agree to pay out of pocket before your insurance coverage begins paying for a covered loss.

Direct liability refers to legal responsibility your business holds for damages or injuries resulting directly from your operations, actions, or products.

D&O insurance protects company leaders from personal financial loss if they are sued for decisions made while managing the business.

Equipment breakdown coverage protects against sudden mechanical or electrical failure of critical equipment, such as HVAC systems, production machinery, or computers.

Exclusive remedy is a legal principle under workers’ compensation laws stating that employees generally cannot sue their employer for workplace injuries if workers’ compensation benefits are provided.

An extended reporting period allows claims to be reported after a claims-made policy has expired, as long as the incident occurred during the active policy period.

F-J

Grace Period

A grace period is the additional time allowed after a premium due date to make payment before coverage is canceled. During this period, your policy typically remains active.

A hold harmless agreement is a contractual provision where one party agrees to assume liability and protect another party from certain claims or damages.

Host liquor liability insurance protects your business if you serve alcohol at a company event and are held responsible for injuries or property damage caused by an intoxicated guest.

An independent contractor is a self-employed individual hired to perform specific work but not classified as an employee. Insurance responsibilities may differ depending on contractual agreements and state regulations.

When a policy is “in force,” it means coverage is currently active and valid, provided premiums are paid and all policy conditions are met.

Insurance appraisal is a dispute resolution process used when the insurer and policyholder disagree on the value of a property loss, not whether coverage applies.

An insurance adjuster investigates and evaluates claims to determine the extent of damage and how much the insurer should pay under the policy terms.

An insurance agent represents one or more insurance carriers and helps clients purchase policies offered by those companies.

Insurance arbitration is a formal process where a neutral third party reviews a dispute between the insured and the insurer and makes a binding decision.

An insurance broker represents the client rather than a specific carrier, helping businesses compare coverage options across multiple insurers to find appropriate protection.

An insurance claim is a formal request submitted to your insurance company seeking payment for a covered loss under the terms of your policy.

Insurance depreciation is the reduction in value of property over time due to age, wear, or obsolescence, which can affect claim payouts under certain policies.

An insurance endorsement is a written amendment to your policy that modifies coverage, either adding, removing, or clarifying specific protections.

An insurance exclusion is a specific condition or circumstance that is not covered under your policy.

An insurance quote is a preliminary estimate of coverage options and pricing based on the information provided about your business and risk exposures.

The insured is the person or business protected by an insurance policy and entitled to coverage under its terms.

Invasion of privacy refers to legal claims arising from unauthorized use, disclosure, or intrusion into someone’s personal information or private affairs.

Insurtech refers to technology-driven innovations that improve how insurance is quoted, purchased, managed, and serviced, often through digital platforms and automation tools.

K-O

Key Person Insurance

Key person insurance provides financial protection if a critical employee or owner passes away or becomes disabled. The policy helps offset lost revenue, hiring costs, or loan obligations tied to that individual.

Lessor’s risk insurance protects property owners who lease commercial space to tenants. It typically covers the building structure and liability exposures arising from ownership of the premises.

Being liable means being legally responsible for damages or injuries caused by your actions, products, services, or property. Liability insurance helps protect your business from the financial impact of those claims.

Libel is a written or published false statement that harms a person’s or company’s reputation. Certain liability policies may provide coverage for libel claims arising from advertising or business communications.

Legal liability insurance provides coverage when your business is held legally responsible for injury, damage, or financial loss suffered by another party.

A loss payee is a third party, often a lender or leasing company, that is entitled to receive payment under a property insurance claim when insured property is damaged.

Loss runs are detailed reports showing your business’s claims history over a specific period. Insurance carriers use them to evaluate risk when underwriting new or renewal coverage.

A microbusiness is a very small company, often with fewer than ten employees. While smaller in size, microbusinesses still face significant liability and property risks that require proper insurance protection.

Minimum earned premium is the portion of premium an insurer retains even if a policy is canceled early. It ensures the carrier is compensated for issuing and underwriting the policy.

The named insured is the individual or business specifically listed on the insurance policy declarations page and holds primary rights and responsibilities under the contract.

A named perils policy provides coverage only for the specific risks listed in the policy, such as fire or theft. Losses not specifically named are generally excluded.

Nose coverage, also known as prior acts coverage, extends protection under a claims-made policy to incidents that occurred before the current policy began, subject to underwriting approval.

An occurrence-based policy provides coverage for incidents that happen during the policy period, even if the claim is filed years later.

An open peril policy covers all risks of loss except those specifically excluded in the policy language.

P-S

Per Claim Limit

The per claim limit is the maximum amount your insurance policy will pay for a single covered claim, regardless of how many claims occur during the policy period.

A premium is the amount your business pays to maintain active insurance coverage. Premiums are based on risk factors such as industry, revenue, claims history, payroll, and overall exposure.

A premium audit is a review conducted by the insurer after a policy period to verify payroll, revenue, or other rating factors used to calculate your final premium.

Products completed operations coverage protects your business if injury or property damage occurs after a product is sold or work has been finished.

Product liability insurance covers claims arising from injury or damage caused by products your business manufactures, distributes, or sells.

Professional indemnity insurance protects against claims of negligence, errors, or omissions in the professional services your business provides.

A proof of loss is a formal document submitted to the insurer detailing the amount and type of damage claimed under a policy.

Property and casualty insurance refers to coverage protecting physical assets and liability exposures, including property damage, general liability, commercial auto, and workers’ compensation.

Prior acts coverage extends protection under a claims-made policy to incidents that occurred before the current policy began, provided they meet the policy’s retroactive date requirements.

Public liability insurance provides coverage if a member of the public is injured or their property is damaged due to your business operations.

A qualifying event is a life or business change that allows modifications to certain insurance coverage outside of standard enrollment periods.

A repetitive stress injury is a work-related condition caused by repeated motions or strain over time.

Replacement value refers to the cost of repairing or replacing damaged property with new items of similar kind and quality, without deducting for depreciation.

Reputational risk is the potential financial loss your business may face due to negative publicity, legal issues, or public perception events.

A rider is an additional provision added to an insurance policy to modify coverage, similar to an endorsement.

Risk retention occurs when a business chooses to absorb certain losses rather than transferring the risk to an insurance carrier.

An S corporation is a tax designation that allows business profits and losses to pass through to shareholders, potentially affecting payroll and insurance classifications.

Scheduled rating is a pricing method allowing insurers to adjust premiums based on specific risk characteristics not reflected in standard rating factors.

A self-employed individual operates their own business and is not classified as an employee, often requiring specialized insurance protections.

A self-insured business sets aside its own funds to cover certain losses instead of purchasing traditional insurance for those risks.

Slander is a spoken false statement that harms someone’s reputation. Certain liability policies may provide protection against slander claims.

A sole proprietorship is a business owned and operated by one individual, where the owner and business are legally considered the same entity.

A state compensation insurance fund is a state-run workers’ compensation insurer providing coverage options to businesses that may not qualify through private carriers.

Stop gap coverage provides employer liability protection in states where workers’ compensation laws do not automatically include employer liability coverage.

Strict liability holds a business legally responsible for certain damages or injuries regardless of fault or negligence.

A sublimit is a smaller coverage limit within a policy that applies to a specific type of loss.

Subrogation is the insurer’s legal right to recover money from a third party responsible for a loss after the insurer has paid a claim.

Tail coverage extends the reporting period of a claims-made policy, allowing claims to be reported after the policy has ended.

Third-party cyber liability covers claims brought by customers or partners who suffer losses due to your business’s data breach or cyber incident.

A tort is a civil wrong that causes harm or loss, leading to legal liability outside of contractual obligations.

Tort liability refers to legal responsibility arising from a civil wrong, such as negligence, that results in injury or damage.

A tortfeasor is the individual or entity legally responsible for committing a civil wrong that caused injury or financial loss.

A triple net lease requires the tenant to pay property taxes, insurance, and maintenance costs in addition to base rent.

U-Z

Underwriting

Underwriting is the process insurers use to evaluate your business risk before issuing coverage. It considers factors such as industry, revenue, payroll, claims history, and operations to determine eligibility, pricing, and policy terms.

An insurance policy is a unilateral contract, meaning only the insurance company makes a legally binding promise to pay covered claims, while the policyholder agrees to meet conditions such as paying premiums.

Vicarious liability occurs when a business is held legally responsible for the actions of its employees or representatives performed within the scope of their duties.

A waiver of subrogation prevents your insurance company from seeking reimbursement from another party after paying a claim, typically required by contract between businesses.

Workers’ compensation class codes are numerical codes assigned to job roles that determine insurance rates based on risk exposure. Proper classification is critical to ensuring accurate premium calculations and avoiding costly audit adjustments.

A loss payee is a third party, often a lender or leasing company, that is entitled to receive payment under a property insurance claim when insured property is damaged.

Loss runs are detailed reports showing your business’s claims history over a specific period. Insurance carriers use them to evaluate risk when underwriting new or renewal coverage.

A microbusiness is a very small company, often with fewer than ten employees. While smaller in size, microbusinesses still face significant liability and property risks that require proper insurance protection.

Minimum earned premium is the portion of premium an insurer retains even if a policy is canceled early. It ensures the carrier is compensated for issuing and underwriting the policy.

The named insured is the individual or business specifically listed on the insurance policy declarations page and holds primary rights and responsibilities under the contract.

A named perils policy provides coverage only for the specific risks listed in the policy, such as fire or theft. Losses not specifically named are generally excluded.

Nose coverage, also known as prior acts coverage, extends protection under a claims-made policy to incidents that occurred before the current policy began, subject to underwriting approval.

An occurrence-based policy provides coverage for incidents that happen during the policy period, even if the claim is filed years later.

An open peril policy covers all risks of loss except those specifically excluded in the policy language.