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Insurance glossary

Insurance terms, in plain language.

The commercial insurance and contract terms business owners actually run into, defined plainly and tied to the coverage and requirements they belong to.

Requirements & contracts

Certificate of Insurance

A certificate of insurance is a one-page document that summarizes your policies, the coverage types, limits, and dates, for a third party such as a landlord, client, or vendor.

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Additional Insured

An additional insured is a party added to your liability policy by endorsement, often a landlord, client, or general contractor, so your coverage can respond on their behalf for claims connected to your work or tenancy..

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Certificate Holder

A certificate holder is the party that receives a certificate of insurance as proof that your coverage exists.

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Waiver of Subrogation

A waiver of subrogation is an endorsement in which your insurer gives up its right to recover from a specific third party after paying a claim.

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Primary and Noncontributory

Primary and noncontributory is contract language asking your policy to respond first (primary) and without seeking contribution from the other party's insurance (noncontributory) for a covered claim..

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Coverages

General Liability

General liability insurance covers third-party bodily injury and property damage your business may be responsible for, along with certain personal and advertising injury claims.

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Business Owners Policy (BOP)

A business owners policy bundles general liability with commercial property coverage, and usually business income coverage, into one package built for small and mid-size businesses..

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Commercial Property Insurance

Commercial property insurance covers your business buildings, contents, equipment, and improvements against covered causes of loss such as fire.

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Business Personal Property

Business personal property is the coverage for the movable property your business owns and uses, inventory, furniture, equipment, and tools, as opposed to the building itself..

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Business Interruption

Business interruption, or business income, coverage replaces lost income and pays continuing expenses when a covered property loss forces your business to close or scale back during the restoration period..

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Workers Compensation

Workers compensation provides medical and wage-replacement benefits to employees injured on the job, and is required in nearly every state once a business has employees..

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Commercial Auto

Commercial auto insurance covers liability and physical damage for vehicles used in the business.

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Hired and Non-Owned Auto

Hired and non-owned auto covers liability when the business uses vehicles it does not own, such as employees' personal cars used for work or rented vehicles..

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Professional Liability

Professional liability, also called errors and omissions, covers claims that your professional advice, services, or work caused a client financial harm.

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Errors and Omissions (E&O)

Errors and omissions is another name for professional liability coverage.

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Cyber Insurance

Cyber insurance covers the costs of a data or network incident, including breach response, liability to affected parties, ransomware, and often funds-transfer and social-engineering fraud..

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Employment Practices Liability (EPLI)

Employment practices liability insurance covers claims by employees such as wrongful termination, discrimination, and harassment.

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Commercial Umbrella

A commercial umbrella provides additional liability limits above your underlying general liability, commercial auto, and often employers liability policies, for claims that exceed the primary limits..

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Policy terms

Deductible

A deductible is the amount you pay out of pocket on a covered claim before your insurance pays the rest.

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Limits of Insurance

Limits of insurance are the maximum amounts your policy will pay for covered losses.

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Aggregate Limit

An aggregate limit is the most a policy will pay for all covered claims during the policy period, as opposed to a per-occurrence limit that applies to a single claim..

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Exclusion

An exclusion is a provision that removes certain causes of loss, situations, or types of claims from coverage.

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Endorsement

An endorsement is an amendment that adds, removes, or changes coverage on a policy.

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Named Insured

The named insured is the person or business named on the policy as the primary holder, with the broadest rights and responsibilities under it.

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Personal lines

Replacement Cost

Replacement cost is a valuation method that pays to replace damaged property with new property of like kind and quality, without subtracting for age or depreciation..

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Actual Cash Value

Actual cash value pays replacement cost minus depreciation, so older property pays out less than it costs to replace..

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Dwelling Coverage

Dwelling coverage is the part of a homeowners policy that insures the physical structure of your home, set to a limit that should reflect the cost to rebuild it..

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Personal Liability

Personal liability coverage protects you if you are legally responsible for injuring someone or damaging their property, paying defense and damages up to your limit..

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Scheduled Personal Property

Scheduled personal property is coverage that lists specific high-value items, like jewelry or art, at an agreed value, covering them more broadly than the homeowners sub-limit..

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Loss of Use

Loss of use, or additional living expense, pays the extra costs of living elsewhere when a covered loss makes your home temporarily uninhabitable..

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Uninsured / Underinsured Motorist

Uninsured and underinsured motorist coverage pays for your injuries, and sometimes damage, when an at-fault driver has no insurance or not enough to cover the loss..

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Water Backup Coverage

Water backup coverage pays for damage when water or sewage backs up through drains or sump pumps into your home, which standard homeowners policies often exclude..

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Ordinance or Law

Ordinance or law coverage pays the added cost of rebuilding to current building codes after a covered loss, which a basic policy may not fully cover..

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Loss Assessment

Loss assessment coverage helps pay your share when a condo or homeowners association assesses unit owners for a covered loss to shared property or liability..

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Independent, plain-language help

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