When you shop for or buy any business insurance you’ll have to read through a lot of paperwork that explains your coverages, limitations, and costs. There are probably some words and phrases in this paperwork that you might not be familiar with. We’ve put together a list of key terms and definitions you’ll come across to help you understand what you’re reading.
- ACORD Certificate – This is a certificate of insurance from ACORD that proves your business is insured. This is the industry standard certificate for almost all insurers.
- Actual Cash Value (ACV) – This is a process that figures out how much your business’s property is worth when it’s being repaired or replaced after a covered loss. You find this value by taking the replacement cost and subtracting the amount of wear and tear.
- Additional Insured – This is a third party you cover under your policy. This would happen if a client asks you to cover a general contractor’s business insurance before they work with you.
- Aggregate Limit – This is the most money your insurance company will pay out during the time of your policy.
- Appraisal – Your insurance company will use appraisals to figure out how much your property is worth. This helps them decide how much it will cost to fix or replace any property that has damage.
- Blanket Insurance – You can choose one limit that will cover some or all of your property. This limit can cover property at several locations.
- Business Interruption Insurance – This type of insurance covers lost income if for some reason your business is unable to operate due to covered property damage.
- Business Owner’s Policy (BOP) – Business owner’s policies are a bundle
- Certificate of Liability Insurance – This shows proof that your business is protected by general liability insurance. Clients may want to see this certificate before they agree to work with your company.
- Claim – If your business suffers a loss or has damage, you make a claim to your insurance policy for help with costs.
- Claims-Made Insurance Policy – With a claims-made insurance policy, your insurance company helps pay for claims that are made against your business while your policy is in effect.
- Coinsurance – Coinsurance is the minimum amount that a covered property must be insured for in order to avoid a penalty in the event of a loss. It is usually in commercial property insurance. Most of the time, this is a percentage of the property’s full or assessed value. Most of the time, it also refers to buildings.
- Commercial Auto Insurance – This insurance protects any vehicles your company owns.
- Commercial Earthquake Insurance – Covers the building or property damage caused by an earthquake.
- Commercial Flood Insurance – Protects your business from damage caused by a flood. You typically by this as a separate policy since most commercial property insurance won’t include flood coverage.
- Commercial Property Insurance – Protects the physical assets of your business from things like fire, explosions, burst pipes, storms, theft, and vandalism.
- Commercial Umbrella Insurance – The coverage limits of some liability policies, like general liability insurance, are increased by commercial umbrella insurance. So, if a claim for general liability costs more than your limit, this type of insurance can help pay the difference.
- Cyber Liability – Includes several types of coverage that protect your business from damages caused by cyber attacks.
- Declarations Page – On the declarations page of your policy, you’ll find important information about your business and the coverages and limits that apply to your policy.
- Disability Insurance – If one of your workers gets hurt on the job and ends up with a temporary or permanent disability, they may be able to get disability insurance. It helps protect their income in case they get sick or hurt and can’t work.
- Employer’s Liability Insurance – This is a type of insurance that helps pay a business owner’s legal costs if an employee gets sick or hurt at work and sues your company.
- Employment Practices Liability Insurance (EPLI) – This insurance helps protect your business if a current or former employee sues you for things like harassment, discrimination, or wrongful termination.
- Endorsement – Changes to your business insurance policy, including adding or reducing coverage.
- Errors and Omissions Insurance (E&O) – This insurance protects your business if a client sues due to a mistake you’ve made. Such as advice that lost them money.
- Exclusion – An exclusion is something that your business insurance won’t cover. Your policy will come with a list of exclusions so you know exactly what it won’t cover.
- General Liability Class Codes – Insurance companies use general liability class codes to figure out the risk level of different types of businesses. These codes help insurers figure out how much to charge.
- General Liability Insurance – A type of business insurance that helps pay for claims that your company hurt someone physically or caused damage to their property.
- Minimum Earned Premium – The minimum earned premium is the least amount of money that an insurance company will take for a policy.
- Named Insured – The person or business that your business insurance covers is the “named insured” on your policy.
- Named Perils – If you have “named perils” insurance, claims can only be paid if they were caused by certain risks or events that are listed in your policy.
- Nose Coverage – Nose coverage helps protect your business from claims that could be made about something that happened when you had a different policy.
- Occurrence-Based Insurance Policy – If your insurance company gives you an “occurrence policy,” it means that claims will be covered if they happened during the time of your policy. Claims can be made at any time, even after the end of your policy.
- Per-Occurrence Limit – Your insurance policy may have a per-occurrence limit. This is the most money your insurance company will pay out for one claim.
- Proof of Loss – A proof of loss is a document that an insurance company sends to a property policy holder after their property has been lost, stolen, or damaged. This document has information about the loss, such as the cause and how much money is it costs.
- Products-Completed Operations Aggregate – The products-completed operations aggregate is the most your insurance company will pay out during the time of your policy for claims that a product or finished service caused injury or damage to your property.
- Property Insurance – Business property insurance helps protect the building and tools of your business. This coverage is the same whether you own or rent your property.
- Qualifying Event – Your insurance policy will have a list of things that they cover if they happen and cause a loss.
- Repetitive Stress Injury – A type of injury that happens over time because of doing the same thing over and over. Employees can get workers’ compensation benefits if they have an injury from doing the same thing over and over again.
- Replacement Value – Replacement value is how much it will cost to replace something with the same thing or something similar.
- Retroactive Date – A part of insurance policies that cover claims. It helps keep your business safe from claims about things that happened on or after a certain date.
- Rider – A business insurance rider is an add-on that gives more coverage than the basic policy.
- Risk Management – Risk management is a way to find and stop problems.
- Sole Proprietorship – A business that has a sole owner.
- Standard of Care – A customer or client’s expectation that a business will give them good services. They can sue your business if they think you didn’t meet the standard of care.
- Stop Gap Coverage – Stop-gap coverage gives an employer liability insurance policy to a business if it doesn’t already have it from their workers’ compensation policy.
- Subrogation – Through subrogation, an insurance company can go after a third party that caused a loss to an insured person.
- Tail Coverage – Helps pay for claims made after an insurance policy has ended. To be covered, the claim must be for something that happened during the time the policy was in effect. A longer reporting period is another name for tail coverage.
- Tort – A tort is an illegal act that hurts or hurts someone else.
- Tortfeasor – A person who commits a tort.
- Underwriting – Underwriting is the process by which a group of experts look at a company’s risk and figure out how much the rate will be. They will decide whether or not the risk is okay for the company.
- Vicarious Liability – Vicarious liability means that your business can be held responsible for the actions of a third party. Like an employee or a contractor you work with.
- Workers’ Compensation State Fund – Businesses in monopolistic states that can’t get workers’ comp coverage from an insurance company can use a state fund. These government pays for these programs.
- Worker’s Compensation Insurance – Workers’ compensation insurance gives workers money to help them get better after getting hurt or sick at work. Most states require business owners to have this kind of insurance.
Working With EZ
EZ can help whether you need group health insurance for your employees or commercial insurance to protect your business. Our agents work with the best insurance companies in the country to make sure you and your employees get the best insurance. In fact, we can find you the best coverage for your budget and save you hundreds of dollars a year. Call us at 877-670-3531 for help with group health insurance or 877-670-3538 for help with commercial insurance if you have any questions.