NJCAIP commercial insurance terms and definitions

Commercial insurance terms and definitions NJCAIP.

INSURANCE TERMS GLOSSARY
Here are some definitions to help you better understand insurance. Although interpretations may vary between insurance companies, these descriptions should provide a basic understanding.
A
Accident
A sudden, unexpected or unintentional event.
Accidental Death and Dismemberment (AD&D)
This coverage pays a lump sum benefit for accidental loss of life, limb or sight.
Accounts Receivable Coverage
Pays for the cost of replacing or restoring your accounts receivable records if they’re damaged by fire, windstorm, vandalism or any other covered incident. It also may pay for amounts due from your customers that you are unable to collect, subject to the policy limits.
Actual Cash Value
There are two ways to calculate the value of your property. Replacement cost valuation is the full amount necessary to replace your property today with property of like kind and quality. The other valuation method is actual cash value, which is the cost to replace your property today with materials of like kind and quality, less depreciation.
Advertising Liability
Your business can incur liability from advertising and associated activities. Advertising liability includes publishing information that is inaccurate, slanders or libels someone; violates their right of privacy; copies their advertising ideas or style of doing business; or infringes on their copyright, title or slogan.
Aggregate Limit
A type of policy limit in liability policies that restricts coverage to a specific sum for covered losses that occur during the policy period.
Auto
A land motor vehicle, trailer or semi-trailer designed for travel on public roads, including attached machinery or equipment, but excluding mobile equipment. Mobile equipment is land vehicles that are not required to have motor vehicle registration.
Automatic Sprinkler
A property protection device to prevent damage by fire. The sprinkler head is made of a substance that melts at a low temperature and releases a spray of water or dry chemicals to extinguish or control the fire.Some insurers discount property insurance rates if your business has automatic sprinklers.
Automobile Collision Coverage
Covers damage to your vehicle from an accident involving another vehicle or a stationary object such as a building, telephone pole or guardrail.
Automobile Comprehensive Coverage
Covers physical damage to your vehicle caused by a variety of risks, including fire, lightning, theft, vandalism, hail or flood, but not caused by a collision.
Automobile Liability Insurance
Protects your business against loss if someone claims that you or someone driving your car with permission is legally liable for injuring a third party or causing property damage.
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B
Bailees Customer Coverage
This coverage is used to insure against loss to property of others that is in your possession, regardless of your legal liability. It is needed since standard Property and General Liability policies limit or exclude exposures of this kind.
Binder
A document you can use to show evidence of your insurance coverage until you receive your insurance policy. If you have a valid binder you are insured.
Blanket Coverage
Coverage under a single amount of insurance for two or more properties or exposures.
Bodily Injury Liability
Liability for injury or death of someone (other than you or your employee), including the cost of care, loss of services and/or restitution for death.
Boiler and Machinery Insurance
Protects your business in case of the sudden and accidental breakdown of your steam boilers, steam pipes, steam engines and turbines, machinery, electrical equipment and mechanical equipment. Sometimes these items are excluded from standard property insurance policies. Some carriers now use the term “Systems Breakdown Coverage” or “Equipment Breakdown Coverage” to refer to Boiler and Machinery coverage. Since the terminolody can have different meanings, a policy should be carefully reviewed to determine if traditional boiler and machinery coverage is included in Systems Breakdown or Equipment Breakdown.
Brands and Label Coverage
Pays for the cost of removing the brands and labels from your damaged stock so it can be salvaged.
Builder’s Risk Coverage
Insures your commercial buildings under construction against damage from fire, windstorm, theft and other exposures. The coverage also applies to property and building materials while in transit and during temporary storage. The coverage may apply to a single location or may be written to cover multiple locations.
Building Coverage
Protection against physical loss or damage to your building and other structures at the same location due to fire and other covered incidents, to the policy limit.
Burglary
Breaking and entering into someone else?s property with the intent of committing a crime and with visible signs of forced entry.
Burglary and Theft Insurance
Protects you from property losses due to burglary, theft or larceny.
Business Income from Dependent Properties
Provides coverage for loss of income resulting from damage to the property of another business on which the Insured depends to continue operations. The other business is typically a supplier or purchaser of the Insured’s products. If the other (dependent) property suffers a covered loss and the Insured cannot obtain required products or component parts from that facility, the resulting loss of income is covered. Also known as Contingent Business Income or Contingent Business Interruption.
Business Income/Business Interruption/Extra Expense Coverage
Reimburses your business for lost profits, fixed expenses and the cost of restoring operations if the business has to shut down due to direct damage to your property. Reimbursement is usually up to a year following the covered loss. Examples of extra expenses include renting equipment or another office space.
Business Owner’s Policy (BOP)
A single policy that combines protection for both property (buildings, personal property, business interruption/extra expense) and general liability coverages. Buying a BOP can be a good deal for a business owner. The policies often provide more complete coverage at a lower price than separate policies would for each kind of coverage.
Business Personal Property Coverage
Protects you against physical loss or damage to your business’ equipment, stock, furniture, fixtures, and/or improvements caused by a fire or other covered incident, to the policy limit.
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C
Cancellation
The termination of a policy before its specified expiration date. The policyholder or the insurance company can request cancellation, according to the policy?s terms.
Casualty Insurance
Covers your legal liability for property damage and bodily injury to others.
Catastrophe
An incident or series of related incidents involving a substantial loss of property or causing substantial liability across a wide geographic area.
Certificate of Insurance
A statement of coverage issued to an interested third party that outlines insurance coverages, limits, insurers, policy numbers and policy terms. A certificate of insurance often is used as proof of insurance in legal transactions such as property leasing and obtaining a mortgage.
Claim
A request for payment of a loss that may be covered under the terms of an insurance policy.
Claims-Made and Reported Coverage
Covers only claims that are made against the Insured and reported to the carrier during the policy period. Coverage is triggered by the date a claim is made against the Insured, not by the date of the actual wrongful act. Claims-made is the typical coverage form for Professional Liability, Directors’ & Officers’ and Employment Liability policies. (See also Retroactive Date.)
Collision Coverage
(See Automobile Collision Coverage.)
Commercial Auto Insurance
Covers claims for which your business becomes legally liable arising out of your business? use of autos. It may include protection for physical damage to an auto that is titled to your business. Commercial auto insurance can cover company-owned cars, trucks, buses and other types of vehicles.
Commercial General Liability Insurance
Covers claims brought by third parties against your business alleging bodily injury, property damage, personal injury or advertising injury, subject to policy terms and conditions.
Commercial Package Policy
A Commercial Package Policy (“CPP”) is a coverage plan that includes a wide range of essential liability and property coverages for a commercial enterprise that may otherwise be purchased separately. The package policy usually features common policy conditions, common declarations, and two or more coverage sections.
Compensatory Damages
Generally monetary damages sought by a claimant to pay the costs of medical bills, lost income, defense expenses, pain and suffering, etc. arising out of an injury.
Comprehensive Coverage
(See Automobile Comprehensive Coverage.)
Computer Coverage
Reimburses you for any physical loss or damage to your computer hardware, software, or data and includes coverage for the cost to reconstruct software or data.
Concealment
Withholding material facts from an insurance company when applying for an insurance contract or making a claim, with the intention of deceiving the insurance company. This action may be grounds for voiding the policy.
Consequential Loss
Loss arising indirectly or as a consequence of a direct physical damage loss, including time element losses such as business interruption.
Contingent Business Income (or Contingent Business Interruption)
(See Business Income from Dependent Properties)
Contract
A legal agreement between two or more parties.
Contractor’s Equipment Coverage
Reimburses you for the cost of renting tools or equipment if yours are not available due to a covered loss.
Contractor’s Equipment and Tools Coverage
Insures your equipment and tools used at your job site, being transported between jobs, and being transported from your primary location to the job site. It may also cover the cost of renting equipment and tools following a covered loss to your own equipment and tools.
Contractual Liability Coverage
Provides coverage for certain liabilities you assume in a written contract, subject to the policy terms and conditions.
Counterfeit Money Order and Paper Currency Coverage
Reimburses you for financial loss if a customer pays you with a counterfeit money order or counterfeit paper currency.
Crime Coverage
(See Employee Dishonesty Coverage.)
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D
Declarations
The portion of the insurance policy that contains specific information, such as your name and address, the coverage, limits of liability, deductible, premium and policy term.
Deductible
The specific dollar amount you must reimburse the carrier when a covered loss is paid on your behalf by the insurance carrier.
Defense Costs Outside the Limit
Some liability policies provide coverage for defense costs in addition to the policy limit. Thus, the entire limit of liability is available for loss costs.
Defense Costs Within the Limit
Many specialty liability policies, such as Professional Liability, Directors’ & Officers’ Liability and Employment Practices Liability, provide defense cost coverage within the policy limit. The limit of liability applies to both loss and defense costs.
Depreciation
A decrease in the value of property over a period of time as a result of use, wear and tear, or obsolescence.
Design Services Liability Coverage
Protection for contractors against damages that arise out of errors in design by the insured contractor in conjunction with projects the insured constructs. Most standard Business Owner?s Policies exclude this coverage.
Directors and Officers Liability
A Directors and Officers Liability (“D&O”) policy provides protection against claims alleging wrongful acts committed in the capacity of a director or officer. A traditional D&O policy covers only the directors and officers, and provides no protection for the corporate entity. However, there are policies available that extend coverage to all employees and provide some protection for the entity. Many D&O policies can also be expanded to include Employment Practices Liability coverage.
Directors and Officers Liability Insurance (“D&O”)
Covers your company?s directors and officers from liability claims arising out of judgment errors, breaches of duty and wrongful acts related to their organizational activities. Shareholders, employees and potential business partners may file claims. Generally the coverage excludes intentional and dishonest acts, and allegations of bodily injury and property damage. D&O insurance is written on a Claims-Made and Reported coverage form.
Directors and Officers with Employment Practices Liability (D&O/EPL) insurance covers a not-for-prof
Directors and Officers with Employment Practices Liability (D&O/EPL) insurance covers a not-for-profit organization, the directors, officers, trustees and other individuals for allegations involving business management decisions and employment practices actions. These policies are written on a claims-made and reported coverage form.
Disability
A physical or mental impairment that substantially limits one or more major life activities. The disability may be partial or total.
Disability Benefits
Payments that compensate a disabled employee for loss of income or earning capacity.
Discrimination
Unfair treatment or denial of rights to a person on the basis of the group, class, or category to which the person belongs.
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E
ERISA
(See Employee Retirement Income Securities Act of 1974.)
ERISA Compliance Bond
According to ERISA, all persons who handle plan assets must be bonded for 10% of the plans’ aggregate assets. The minimum required amount is $1,000 and the maximum is $500,000 (required amounts are subject to change). This requirement can be easily complied with by adding an ERISA endorsement to an Employee Dishonesty policy.
Each Claim Deductible
A deductible that must be satisfied for each separate claim. Premium discounts may apply if this option is selected for certain policies.
Effective Date
The inception or starting date and time of an insurance policy.
Electronic Data Processing (EDP) Coverage
Covers damage to your computer equipment, data systems and information storage media. Also covers your expenses to reconstruct lost electronic data because of a covered loss.
Embezzlement
Fraudulent use or theft of property or money not belonging to the person entrusted with its care.
Employee Benefits Liability Coverage
Protects your business from losses arising from the administration of employee benefit programs, such as not properly enrolling a new employee in a health plan. This coverage can be endorsed to a General Liability policy and is often included in a Fiduciary Liability policy. It is important to note that Employee Benefits Liability coverage does not cover the liabilities imposed by ERISA on the benefit plans’ fiduciaries. Please refer to Fiduciary Liability Coverage.
Employee Dishonesty Coverage
Reimburses you for financial loss to your business due to dishonest or fraudulent activities of one or more employees. Also known as a Fidelity Bond. The coverage can be extended to comply with the bonding requirements imposed by ERISA. (See ERISA Compliance Bond.)
Employee Retirement Income Securities Act of 1974 (ERISA)
Prescribes federal standards for funding, participation, vesting, termination, disclosure, fiduciary responsibility and tax treatment of private pension plans. ERISA is intended to ensure that individuals who are entitled to pension and benefit plans are able to collect those benefits. ERISA also requires that the plans’ assets be protected from dishonest acts. (See also Fiduciary Liability and ERISA Compliance Bond.)
Employee Tool Coverage
Covers your employees? tools while at any job site or in transit to or from a job site.
Employers Liability Coverage
Provides liability protection for employers for damages arising from employment-related accidents or diseases. This coverage also applies if your business is sued by a third party affected by a workplace injury, such as a family member of the injured worker. However, an injured worker or anyone else seeking to recover damages under this coverage must prove that the employer was legally responsible for the injury or disease.This coverage is generally in a workers? compensation policy as Part Two or Coverage B. (See Workers’ Compensation Insurance.)
Employment Practices Liability Insurance
Employment Practices Liability Insurance (“EPLI”) is coverage against claims by employees alleging that they suffered damages as a result of the employer’s discrimination, wrongful termination, sexual harassment, or various other employment-related offenses.
Endorsement
A written amendment added to and made a part of an insurance policy to change the original insurance policy language. The change may restrict or broaden the coverage.
Equipment Breakdown Coverage
Pays to repair or replace various types of due to breakdown, rupture or bursting, or artificially generated electric current. Covers computers, scanning equipment, phone systems, air conditioners, refrigeration systems and many other types of equipment. Some carrieres use the term “Systems Breakdown Coverage” to be inclusive of Equipment Breakdown Coverage and traditional Boiler and Machinery insurance (e.g., steam boiler explosion). Other carriers do not include steam boiler explosion in the definition of Equipment Breakdown Coverage.
Errors and Ommissions Insurance (“E & O”)
Protects you against liability for committing an error or omission in the performance of professional duties. E&O policies are designed to cover financial losses rather than liability for bodily injury or property damage. For example, E&O coverage would protect an architect who is sued because he made a mistake in his drawings for a new building or an accountant who failed to tell a client to submit quarterly estimated tax payments. E&O policies are written on the Claims-Made and Reported coverage form.
Excess Accident Medical
This coverage pays last. The medical bills must be first submitted to the individual¿s other insurance plan, and then the Excess Accident Medical policy will consider the unpaid balances, after a deductible, up to the benefit limit.
Excess Liability Insurance
Provides coverage above the limits of primary liability insurance policies, after the primary policy limits have been exhausted. (See also Umbrella Liability.)
Exclusion
A written provision in an insurance policy that denies coverage for certain events, hazards, people, property or locations.
Experience Rating
A method of calculating premiums based on prior claims experience and exposures such as payroll.
Expiration Date
The date specified in an insurance policy as its termination date.
Exposure
The risk of loss due to some potential hazard. Also used to measure the rating units or the premium base of a risk.
Extra Expense Coverage
Covers additional costs of continuing your business following a covered loss or damage to your insured property. This coverage could include the expense of renting an alternative office and buying new office supplies. This coverage is important if you can’t close your business in the event of a loss, but must quickly find alternative office space to continue your business operations.
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F
Fidelity Bond
(See Employee Dishonesty Coverage.)
Fiduciary Liability Coverage
ERISA designates the people who administer and manage pension and benefit plans as “fiduciaries.” Fiduciaries are personally liable for breaches of duty, as defined by ERISA, while administering the plans. An example of a breach of fiduciary duty is failing to prudently invest the plan assets, resulting in financial loss to the plan beneficiaries. Fiduciary Liability insurance protects the individual fiduciaries’ personal assets from claims alleging breaches of duty. Fiduciary policies are written on a Claims-Made and Reported coverage form. Employee Benefits Liability coverage is often included on Fiduciary policies.
Fine Arts Coverage
Covers your works of art that are damaged due to perils, subject to the terms and conditions of the policy. The coverage is written on a valued basis.
Fire Damage Liability Coverage
Pays for fire damage caused by your business to the property of others in your building. It also covers fire damage to other parts of the building you occupy, due to negligence by you or an employee. Also known as Fire Legal Liability coverage.
Fire Resistive
Exterior walls, floors and roof constructed of masonry or fire resistive materials having a fire resistance rating of two hours or more.
First Dollar Defense
Provides coverage for defense expenses related to a claim from the first dollar. Allows the deductible to be applied to the loss only.
Flood Insurance
Covers your property in the event of a flood. Flood is commonly excluded from property insurance policies.
Food Storage Coverage
Reimburses you for the cost of your food inventory damaged due to spoilage caused by an insured incident. Also called Spoilage Coverage or Temperature Change Coverage.
Frame
Exterior walls are wood or other combustible materials or a combination of materials such as brick veneer, stone veneer, wood iron-clad, stucco on wood.
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G
Garage Liability Insurance
Covers the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage claims arising out of business operations. Damage to customers? vehicles is excluded from this coverage. (See Garagekeepers? Legal Liability.)
Garagekeepers Legal Liability Coverage
Provides coverage to owners of vehicle garages, parking lots and vehicle repair shops for damage to your customers’ vehicles left in your custody for safekeeping or repair. Coverage is applicable only if you are at least partially responsible for the loss.
General Liability Insurance
Liability only coverage that protects business owners and operators from claims brought by third parties alleging bodily injury or property damage.
Glass Coverage
Pays to replace or repair glass on your property that is damaged by a variety of factors, including vandalism. You may need this coverage even if you don’t own your building, when your lease specifies that you are responsible for building glass.
Group Accident Medical
This policy provides medical expense coverage for members of a group who are injured by an accident while participating in scheduled, sponsored and supervised activities of the group. Injuries sustained during direct travel to and from the covered activity are also covered. Covered expenses can include physician treatments, hospital services, LPN or RN services, use of an ambulance, ambulatory surgical or medical center services, home health care expenses, prescription medicines, and dentist visits.
Growth Guard Coverage
Property Growth Guard Coverage provides a means by which property limits may be automatically increased over the course of the policy period. If, for example, the initial property limit is $1,000,000 and the insured selects a growth guard of 50%, the property limit will increase to $1,500,000 ($1,000,000 + 50%) by the end of the policy period.
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H
Hazard
A condition that creates or increases the chances of a loss arising from an insured peril. Examples include slippery floors and unguarded property.
Hired and Non-Owned Auto Liability Coverage
Protects your business from liability due to your employees? job-related use of vehicles your company does not own. This coverage includes hired or rented vehicles and employees? own vehicles. It is important to note that while an employee is driving his or her own personal car on company business that their personal auto policy will respond on a primary basis for an accident. The company’s Non-Owned Auto coverage will respond excess of the personal auto policy.
Hold Harmless Agreement
A hold harmless agreement is normally included in a written contract whereby one party agrees to assume the other party’s liability arising from specified actions. For example, if you contract with another party to do work for you, you agree in writing that the other party will pay for any liability you incur because of his work.
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I
Inland Marine Insurance
Covers your goods in transit, except across oceans. The coverage also applies to items that are used at locations other than at your insured property.
Installation Coverage
Covers your building materials that will become a permanent part of a structure and the cost of labor involved in completing your project. Also applies to your materials while at the job site, while stored in temporary locations or while in transit between your primary business location and the job sites.
Insurance Department
A government entity in each state or territory administers insurance laws and licenses and regulates insurance agents and companies. A state insurance department can be a stand-alone government agency or a division of another department.
Insured
The person or organization named, defined and protected by an insurance policy.
Insured Contract
A definition in a liability policy that describes the types of contracts in which liability is assumed by the insured and included for coverage in the policy.
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J
Jeweler’s Block Coverage
A separate policy form that covers damage to the Insured’s stock of jewelry, precious and semiprecious stones, watches, precious metals, and similar merchandise. Also covers similar ‘property of others’ in the Insured’s care, custody, or control.
Joisted Masonry
Exterior walls are masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials and floors and roof are combustible.
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K
Kidnap and Ransom Coverage
Provides financial protection in the event you or any of your employees are kidnapped and a ransom is demanded. Coverage may extend to reimbursement for extortion demands for threats to your property. Policies typically include the services of Crisis Management professionals to assist in the negotiations, coordination of law enforcement agencies, and resolution of the situation.
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L
Liability
Your company?s legal responsibility to make financial restitution for bodily injury or property damage to a third party because of your company?s action or inaction. May also refer to a company’s debts and future obligations.
Liability Insurance
Provides financial protection in case your business is sued or held legally responsible for bodily injury or property damage to a third party. Typically, covered expenses include:? The amount the insurer spends to investigate or defend the claim or lawsuit;? Other costs incurred directly by the insurance company, such as attorneys? fees, witness fees and police report costs? Court costs or other costs assessed against you;? Reasonable expenses you incur at the insurance company’s request to aid in your defense against a claim, such as your loss of income for a day spent in court;? A judgment or settlement arising from a covered lawsuit;? Any required interest on the judgment if the defense is unsuccessful;? Medical expenses for injured parties. * The policy may include coverage for premises, personal injury, products and completed operations and contractual liabilities.
Libel
Written defamation conveying an unfavorable impression about an individual and harming that person?s reputation.
Limits of Liability per Occurrence
The maximum amount of money an insurer agrees to pay for any one occurrence under a particular insurance policy.
Liquor Liability Coverage
Provides your business with protection from bodily injury and property damage claims arising from selling or serving alcoholic beverages.
Livery Vehicle
An automobile that is used to transport people for a fee, such as a limousine or a taxi.
Loss
The amount sought by a policyholder in connection with a claim or the amount paid by an insurance company for a claim. Also means a negative financial result of a business.
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M
Masonry Non-Combustible
Exterior walls are constructed of masonry materials as described under Joisted Masonry, with the floors and roof of metal or other non-combustible materials.
Materials On-Site Coverage
Protects your business from financial loss due to theft, vandalism or other damage to materials being stored or used at a job site.
Medical Payments Coverage
Covers reasonable medical costs of an individual other than the insured due to an accident, regardless of the Insured’s legal liability. This coverage can be part of an automobile policy or a general liability policy.
Misrepresentation
Making written or verbal statements that are untrue or misleading, with the intention of deceiving the insurance company. This activity may be grounds for voiding the insurance policy that was issued based on the untrue or misleading statements.
Modified Fire Resistive
Exterior walls, floors, and roof constructed of masonry or fire resistive material with a fire resistance rating of one hour or more but less than two hours.
Money and Securities Coverage
Subject to policy provisions, protects your money and securities against theft, disappearance or destruction while they’re on your business premises or off-site, such as while being transported to the bank.
Monopolistic States
States in which state-operated funds are the only entities allowed to underwrite workers? compensation insurance. The five monopolistic states are: North Dakota, Ohio, Washington, West Virginia and Wyoming. In these states, employers must buy workers? comp coverage from the state fund. However, these funds do not offer employers liability coverage. Employers’ Liability coverage for the monopolistic states can be added to the Insured’s Workers’ Compensation or General Liability policy via the Stop Gap Liability endorsement.
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N
NSB Package
Packaged Insurance Product for NoodleSpecialty Brokers
Named Insured
Any people or entities specifically named in the policy declarations as covered by an insurance policy. There may be others who also are covered by the policy but are not named.
Named Perils Policy
A property insurance policy that covers only losses caused by the perils specifically listed in the policy. This coverage contrasts to special form coverage, which covers property losses from all causes not specifically excluded.
Negligence
Failure to use the degree of care considered reasonable under the circumstances.
No-Fault Insurance
A law enacted by many states allowing a victim of an automobile accident to collect medical and hospital expenses from his or her own insurance company.
Non-Combustible
Exterior walls, floors and roof are constructed and supported by metal, asbestos, gypsum or other non-combustible materials.
Non-Owned and Hired Automobile Liability Coverage
(See hired and Non-Owned Auto Liability Coverage.)
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O
Occurrence
An accidental event that results in loss or damage.
Occurrence Coverage Form
Covers claims that happened during the policy period, regardless of when the claim is made against the Insured or when the claim is reported to the carrier.
Ocean Marine Coverage
Covers your cargo being transported by ship or over water.
Off-Premises Power Failure Coverage
Reimburses you for your loss of business income if an off-premises power failure temporarily shuts down your business operations because of a covered loss.
Off-Premises and In-Transit Coverage
Extends protection of your business personal property away from your principal business site.
Other Business Structures Coverage
Extends protection to other business structures on your property, such as a greenhouse, business car garage or storage shed.
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P
Package Policy
A single insurance policy that includes property and liability coverages, and possibly others.
Peak Season Coverage
Automatically provides you with a specified percentage increase in insurance coverage during peak inventory periods when you insure your inventory for its average monthly value.
Peril
The cause of a possible property loss, such as fire, windstorm, theft, explosion or riot.
Personal Injury Coverage
Protects your business from liability due to injury (other than bodily injury) to a third party that arises out of false arrest, detention or false imprisonment, malicious prosecution, wrongful eviction, wrongful entry, invasion of privacy or slander, except in the course of advertising, publishing, broadcasting or telecasting. (See Advertising Liability.)
Personal Injury Protection
The bodily injury and other automobile insurance coverages required under state no-fault insurance laws. These benefits may include basic medical expenses, rehabilitation, lost earnings, funeral expenses and survivors? benefits. (See No-Fault Insurance.)
Personal Property Coverage
(See Business Personal Property Coverage.)
Policy
The printed legal document stating the terms, definitions, exclusions, and conditions of the insurance contract that an insurance company issues to the policyholder.
Policy Term
The length of a policy period.
Policyholder
The person or entity that owns an insurance policy; the “Named Insured.”
Pollution Liability Coverage
A specialized insurance policy that covers liability associated with your business? contamination of the air, ground or water. It may also provide coverage for clean-up costs.
Premises
The property described and designated in an insurance policy’s declarations or schedule of covered properties.
Premises Liability Coverage
Protects your business against liability damages due to an injury that occurs on your premises to a third party. An example would be a customer slipping or falling at your business.
Premium
The dollar amount an insurance company charges to provide the coverage in an insurance policy or bond.
Primary Accident Medical
This coverage responds to covered expenses regardless of other available insurance the individual may have. The expenses are subject to a deductible.
Products Liability and Completed Operations Coverage
Products Liability covers third-party bodily injury or property damage occurring somewhere other than your premises from a product your company made, distributed or sold, or a service your business provided. Completed Operations covers bodily injury or property damage resulting from completed work when the injury or damage takes place away from your premises. In the event of a lawsuit, your business also is covered for related defense costs.
Professional Liability (PL) Insurance
Protects you against liability for committing an error or omission in the performance of professional duties. Professional Liability policies are designed to cover financial losses rather than liability for bodily injury or property damage. For example, Professional Liability coverage would protect an architect who is sued because he made a mistake in his drawings for a new building or an accountant who failed to tell a client to submit quarterly estimated tax payments. Also known as Errors and Ommissions (“E & O”) insurance.
Property Damage Liability Coverage
Protects your business against liability damages arising from physical loss or damage to someone else’s property, other than your employees’. It usually includes damages for loss of use of the property.
Property Insurance
Provides financial protection against physical loss or damage caused by fire, windstorm, vandalism or other covered incidents to many kinds of business property that you own. Covered business property can include your building, equipment, tools, supplies, furniture, fixtures and improvements.
Property of Others Coverage
Covers you for damage to the property of others that is in your possession and for which you are legally liable while it is in your possession.
Punitive Damages
Damages awarded in addition to compensatory damages. Punitive Damages are intended to financially punish the wrongdoer.
Punitive Damages Coverage
Insurance coverage for punitive damages is available in some jurisdictions in the US. In other jurisdictions it is considered against public policy to insure punitive damages because reimbursement from an insurance company would negate the intended punishment. Some policies provide Punitive Damages Coverage “where insurable by law.”
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Q
Quote
A proposal from an insurance company to underwrite a certain risk at a specific price.
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R
Rate
A charge per unit used in calculating insurance premiums.
Real Property
Real estate property that includes buildings but excludes land.
Rental Reimbursement for Tools and Equipment Coverage
Reimburses you for the cost of renting tools or equipment if yours are not available due to a covered loss.
Replacement Cost Value
The dollar amount it costs today to replace or repair your damaged property with that of like kind and quality, without any deduction for depreciation.
Research and Development Property
Research and Development Property is property directly related to the development of new products or enhancement of existing products, such as records, formulas, test samples or a prototype.
Retention
The dollar amount that an Insured assumes as its own liability and which is not insured (“self-insured retention”). A retention functions similar to a deductible as in the retention is the amount of the loss that the Insured is responsible to pay.
Retroactive Date
A provision found in all eClaims-Made and Reported policies that restricts coverage to injuries or damages (“wrongful acts”) occurring on or after this specified date. Typically the Retroactive Date will be the effective date of the first Claims-Made policy purchased by the Insured.
Rider
An attachment to an insurance policy or a bond that expands or restricts coverage, or makes some other policy change. The term “rider” is most frequently used in surety bonds and can be considered a synonym for “endorsement.”
Risk
A chance of loss. Also used to mean the insured, or the property the insurance applies to.
Robbery
Theft of personal property, either by force or with a threat of force.
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S
Seasonal Inventory Increase Coverage
(See Peak Season Coverage.)
Self-Insured Retention
(See Retention)
Sewer and Drain Back-Up Protection
Protects your business against losses caused by water backing up through your sewers or drains, or by water overflowing from a pump.
Sexual Harassment
Unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature that are made a condition of employment, used as a basis for employment decisions or create a work environment that interferes with job performance. Most standard Business Owner?s Policies exclude coverage for sexual harassment claims. (See Employment Practices Liability Insurance.)
Sign Coverage
Insures your outdoor signs against theft, fire, vandalism and other losses.
Slander
Spoken defamation conveying an unfavorable impression about an individual and harming that person?s reputation.
Spoilage Coverage
(See also Temperature Change Coverage and Food Storage Coverage.)
State Fund
There are various types of state-owned and operated entities that are designed to protect policyholders in the event of an insurance company becoming insolvent. These entities are called “insolvency funds” ir “guarantee associations.” There are also state-operated entities that write workers? compensation insurance.
Subrogation
The assignment to an insurer, after payment of a loss, of an insured?s right to recover the amount of the loss from someone who is legally liable for the damages.
Surety
A company, usually an insurance company, which issues a surety bond. The surety company agrees to fulfill the obligation of the bonded party, according to the terms of the surety bond.
Surety Bond
A guarantee by a surety company that the bond buyer will fulfill a certain obligation he or she has made to a third party.Unlike other forms of insurance, the entity protected by the bond is a third party, not the buyer; the surety bond buyer is the one doing the work that is guaranteed.
Systems Breakdown Coverage
Insurance companies use this term for a variety of different coverages, so care must be taken to determine the extent of coverage actually provided. Some carriers include Equipment Breakdown and Boiler & Machinery under Systems Breakdown. Other carriers provide only Equipment Breakdown; still others use Systems Breakdown to mean Boiler and Machinery coverage. (See also Equipment Breakdown Coverage and Boiler and Machinery.)
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Temperature Change Coverage
Protects perishable stock you have on your premises in case of damage caused by a temperature change due to an equipment breakdown or power failure. Also called Spoilage Coverage.
Terrorism Coverage
Provides coverage under the Terrorism Risk Insurance Act of 2002, limited by the terms, conditions, and exclusions provided by the carrier. Terrorism coverages is partially reinsured by the United States of America.
Theft
Any act of stealing, including burglary, robbery and larceny.
Third Party Coverage for Employment Practices Liability
EPL policies typically cover claims filed by employees alleging employment-related wrongful acts. Some policies can be extended to include Third Party Coverage that covers claims filed by non-employees for discrimination and harassment. These “third party” claimants can be customers, clients, vendors or suppliers of the Insured.
Tilt-Up
A construction technique whereby reinforced concrete panels are cast horizontally on-site then tilted into position.
Title Agency Coverage Endorsement
Coverage available for a separate title agency that is 51% or more owned by an insured law firm.
Tort
A wrongful act against another person, other than breach of contract, that results in injury or damage on which a civil lawsuit may be based.
Transit Insurance
Protects shipments of goods you make by car, truck, rail, or air from the time they leave your business location to the time they are delivered to your customer.
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Umbrella Liability Coverage
Provides additional protection for your business over and above the liability limits of primary insurance policies such as Business Owner?s Policies, commercial automobile policies and Employers’ Liability. Subject to the policy terms and conditions, coverage begins after the policy limits of a primary policy have been exhausted. Also called Excess Liability Coverage.
Underinsured Motorists Coverage
Coverage available on your own auto insurance policy to protect you from a loss caused by a negligent driver who has inadequate auto insurance.
Underwriter
The insurance company that insures a particular risk, or the person at an insurance company who evaluates applications for insurance coverage, decides whether to accept or reject the risk and sets a price for the coverage.
Underwriting
The process of evaluating applications for insurance coverage, deciding whether to accept or reject the risk and setting a price for the coverage.
Uninsured Motorists Coverage
Coverage available on your own auto insurance policy to protect you from a loss caused by a negligent driver who does not carry any auto insurance. In some states the term Uninsured Motorists is inclusive of Underinsured Motorist Coverage.
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Valuable Papers Coverage
Pays for the cost to research, reproduce, replace or restore your valuable business records if they are not duplicated but are damaged or destroyed by a covered loss. Coverage includes printed or written documents, books, films and more.
Vandalism
The malicious or ignorant, often random, destruction or spoilage of another person’s property.
Vicarious Liability
The liability of one person for the acts of another. Vicarious liability can result from the acts of independent agents, partners, independent contractors and employees.
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Warranty (of a Product or Service)
A warranty product protects customers from financial loss associated with the breakdown or underperformance of a product or service.
Warranty Statement (on an insurance application)
Some policies, such as Professional Liability, D&O, or EPLI, require that the Insured sign a warranty statement on the insurance application attesting to the accuracy and truthfulness of the information provided on the application. If a policy is issued based on a false material fact, the coverage may be considered null and void.
Water Damage Coverage
Protects your business from losses resulting from flooding and surface water, and the backup of sewers, drains or sump pumps.
Workers Compensation Insurance
Provides benefits, as specified by state law, to employees for work-related injuries or illnesses, regardless of who is at fault. Typical covered expenses include medical benefits, such as medical, hospital and surgical costs; related healthcare costs such as physical therapy and prosthetic devices; disability income benefits, including services such as vocational rehabilitation that help an injured worker return to productive work; and death benefits. (Also see Employer’s Liability Coverage.)Workers? comp is a no-fault system, meaning that injured employees do not have to sue their employers to receive compensation. Compensation is automatic for covered benefits; benefits vary by state.

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