A Simple Business Insurance Glossary

Small Business Insurance Simplified

Business Insurance Glossary

Simplified Business Insurance Glossary

As in all industries, insurance too has its fair share of jargon and buzz words, which is why a business insurance terms glossary is needed in the first place.

Since business insurance is such a complex subject and involves issues that affect the future of companies, misunderstandings can be dangerous.

It is for this reason that all those who are involved with obtaining business insurance for their companies need to know at least the basic technical terminology.

Here we list and explain some of the business insurance terms you may come up against:

Business Insurance Glossary Made Simple

• Accounts Receivable Insurance – This refers to insurance coverage against any loss of income caused by a loss of records that detail the amount of money outstanding or due to the insured.
• Additional Insured – This refers to people who are covered by an insurance policy but may not be specifically named in it. For example, officers of a company may be additional insured under a blanket coverage policy.

• Adjuster – A person who acts on behalf of either the insurance company or the insured and works towards settling claims to mutual satisfaction.
• Agent – A person who acts on behalf of an insurance company.
• Aggregate Limit – The maximum amount that the insurer may have to pay to the insured under a policy.
• Blanket Coverage – Coverage that includes various items and covers various risks, all under one policy
• Business Owners Policy – A policy that will cover the owner of a small business against loss and liability claims. This type of policy is not suitable for large businesses.
• Compensatory Damages – A compensation, usually in monetary terms, that is given to an injured party to compensate them for their injury and the losses suffered because of it.
• Comprehensive Physical Damage – This refers only to automobile insurance and covers all physical damage, except that arising out of any form of collision.
• Contributory Negligence – This refers to cases where the insured party did not take proper precautions to protect themselves from loss or liability claims. In such cases the insurance company's liability may be reduced.
• Covered Loss – Any situation wherein an insurance policy is activated.
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• Deductible – That part of the loss which is to be borne by the insured. The insurance company will pay only the balance.
• Depreciation – As property ages it may fall in value and this is taken into account when making cash payouts to compensate for losses.
• Effective Date – The date on which an insurance policy becomes effective.
• Endorsement – This refers to any form of amendment or modification to an insurance policy that is currently in force.
• Errors And Omissions Coverage – A form of professional liability insurance to cover claims of liability for any injury or damages arising out of the work of the insured.
• Exclusion – Any item or issue that is specifically excluded from coverage under a policy.
• First Named Insured – When a policy covers more than one person (the partners in a business for example), the First Named Insured is the person who is liable for administering the policy, paying premiums, etc.

• Glass Insurance – A special policy to cover plate glass, signs made of glass, lettering and other commercial glass uses. Since glass is delicate and prone to breakage, this kind of stand-alone policy is popular with companies who have a large amount of plate glass on their premises or use a large number of glass signs etc.
• Hold Harmless Agreement – An agreement wherein one party (say a tenant) agrees not to hold another party (a landlord) liable for any damage or injury that may occur within the premises.
• Indemnity – Compensation payable for loss or injury sustained.
• Misrepresentation – A wrongful or incomplete statement of facts on any insurance application.
• Named Insured – Those that are specifically named as beneficiaries in a policy. Others may also have claims but that is to be settled between the Named Insured and the other claimants.
• Off Premises Cover – A limited coverage for property that is not within the insured's place of business.
• Property Damage – this refers to both physical damage and other forms of damage that may render property unfit for use.
• Renters Insurance – A form of coverage for a non-owner occupant of a business premises.
• Umbrella Liability – A policy with high limits that exists on top of, or in addition to, other policies that may cover the same risk. This policy gets activated when the liability is in excess of that covered by the main policy.
• Uninsurable Risk –A risk that cannot be covered by insurance since it is considered inevitable – for instance, if a forest fire is burning one block away from your home or business premises, you will not be able to obtain a relevant insurance policy to protect yourself at that time because the risk of fire damage is extremely high.
• Vicarious Liability – When one person is held responsible for the actions of another and any liability arising from that action. An employer may be vicariously liable for the actions of his employees.
• Wear And Tear Exclusion – All property will suffer degradation over time and with use. Wear And Tear Exclusion means that this kind of damage will not be covered by the insurance policy.

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What's Next

Next In This Guide
Part 15
Business Insurance Resources: Resources, including books, videos, and websites, that specialize in insurance. Knowledge is power. Use these resources to obtain the right coverage for your business.

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Part 13:
Business Insurance Companies - Nine that May Insure Your Business: A list of insurance companies that specialize in a wide rang of coverage for your business..

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