Glossary

An ACORD certificate of liability insurance (aka ACORD 25) is a one-page document that proves you have insurance coverage.

Actual cash value is how much an item is worth in its current condition.

An additional insured is defined as a person, group, or location that is added to a business insurance policy that you have purchased. Essentially, it’s a way of extending the named insured’s coverage to others.

An adjuster, also known as an insurance adjuster or claims adjuster, is defined as the person who determines how much your insurance company will pay out when you file a claim.

An admitted insurance provider has been approved by a state’s Department of Insurance, and a non-admitted carrier has not. Both admitted and non-admitted carriers are regulated, although by different offices, and both have benefits dependent on you business.

When someone claims your advertising has harmed their reputation or infringed on their intellectual property.

The maximum amount of money your insurance company will pay out over the life of your policy, usually one year.

Assessed value is how much your business property is worth according to your municipal tax authority. That person (or entity) uses this figure to determine how much you’ll pay each year in business property taxes.

A type of coverage for individuals or businesses who temporarily have someone else’s property in their care. A common example is when a laundromat has a fire, and the clothes inside are ruined. This insurance covers things that don't belong to you as the policyholder.

A single insurance policy that covers multiple properties or items, but only if they are located in the same place. It’s an alternative to buying separate insurance policies for each individual property or item.

Insurance coverage for when someone is harmed physically. This can be an injury, but can also refer to sickness, disease, or any other incident that may require medical treatment.

Business interruption insurance covers the loss of income your business may experience in the event of a disaster. 

Business risk management involves identifying, assessing and mitigating risks affecting a company’s operations, finances and overall success. 

CCC is an exclusion in general liability insurance or commercial auto insurance policies. If you damage an item you’re taking care of, but don’t own, your insurance might not cover the costs.

A person or business who files a claim under an insurance policy.

The portion of payment you contribute to covered doctor’s visits and health services – with the rest paid by your insurance company.

In business, coinsurance is defined as the provision in your commercial property insurance policy that requires you to insure your property to a certain percentage of its value.

Commercial insurance, commonly called business insurance, safeguards your business against unforeseen losses arising from lawsuits, natural disasters and everyday accidents. It offers a variety of coverage options, including protection against property damage, legal liability, cyberattacks and bodily injuries.

Cyber extortion is a type of cybercrime where hackers threaten to block your use of your own hardware, apps, files, networks or other digital assets — essentially locking you out of your business systems — unless you pay them.

Data breach insurance, or cyber insurance, protects your business from the financial fallout of electronic data breaches and cyber attacks. Data breach insurance addresses the financial consequences of cyber incidents like hacking and data theft.

A declarations page, also known as a dec page, summarizes your business insurance policy, including its protections, coverage limits, and the endorsements (if any) you purchased to add on extra coverage.

In small business insurance, “decline” means an insurance company has decided not to give you coverage. This could be because your business is seen as high risk, or maybe you've made a lot of claims in the past. Sometimes your business simply doesn't match what they typically cover.

A deductible is the amount of money you have to pay out-of-pocket before your insurance coverage kicks in. In short, it’s your buy-in to getting coverage.

Direct liability is the legal responsibility of a business or individual for causing harm or damage directly through their own actions or activities. In other words, this means direct responsibility for the consequences of your own actions or inactions, including things like negligence or others.

Directors and officers liability insurance, also known as D&O insurance, is a liability insurance designed to protect directors and executives if they get sued for their role in a business or organization. This insurance covers the personal assets of the company officers if they are sued.

A disaster recovery plan is a well-thought-out strategy to get your business back up and running if it has to close because of a natural or human-induced disaster. 

This type of health plan is like a more affordable PPO, but with no out-of-network benefits.

Equipment breakdown coverage protects your business property and equipment from unexpected malfunctions, whether due to equipment failure or human error. This small business coverage excludes damages from natural disasters or external events.

The exclusive remedy is a provision found in workers’ compensation insurance policies. It clearly states that if a worker is injured on the job and is receiving benefits from workers’ compensation, they cannot sue their employer for that injury.

An extended reporting period (ERP) lets you report a claim to your insurance company after the policy term has ended. However, the event in your claim must have happened within the coverage period.

A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.

A hazard in small business insurance refers to any unplanned event that can cause physical damage or loss to your business property, equipment or inventory.

Your company sets this up and provides tax-free money you can use to pay for qualified health expenses or health insurance premiums. 

Set up for yourself or by your employer, an HAS is made to supplement those high deductible health plans. Your account can receive tax-free contributions from anyone. And unspent funds carry over from year to year.

In this type of health plan you much select a Primary Care Physician and see only health care providers in your network.

A hold harmless agreement is part of a contract that frees one or both parties in the contract from legal liability for any injury, damage, or financial loss suffered by the person signing the contract. It’s also know as a hold harmless clause or an indemnity agreement.

Indemnity insurance can help protect your business when someone claims you caused them harm due to a business disagreement, whether that claim is true or not. This type of insurance is also known as professional liability insurance or errors & omissions coverage.

An independent contractor is a person, business or corporation that provides goods or services under a written contract or a verbal agreement. Independent contractors don’t work regularly for a single employer. Instead, they work as required, and they can work for a number of companies and business entities at the same time.

An insurance adjuster, also known as a claims adjuster, is someone who settles claims for an insurance company.

An insurance agent is an intermediary between insurance companies and insurance buyers. Agents can explain which insurance you need to buy for yourself or your business and which policy provisions are most important.

An appraisal is the process of figuring out how much something is worth for business or financial reasons. It’s typically used in business valuations, real estate deals and business insurance. Insurers and policyholders use insurance appraisals when they differ about the value of the property involved in a claim.

Insurance arbitration is a way to resolve disputes between you (the policyholder) and your insurance company when you can’t agree on a claim settlement.

An insurance broker is an intermediary between small business owners and insurance products from dozens of insurers.

An insurance claim is when you make a formal request to your insurance company to step in and pay for the damages or losses you’ve experienced — as long as it’s within the terms of your policy.

Coverage limits define the line between what your insurance company will cover and what you’re responsible for paying out of pocket.

Depreciation refers to the decrease in value of an item over time due to age, becoming obsolete or normal wear and tear. Insurance depreciation is when your carrier calculates depreciation based on the property or item’s condition when lost or damaged, its replacement cost and its expected lifespan.

An insurance endorsement (also called a rider) is a document added to your insurance policy that modifies it to better meet your needs. It typically adds, deletes or changes your policy’s benefits, allowing it to fit your business better.

An insurance exclusion specifies which events your policy won’t cover, essentially narrowing the scope of coverage. 

A peril is a specific danger or a cause of loss. It often results in property or human loss.

An estimate of what you’ll pay for your business insurance coverage. You provide the insurance company with details about your company and your operations, then the company assesses your risk and tells you how much your coverage will cost.

The individual or business covered under an insurance policy. 

Key person insurance helps protects your business should the owner or another key employee pass away.

Legal liability is when you are legally responsible for the financial loss of another under the law. This responsibility can arise from intentional actions, accidents, or contracts.

Lessor’s risk insurance acts as a shield against unexpected mishaps at leased commercial spaces. It protects landlords from lawsuits if a tenant gets hurt or if their property is damaged while in the leased space.

Liable means being responsible for something.

Libel is the legal term describing a written statement harming a person or business’s reputation by publishing something untrue and damaging about them. 

A loss payee is the person or entity who receives payment from an insurance claim if something happens to a property where they have an ownership stake. 

Loss runs are reports from your insurance provider that detail the past claims you’ve filed under your business insurance policies. They are, essentially, the “permanent record” of every time you’ve had to use your insurance.

The max amount that you have to pay for covered doctor’s visits and health services in one year. After you hit this, your insurance company pays for everything covered by your policy.

A microbusiness is a small business that typically operates with fewer than five employees. These businesses are often owner-operated and have limited resources and capital.

A minimum earned premium is the portion of your premium that the insurance company keeps to cover its costs. Typically, it’s non-refundable even if you decide to cancel your policy early.

The named insured is the person or business who is explicitly named on an insurance contract and is the person who signs the policy with an insurance company. 

Named perils coverage is defined as a type of commercial property insurance that only protects you against hazards or events specifically named in your policy.

An occurrence-based insurance policy covers you for incidents that occurred while the policy was active, even if you no longer have that coverage.

An open peril policy covers all potential losses or damages to your property unless they’re explicitly excluded.

A per claim limits is the maximum amount of money your insurance company will pay out for a single claim. It’s also known as a “per occurrence limit.”

In this type of health plan you can see doctors, hospitals and providers outside of your network. However, you may end up paying more and it won't reduce your in-network deductible.

The price you pay for insurance coverage.

Insurance companies routinely conduct a premium audit to review a business’s financial records and determine its actual risk exposure. They do this to ensure that the premium set at the beginning of your policy aligns with any changes in your business operations.

Prior acts coverage is insurance that protects you from incidents that occurred before you purchased your current policy.

Product liability is a legal term referring to any lawsuit brought against a product manufacturer or seller by a consumer which alleges that some aspect of their product was defective, harmful or caused an injury.

A type of coverage, usually found in a general liability policy, that provides coverage for any harm or damage caused by your products or completed work after it has left your control or responsibility.

Professional indemnity insurance acts as a protective shield for professionals, particularly those who offer expert advice or services. It safeguards against claims from clients who believe your work led to their financial loss or harm.

Proof of loss is a document you submit to your insurance company when claiming after an insured event. This document details the nature of the incident, any damaged or stolen property, and the specific amount of money you’re seeking as compensation.

Property and casualty (P&C) insurance is an overarching term in the insurance industry for coverages that protect you and the property you own.

Property damage is the damage or destruction caused to physical or intangible property.

Public liability is an old-fashioned insurance term that is now commonly referred to as general liability insurance.

When something significant changes in your business, it’s known as a qualifying event. This could be anything from alterations to your business’s scope, or even ownership of the business.

Replacement value is the amount it would cost to replace a stolen or damaged item with a brand-new replacement.

Reputational harm is the negative impact on a person’s or business’s reputation. This can lead to a significant financial loss for your business.

Risk retention in insurance is a strategic choice where you, as a business owner, personally shoulder the financial risk of potential losses instead of transferring it to an insurance company. This decision is often made when the cost of insurance exceeds the potential loss.

An S corp is a unique business structure that combines the simplicity of a sole proprietorship or partnership with the liability protection of a corporation. It allows businesses to use a “pass-through” tax structure, which means they bypass federal corporate income taxes.

Scheduled rating is a process some insurers use to personalize business insurance premiums based on specific risk factors. Insurance companies and underwriters can grant insured credits or debits based on schedule rating.

Being self-employed means you work for yourself rather than being employed by someone else and receiving a consistent salary or wage. 

Self-insured is when a person or business sets aside resources, usually a pool of cash, to insure themselves against any accidents, illnesses or mishaps they may face. If these incidents occur, the individual or business would pay out of pocket to cover the associated costs. Self-insurance is also called self-funding.

Slander is the legal term used to describe the act of harming a person or business’s reputation by saying something untrue and damaging about them.

A sole proprietorship is a type of business ownership in which one person owns and operates a firm and there’s no legal distinction between the business and the owner. 

Standard of care refers to a professional’s duty to act competently and provide quality services. If you fall short of the standard of care, a client usually has the right to sue.

A state compensation insurance fund is a state-run organization that offers workers’ compensation insurance to businesses. It covers employees who suffer injuries or illnesses related to their work.

stop gap coverage is a specific type of insurance that employers may purchase to fill potential gaps or limitations in their workers’ compensation coverage. This gap in coverage is called employers liability insurance, which protects against workplace injury lawsuits.

Strict liability is a legal concept that means if you do something that’s considered potentially risky, you can be held responsible for any damages or harm that happens because of it — even if you didn’t mean it or took all the precautions you could think of to prevent it.

A sublimit is a specific cap within an insurance policy that applies to certain types of losses. It’s part of the original limit, not extra coverage. Sublimits can be expressed as a dollar amount or a percentage of the total coverage of your business insurance.

Subrogation is the legal term for when one person or a group steps in as a substitute for someone else. When it comes to business insurance, subrogation occurs when your insurance company steps in for you in a legal setting.

Tail coverage is an endorsement added to an insurance policy that extends coverage beyond the policy’s end date.

Third-party cyber liability insurance helps protect your business from the financial consequences of cyberattacks and data breaches that impact your clients or other third parties. 

A tort is a wrongful act or an action that harms someone else. It’s usually a civil (non-criminal) offense. 

Tort liability is a business’s legal obligation to compensate individuals who have been harmed or lost something because of their actions or negligence. 

Underwriting is the process insurers go through to evaluate the risks of offering coverage to individuals or businesses. The underwriting process determines your insurance rates or if you’ll get coverage.