ACTUAL CASH VALUE (ACV):  A method of determining value for a loss by taking its replacement value less depreciation.  The term also refers to a type of policy that pays its claims in this fashion.

ADDITIONAL INSURED:  A person or entity added to a business policy for purposes of coverage.  This may be a temporary arrangement (contractor on a job adding the premises of the project until complete) or more permanent (tenant in a commercial building adding the landlord).  After endorsing, the additional insured will be protected under the named insured’s policy.

ADDITIONS AND ALTERATIONS COVERAGE:  Protects the insured for any additions, alterations, and improvements made to a rented unit, not reimbursed for by the landlord.

AGGREGATE:  A limit in policies, commonly liability types, used to specify the maximum it will pay out for all covered losses during a certain period of time, normally one year.

AGREED AMOUNT ENDORSEMENT:  An agreement made by the insurance company wherein it waives the coinsurance clause on the specified property.  As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.

AUDIT:  Insureds that have policies with estimated data, such as liability and workers’ compensation, are subject to an examination of their operations and books at the end of the policy term to discover the actual exposure.  The audit is done to obtain insurance rating information only and to adjust the initial premium billed to reflect the actual coverage.

BAILEE COVERAGE:  Inland marine coverage on property given to the insured for servicing, repair, or storage; such as dry cleaners, jewelers, or small engine shops.

BODILY INJURY:   Means bodily harm, bodily sickness, or bodily disease sustained by a person, including death resulting from any of these.

BOND:  A three part contract in which one party (the company) guarantees the performance, act, or behavior of another party (principal) for a third party (obligee).  The two most common types of bonds are Surety and Fidelity.

BUILDER’S RISK COVERAGE:  Provides property insurance for building in the course of construction.  The policy may also include coverage for items in transit to the construction site and items at the site.

BUSINESS AUTO COVERAGE:  For a company’s use of cars, trucks, vans, and other vehicles in the course of carrying out its business.  Also designed to provide a method of insuring personal vehicles not eligible for a personal auto policy.

BUSINESS INTERRUPTION INSURANCE:  Also known as Business Income Insurance.  Provides for the loss of earnings of your business by replacing your operating income during the period when damage to the premises or other property (by a covered peril) prevents income from being earned.

BUSINESS OWNER’S POLICY (BOP):  Single policy form that combines many types of coverages such as property, liability, and business interruption risks into one package.  BOPs are created and available to small and medium sized businesses and specifically for specialized trades.

CARGO INSURANCE:  Inland marine coverage for physical damage to or the loss of goods during shipping, whether by land, sea, or air.

CERTIFICATE OF INSURANCE:  A document which serves as proof of the types of coverage, amounts of coverage, and policy effective dates of an insurance policy or policies.

CLAIM:  A policyholder’s request to recover losses covered by an insurance policy.

CLAIMS-MADE POLICY:  Commonly used with professional liability insurance such as directors & officers coverage, medical malpractice insurance, and errors & omissions policies.  In claims-made policies, the insurer agrees to cover you against incidents that occur after your “retroactive date”, but are reported (or “made”) during the policy term.

COINSURANCE:  An agreement by which the insured, in consideration of a reduced rate, agrees to carry an amount of insurance equal to a percentage of the total value of the property insured.  If you do not keep your agreement, and there is a loss, you become a “co-insurer” in the loss and will have to share in the financial impact of the repairs.

COLLISION COVERAGE:  Covers loss to the insured’s own vehicle caused by its rollover or collision with another object.

COMMERCIAL GENERAL LIABILITY (CGL):  Coverage for an insured when negligent acts and/or omissions result in bodily injury and/or property damage on the premises of a business, when someone is injured as the result of using the product manufactured or distributed by a business, or when someone is injured in the general operation of a business.

COMMERCIAL PACKAGE POLICY (CPP):  A single insurance policy which combines several types of insurance coverages.  A typical CPP might contain coverage for some or all of these: property, liability, crime, and inland marine.

COMMERCIAL PROPERTY COVERAGE:  Protects against physical damage to buildings, contents, stock, and equipment.

COMPLETED OPERATIONS LIABILITY:  A form of liability insurance for contractors providing coverage for bodily injury and/or property damage to a third party once the contracted project has ceased and been abandoned.

CONTENTS:  Some or all of the following – machinery, furniture, office equipment, stock, improvements & betterments, and work in progress.

CRIME INSURANCE:  Protects businesses from loss of money, securities, or inventory from crimes including employee dishonesty, embezzlement, forgery, counterfeiting, robbery, burglary, and fraud.

DEDUCTIBLE:  An excluded amount or threshold for payment on an insurance policy.  The deductible amount (i.e.: $500, $1000) is usually subtracted from the total amount of your claim and then the remaining amount of the damages are paid.

DIRECTORS AND OFFICERS (D & O) LIABILITY:  Provides financial protection for the directors and officers of your organization against claims alleging financial loss from mismanagement in day-to-day decisions and actions.

DRIVE OTHER CAR COVERAGE:  An endorsement added to a business auto policy for people supplied a company vehicle, but do not own a personal vehicle and therefore do not have personal auto insurance.  It provides protection for the individual or family member while driving a non-owned or borrowed vehicle (other than the vehicle listed on the policy).

ELECTRONIC DATA PROCESSING (EDP) COVERAGE:  Inland marine insurance for electronic data processing equipment (computers), computer programs, and data.  Typically includes coverage for perils to which such property is especially susceptible: mechanical breakdown, electrical injury, and changes in temperature and humidity.

EMPLOYEE DISHONESTY COVERAGE:  Coverage for employee theft of money, securities, or property written with a per loss limit, a per employee limit, or a per position limit.

EMPLOYMENT PRACTICES LIABILITY COVERAGE:  Protects the business, directors & officers, and employees for claims resulting from wrongful termination, discrimination, sexual harassment, wrongful discipline, and failure to employ or promote.

ENDORSEMENT:  A document which changes or alters the basic and/or original insurance policy.

EQUIPMENT FLOATER:  Also called scheduled equipment.  A form of inland marine property insurance covering equipment that is often moved from place to place.

ERRORS AND OMISSIONS COVERAGE:  A professional liability insurance that protects companies and individuals against claims resulting from errors or omissions in the performance of their duties.

EXTENDED REPORTING PERIOD:  Or “tail”.  For claims-made policies, a designated period of time after the policy has expired during which a claim may be made and coverage triggered as if the policy were still in force.  This is purchased for an additional premium.

EXTRA EXPENSE COVERAGE:  Pays for expenses in excess of normal costs that a business will incur to continue operating while its property is being repaired or replaced after a covered loss.

FIDELITY BOND:  A form of protection that covers policyholders for losses they incur as a result of fraudulent acts by specified individuals.

FIRE LEGAL LIABILITY COVERAGE:  Coverage of a tenant’s insurance for damage by fire to the rented premises.

GARAGEKEEPERS LIABILITY:  Coverage for owners of body & repair shops, storage garages, and parking lots for liability as “bailees” with respect to damage to vehicles left in their custody for repair or safekeeping.

HIRED AUTO COVERAGE:  Provides liability coverage for claims arising out of the use of rented or borrowed vehicles.  Some companies will also provide hired auto physical damage (comprehensive and collision) for rented or borrowed vehicles.

INDEMNITY BOND:  Coverage for the loss of a third party (obligee) in the event that the principal fails to perform according to the standards or fulfill their contractual obligation as agreed upon by terms in the bond.

INDEPENDENT AGENT (AGENCY):  An insurance agent or agency not directly employed by an insurance company.  By definition, independent agents represent multiple insurance companies and can help find the best plan for a particular insured.

INFLATION GUARD COVERAGE:  Provides for automatic periodic percentage increases in the building amounts of insurance to keep up with the effect of inflation on replacement cost.

INLAND MARINE COVERAGE:  Specialty insurance forms designed to insure property in transit as well as property of others left in your care, contractor’s equipment, and other unusual types of property not generally kept at a specific location.

LIABILITY COVERAGE:  Protects business owners in the event their actions or those of their employees cause property damage or injury to others.

LIQUOR LIABILITY COVERAGE:  Protects against loss from injury or damages claimed as the result of a patron of your business becoming intoxicated and injuring themselves or others.

LOSS OF RENTS:  Coverage for loss of rental income or rental value due to property damage from a covered peril which makes it unsuitable for occupancy.

NAMED INSURED:  The named individual(s) or firm (usually the policyholder) with whom an insurance contract is made, and whose interests are protected under the policy.

NAMED PERILS:  This provides coverage only for losses to your property resulting from the “perils” that are specifically listed in the policy.

NON-OWNED AUTO COVERAGE:  Protection for losses by vehicles owned by others (such as employees) used in the business of the company.

OBLIGEE:  The one in whose favor a bond is created.

OCCURRENCE:  An event that triggers coverage under a policy, often equated with “accident”; also including continuous or repeated exposure to conditions, which result in bodily injury or property damage neither expected nor intended by the insured.

PACKAGE POLICY:  see “Commercial Package Policy”

PERIL:  The cause of a loss; such as fire, wind, vandalism, and theft.

PHYSICAL DAMAGE COVERAGE:  A general term for a group of coverages that protect your own vehicle.  This general term includes Collision, Comprehensive, and the more limited Fire, Theft with Combined Additional Coverages.

PREMIUM:  The amount of money paid for an insurance policy.

PRINCIPAL:  The party of the bond who is promising to the obligee that they will do or not do a specific thing.

PRODUCTS LIABILITY:  The liability for bodily injury or property damage incurred by a merchant or manufacturer as a result of some defect in the product sold or manufactured.

PROFESSIONAL LIABILITY:  Protects against claims involving allegations of a “wrongful act” or an “error or omission” in rendering or failure to render a professional service.

PROPERTY COVERAGE:  Protects against loss of or damage to buildings and business personal property.

PROPERTY DAMAGE LIABILITY:  Protects against damage you cause to other people’s property.

REPLACEMENT COST COVERAGE:  The amount to replace assets, rebuild a building, or repair damages with materials of comparable kind and quality, without deducting for depreciation.

RETROACTIVE DATE:  In a claims-made policy, the earliest date for which a loss will be considered, even if the claim is first made during the policy period.

RISK:  The reason you buy insurance.  The likelihood that an insured event will occur requiring the insurance company to pay a claim.

SCHEDULE:  A list of items attached to a policy for identification, including descriptions and values.

SELF-INSURANCE:  A risk management method protecting against loss by setting aside and accumulating funds to meet anticipated claims, as opposed to buying an insurance policy.

SURETY BOND:  Protects a third party (obligee) against non-performance by a contracted party.  Common in the construction industry and to guarantee ongoing payments.

SURPLUS LINES INSURANCE:  Insurance written with carriers not licensed in the states where the risks are located.  Most states generally require that attempts are made to place the coverage with a licensed carrier before using a surplus lines carrier.

TAIL COVERAGE:  see “Extended Reporting Period”

TERRORIST COVERAGE:  Insurance purchased by property owners to cover their potential losses that might occur due to terrorist activities.

TIME ELEMENT COVERAGE:  Protects business owners for loss in the event damaged business property is deemed partially or wholly unusable as the result of a covered loss.  Called “time element” because the amount of loss depends on the length of time to repair or replace the damaged property.  The most common types are Extra Expense and Business Interruption.

WORKERS’ COMPENSATION:  State required payments (including medical expenses, death benefits, lost wages, and vocational rehabilitation) to be made to an employee who is injured or disabled on the job.  Failure to carry workers’ compensation insurance (or meet the State’s regulation in this regard) leaves an employer paying these benefits out-of-pocket and exposed to law suits, as well as possible state penalties.