Definitions of Common Terms
Annual Aggregate
The maximum dollar amount that can be paid under a policy during a one-year period.
All-Risk
Insurance against loss or damage to property from any causes, except those that are specifically excluded.
Binder
An acknowledgement that insurance applied for is in force whether or not premium has been paid or the policy issued.
Blanket Property Coverage
Covers business property under a single-dollar amount of coverage as opposed to insuring each item separately, i.e., "Electronic Equipment and Media" blanket coverage.
Bodily Injury Liability Insurance
Protection against the liability that may arise from the injury or death of another person. Written in conjunction with Property Damage Liability Insurance.
Business Interruption Insurance
A type of policy that pays for loss of earnings when operations are curtailed or suspended because of a covered property loss.
Business Personal Property (Contents)
Furniture, fixtures, equipment, machinery, merchandise, materials and all other property (excluding real estate) owned by you and used in your business.
Carrier
The insurance company that issues the policy and provides coverage.
Certificate of Insurance
A statement summarizing the types of coverage, amounts of coverage, and policy effective dates; it indicates that the certificate holder (usually your client) will be notified if a policy cancels.
Claim
The demand for benefits as provided by the policy.
Claims-Made Coverage
A policy providing coverage only if a claim is made during the policy period. If the policy has a retroactive date, it does not cover a loss that occurred before that date. Contrast with Occurrence Coverage.
Consequential Damages
Loss of revenue or productivity suffered by your customer due to your alleged failure to deliver services as promised.
Effective Date
The date on which a policy goes into effect.
Electronic Data Processing Coverage
Specialized type of insurance designed to cover your computer equipment, data systems, information storage media, and expenses or income loss related to the destruction of hardware or software.
Employee Dishonesty
Protection against allegations of employee theft of tangible or intangible property from a client. Coverage should be provided on your premises and at the customer's location.
Employer's Non-Owned Auto Liability
Liability the employer is exposed to when an employee uses his own personal vehicle on company business.
Errors and Omissions Coverage
Protection against claims that you or your employee made mistakes through error or oversight that caused a loss of productivity or loss of revenue on the part of your client.
Exclusions
Causes of loss, conditions, or property listed in the policy that are not covered.
Expiration
The date on which a policy will cease to provide coverage, unless previously canceled.
Extended Reporting Period
A period that allows claims to be made after the expiration of a "Claims-Made" policy.
Extra Expense Insurance
Insurance that provides extra funds needed to continue operating a business without interruption following a property loss.
Force Majeure
Circumstance that is beyond the control of one of the parties to a contract that may, according to the terms and conditions, relieve that party of liability for failing to execute the contract. i.e. Act of God.
Hired Auto Liability
Liability the employer is exposed to when a vehicle is rented in the company name.
Limit of Liability Per Occurrence
The maximum dollar amount the insurance company agrees to pay for any single loss.
Negligence
Failure to use the degree of care that an ordinary person of reasonable prudence would use under the given circumstances. Negligence may be constituted by acts of either omission or commission, or both.
Occurrence Coverage
A policy that provides coverage only for injury or loss that occurs during the policy period, regardless of when the claim is made. For example, a claim made in the current policy year could be charged against a prior policy, or may not be covered, if it arises from an event that occurred prior to the policy effective date. Contrast with Claims-Made Coverage.
Package Policy
Multiple lines or types of insurance under one policy.
Professional Liability Insurance
Liability insurance to protect professionals for loss or expense resulting from claims of mistakes, errors or omissions committed - or alleged to have been committed - by the insured in his or her professional activities.
Property Damage Liability Insurance
Protection against liability for damage to the property of another not in the insured's care, custody or control. Property damage liability coverage is written in conjunction with Bodily Injury Liability Insurance, but the premiums and limits of insurance are separate.
Retroactive Date
The date on a Claims-Made policy that triggers the beginning period of coverage prior to the effective date. A retroactive date is not required. If a retroactive date appears on the policy, any claim made during the policy period on a loss that occurred before the retroactive date will not be covered.
Umbrella Liability Policy
A liability policy designed to provide liability protection in addition to that provided by standard policies.
Valuable Papers and Records Insurance
Provides coverage for the replacement of valuable papers, records and forms, including electronic media.
We have also answered some of the more common questions that arise on our Question and Answer page.
