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The TechInsurance Glossary of Insurance Terms & Jargon

Helpful Small Business Insurance Terms and Definitions

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The TechInsurance Glossary of Insurance Terms & Jargon

IT business insurance has many specialized terms that can get confusing. While your insurance policies are technically written in English, it may not seem that way at times. Our agents specialize in making insurance easy to understand. That's important. You need to know what coverage you're getting and what you aren't.

In this glossary, we'll define many of the common and confusing insurance terms and provide examples to show you how they affect your IT business.

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Actual Cash Value
The current fair-market value of a piece of property.
Additional Insured
Any person other than the policyholder who is covered by an insurance policy.
All-Risk Coverage
A Property Insurance policy that lists certain exclusions but covers most other claims not specifically excluded by the policy.
Appraisal
The determination of the value of property.
Arbitration
A third-party process to resolve a dispute outside of court.
Assessed Value
The value of commercial property (e.g., office buildings) as assigned by a municipal tax authority.
Bind
The agreement between an insurance agent and the insured party.
Business Interruption Insurance
A policy that covers lost income when a business is forced to close due to covered property event. (See: all-risks coverage and named-perils coverage.)
Business Owner's Policy / BOP
An insurance bundle for small businesses that includes Property Insurance and General Liability Insurance..
Certificate of Liability Insurance
A one-page summary of an insurance policy that lists the most important information.
Claimant
The person who files a claim with an insurance company OR a person who files a lawsuit against a business.
Claims Adjuster
An investigator, typically in the employ of an insurance company, whose job is to verify Property Insurance claims.
Coinsurance
Coinsurance has two meanings:
  1. The practice of tying the limit of an insurance policy to the assets of the policyholder.
  2. The rare situation wherein two insurance companies provide insurance for a single entity.
Commercial Auto Insurance
Insurance that covers vehicles owned by your business and employee vehicles while they are driven for work purposes.
Cyber Extortion
Threatening to damage or slow down a business's network if the business doesn't pay a ransom.
Cyber Insurance, First-Party Response
An insurance policy that covers a business's costs when its network is attacked.
Cyber Insurance, Third-Party Liability
IT liability insurance included with most IT Errors and Omissions policies that pays for lawsuits when a business is sued for a security breach on a client's network.
Deductible
The amount an insured party has to pay before an insurance policy covers remaining expenses.
Defendant
The party sued in a lawsuit.
Digital Assets
Textual, multimedia, and other digital files a business owns the rights to.
Employment Practices Liability Insurance (EPLI)
Insurance coverage for lawsuits brought against a business by its employees.
Employer's Liability Insurance
Liability insurance included with Workers' Compensation Insurance that pays an employer's legal expenses in a covered Workers' Comp lawsuit
Errors and Omissions Insurance
Liability insurance that covers the cost of claims related to professional mistakes or negligence.
Expiration Date
The date an insurance policy's coverage terminates.
General Liability Insurance
A common insurance policy covering lawsuits over property damage and bodily injury brought by non-employees and other third parties.
Grace Period
The span of time after a premium is due when a business is able to pay without penalty or cancellation of its policy.
Hired and Non-Owned Auto Insurance
Auto insurance coverage for cars not owned by a business but used by employees for business purposes.
Homeowner's Insurance
A personal Property Insurance policy that can cover a home and the property inside it.
Indemnity
Compensation for a loss suffered.
Insured
The party covered by an insurance policy (also called a "policyholder").
Insurance Agent
The person who sells insurance to a third party (but is not a provider of insurance)
Insurer / Insurance Company / Insurance Provider
A business that sells insurance policies through a process called underwriting.
Judgment
The "verdict" of a lawsuit.
Liability
Legal responsibility for an action or omission.
Liability Insurance
Coverage for lawsuits over the insured party's legal responsibility.
Mediation
A non-binding alternate dispute resolution process.
Named Perils Coverage
A type of Property Insurance that only covers damage or loss from events specifically listed in the policy.
Peril
The event and cause of property loss covered by Property Insurance.
Plaintiff
The party filing a lawsuit and seeking damages.
Premium
The amount an insured party pays for insurance coverage.
Prior Acts Coverage
Coverage for claims-made policies (including Errors and Omissions Insurance) that includes events that happened before the insurance was purchased.
Professional Liability Insurance
Another name for Errors and Omissions Insurance.
Proof of Loss
A sworn statement you send to an insurance provider while making a Property Insurance claim.
Property Insurance
An insurance policy that pays for lost or damaged commercial property.
Quote
A non-final estimate of the cost and coverage provided by an insurance policy.
Replacement Value
The cost to replace a piece of property with a new equivalent. Property Insurance with replacement-value coverage pays the full cost of new equipment.
Retroactive Date of Inception (Retro Date)
The date your Errors and Omissions Insurance coverage begins.
Rider
An additional insurance agreement added to a larger policy. Riders are also called "endorsements."
Risk Management
The practices IT businesses can implement to reduce their exposure to financial and legal liability.
Settlement
An agreement between the defendant and plaintiff to end or "settle" a lawsuit.
Small Business Insurance
Insurance coverage specifically designed to help small businesses manage the risks they face.
Tort
A non-criminal wrong action or negligence.
Tortfeasor
The person or entity who (allegedly) commits a tort.
Underwriting
The process of assessing risk and then creating an insurance policy to protect against it.
Workers' Compensation Insurance
A policy to cover a business's liabilities and expenses related to on-the-job illnesses and injuries suffered by employees.