Practical definitions
Find the term behind the decision.
A-E
- Actual cash value (ACV)
- A property valuation method that generally starts with replacement cost and subtracts depreciation for age, condition, or useful life. Read the full explanation →
- Additional insured
- A person or organization added to another party’s liability policy for certain claims arising from the named insured’s work or operations. Read the full explanation →
- Aggregate limit
- The most an insurer will pay for all covered claims during a stated policy period, subject to the policy’s terms and any separate limits. Read the full explanation →
- Business income coverage
- Coverage that may replace lost operating income and certain continuing expenses when a covered property loss interrupts business operations. Read the full explanation →
- Business personal property
- Commercial property coverage for eligible movable property a business owns or uses, such as furniture, equipment, inventory, and supplies, subject to the policy’s locations, limits, valuation, and exclusions. Read the full explanation →
- Business Owner’s Policy (BOP)
- A package commonly combining commercial property and general liability coverage for eligible smaller businesses. Available coverages and eligibility vary by insurer. Read the full explanation →
- Certificate of insurance (COI)
- A document summarizing selected policy information on the date it is issued. A certificate does not replace or change the policy contract. Read the full explanation →
- Claims-made policy
- A policy that generally responds when a covered claim is first made during the policy period, provided other requirements such as the retroactive date are satisfied. Read the full explanation →
- Coinsurance
- A commercial property provision that can reduce a claim payment when the amount of insurance carried is less than the required percentage of the property’s value. Read the full explanation →
- Commercial auto liability
- Coverage for covered bodily injury or property damage liability arising from the use of insured business vehicles. Read the full explanation →
- Commercial flood insurance
- Flood coverage for eligible business buildings, contents, or both. Options may include the National Flood Insurance Program and private markets. Read the full explanation →
- Cyber insurance
- Coverage that may address specified first-party costs and third-party liability arising from covered cyber events, data incidents, or network security failures. Forms and services vary widely. Read the full explanation →
- Deductible
- The amount of a covered loss the policyholder is responsible for before the insurer’s payment is calculated, subject to policy terms. Read the full explanation →
- Dealer errors and omissions (E&O)
- Coverage designed for certain claims alleging mistakes or failures in dealership services or transactions, as defined by the policy. Read the full explanation →
- Dealers open lot
- Physical damage coverage designed for vehicles held for sale by an auto dealership, subject to covered causes of loss, limits, deductibles, and valuation provisions. Read the full explanation →
- Endorsement
- A written policy amendment that adds, removes, or changes coverage, conditions, definitions, limits, or other contract terms. Read the full explanation →
- Excess flood coverage
- Flood coverage intended to sit above an underlying flood policy or provide limits beyond what that underlying policy supplies, subject to its own terms. Read the full explanation →
F-J
- General liability insurance
- Coverage commonly addressing certain third-party bodily injury, property damage, and personal or advertising injury claims arising from business operations. Read the full explanation →
- Garage liability
- Liability coverage designed for auto-related businesses, addressing certain covered injuries or damage arising from garage operations and, where included, covered autos. Read the full explanation →
- Garagekeepers coverage
- Coverage for customers’ autos in an auto business’s care, custody, or control when damaged by a covered cause of loss. Read the full explanation →
- Insurance-to-value
- The relationship between a property’s current insurable value and the amount of insurance carried. Accurate values can be important to limits and coinsurance. Read the full explanation →
K-O
- Loss runs
- Reports showing an account’s insurance claim history over a stated period, often requested by underwriters when evaluating a commercial risk. Read the full explanation →
- Liquor liability
- Liability coverage designed for certain claims arising from the sale, service, or furnishing of alcoholic beverages. Host liquor provisions are not a substitute for liquor liability when a business is in the alcohol trade. Read the full explanation →
- Miscellaneous professional liability
- A form of professional liability coverage designed for eligible service businesses whose work does not fit a more specialized professional policy, subject to the services and claims described by the contract. Read the full explanation →
- Motor truck cargo
- Coverage for covered loss or damage to property a motor carrier is transporting, subject to commodities, causes of loss, limits, and exclusions. Read the full explanation →
- Named insured
- The person or organization specifically identified as an insured on the policy declarations. Rights and duties can differ from those of other insured parties. Read the full explanation →
- Non-trucking liability
- Liability coverage intended for certain non-business use of a tractor when the driver is operating under specified conditions outside motor-carrier dispatch. Read the full explanation →
- Occurrence policy
- A policy generally triggered by covered injury or damage that occurs during the policy period, even if the claim is reported later, subject to the contract. Read the full explanation →
- Ordinance or law coverage
- Property coverage that may address certain added costs to demolish, repair, or rebuild in compliance with current building codes after a covered loss. Read the full explanation →
P-T
- Primary and noncontributory
- Wording indicating that specified coverage is intended to respond before another party’s insurance and without seeking contribution from it, when policy conditions are met. Read the full explanation →
- Private flood insurance
- Flood insurance issued by a private insurer rather than through the National Flood Insurance Program. Limits, underwriting, waiting periods, and forms vary. Read the full explanation →
- Professional liability (E&O)
- Coverage designed for certain claims alleging errors, omissions, or failure to perform professional services, as defined by the policy. Read the full explanation →
- Replacement cost
- A property valuation approach based on the cost to repair or replace damaged property with materials of like kind and quality, without deduction for depreciation, subject to policy conditions. Read the full explanation →
- Retroactive date
- A date used in many claims-made policies. Covered services or acts generally must occur on or after this date and satisfy the policy’s other requirements. Read the full explanation →
- Sublimit
- A limit within the policy that caps payment for a particular property, cause of loss, location, or type of expense below the broader policy limit. Read the full explanation →
- Surety bond
- A three-party agreement in which a surety supports the principal’s obligation to an obligee. A bond is not the same as a traditional insurance policy. Read the full explanation →
- Trailer interchange coverage
- Physical damage coverage for a non-owned trailer in a trucker’s possession under a written trailer interchange agreement. Read the full explanation →
U-Z
- Umbrella or excess liability
- Coverage that may provide limits above scheduled underlying liability policies. Whether it broadens coverage depends on the specific form. Read the full explanation →
- Underwriting
- The process of evaluating an applicant’s exposures, controls, history, and requested coverage to decide whether and on what terms insurance may be offered. Read the full explanation →
- Waiver of subrogation
- A provision under which an insurer gives up specified recovery rights against another party, subject to the policy wording and applicable law. Read the full explanation →
- Workers’ compensation
- Coverage for statutory benefits arising from eligible work-related injuries or illnesses, with requirements and benefits governed by applicable law. Read the full explanation →