ACORD insurance certificate. A certificate of insurance in the standard ACORD format often is issued by insurance agents as proof to other parties of the nature and amounts of insurance purchased by the client. For example, a business may be required so show a certificate of liability insurance before being allowed to exhibit at a trade show.
Advertising injury. An injury arising out of a professional advertiser’s negligent act, error, or omission in rendering or failing to render its services.
Agent. A person who has the authority to act on another’s behalf. An insurance agent solicits buyers and provides service to them on an insurer’s behalf. See “Broker.”
Aggregate limit. A cumulative limit that applies to all claims within a given period of time. For example, if a policy has an aggregate limit of $1 million, the policy coverage could be exhausted by a single loss of $1 million, or a series of losses totaling $1 million.
Aircraft liability insurance. Aircraft liability insurance protects aircraft owners and operators against liability for injury to other people or damage to others’ property arising out of the ownership or use of aircraft.
Automobile. The term “automobile” is often used to refer to a variety of vehicles as specified on a policy. It will often include all land motor vehicles and trailers or semi-trailers designed for travel on public roads, but not “mobile equipment.”
Automobile liability insurance. Automobile liability coverage insures against liability claims arising out of the insured’s use of automobiles. See “Automobile.”
Bodily injury. Commonly, any injury to the body, sickness, or disease, including death.
Broker. A person who solicits, negotiates, and services insurance policies for an insurance buyer in exchange for a commission from an insurance company. See “Agent.”
Builder’s risk insurance (a/k/a course of construction insurance). Builder’s risk insurance is a type of property insurance that covers construction projects by insuring property already in place but under construction, as well as equipment and materials to be installed.
Building code updating. The cost of repairing or reconstructing damaged buildings can far exceed estimates if the building must be demolished or upgraded to comply with laws relating to such areas as earthquake safety, handicapped access, life safety (e.g. sprinkler system), and other code requirements. Most coverage only pays for “like kind and quality” repair, and updating coverage must be purchased separately.
Business income/extra expense insurance. Business income insurance will pay for the actual loss of business income sustained because of necessary suspension of business operations during a restoration period. Coverage also applies to continuing expenses, such as payroll and rent, and extra necessary expenses incurred during business restoration.
Claims-made coverage. A type of liability coverage that imposes strict deadlines regarding timing of claims by plaintiffs and reporting of accidents and claims to the insurer. It is not widely used for general liability coverage, but is more common in professional liability insurance. Claims-made coverage responds to claims made during the policy term, regardless of when the triggering event happened. Most claims-made policies also have a retroactive date to which covered triggering events may have occurred. Claims arising from events that occurred before the retroactive date are not covered. Usually the retroactive date is the date that the insurer began providing the liability insurance.
Computer fraud insurance. “Computer fraud” refers to theft through the use of a computer to transfer covered property fraudulently from inside the insured’s premises to a person or place outside those premises. Computer fraud coverage insures the loss of money, securities, and other property caused by computer fraud.
Contingent business income coverage. This coverage protects a business from income loss or extra expenses caused by damage to the premises of specified suppliers, customers, or subcontractors by a covered peril.
Credit insurance. Credit insurance protects a business against bad debts resulting from its customers’ inability to pay. Insurers are selective about which businesses they will cover, and the minimum premium can amount to $25,000.
Damage to insured’s products. Products liability excludes damages to the products that a business manufactures, sells, handles, or distributes when the products, or any part of the products, cause the damage. Products liability insurance covers only the resulting damage to other property. See “Products Liability Insurance.”
Directors & officers liability (D&O) insurance. D&O insurance protects directors and officers of a business against allegations of “wrongful acts” in the course of their duties.
Earthquake & flood insurance. Standard property insurance policies exclude earthquake and flood damage. Earthquake and flood coverage can be purchased separately based upon location and limits required. Deductibles will usually be 10 to 15 percent of total property values, and minimum premiums can be $20-25,000.
Electronics or software errors & omissions liability. General liability insurance typically covers bodily injury or property damage caused by the business’s product. It does not cover allegations that the product failed to perform as promised, thereby causing financial loss to the customer. Electronic or software errors and omissions insurance covers this gap.
Employee benefits. Employee benefits may include medical, life, and disability insurance, 401(k) or other retirement plans, and other benefits.
Employee benefits liability coverage. This insurance covers sums an insured becomes legally obligated to pay because of its negligent act, error, or omission in the administration of its employee benefit programs.
Employee dishonesty coverage. This coverage protects an organization against loss of money, securities, and other property through employee theft, fraud, or embezzlement.
Employment practices liability coverage. This insurance covers companies against a broad spectrum of employment-related claims including wrongful termination, sexual harassment, and discrimination. It provides defense for companies and employees who are sued, and will pay a wide range of monetary damages.
ERISA (Employee Retirement Income Security Act). ERISA is the federal law establishing requirements governing employee pension and welfare plans including communications, disclosures, and reporting.
Excess liability policy. An excess liability policy increases total liability coverage limits of underlying policies.
Exhibition/trade show coverage. This coverage is often automatically included in business liability coverage. However, it is generally insured separately if the location of the exhibition is other than in the United States or Canada.
Extended period of indemnity. Business income insurance typically provides coverage while damaged premises are repaired. However, business may be slow in the first few months following the repair or relocation, and loss of income may continue. Business income coverage can be extended to pay some or all of the additional loss.
Extortion, kidnap & ransom insurance. Some prominent individuals, as well as corporations, can be targets for extortion, kidnap, and ransom. This type of insurance covers ransom money paid after a threat to injure an insured person, and a threat to damage the insured’s property. Also covered are all reasonable professional negotiator expenses including bodyguards, transportation, and communications expenses.
Fiduciary liability. The trustees of any benefit plan (such as a 401(k) plan) are subject to fiduciary liability exposure. Fiduciary liability coverage would pay, on behalf of the plan trustees and the business, all sums they would be legally obligated to pay because of a breach of fiduciary duty (i.e., a violation of responsibilities or duties imposed upon fiduciaries by ERISA). See “ERISA.”
Foreign liability coverage. Standard liability insurance covers suits brought in the United States or Canada. Coverage for liability outside North America must be purchased separately.
General liability insurance. General liability insurance provides protection against bodily injury and property damage claims arising from the insured’s operations. It covers premises and operations, use of independent subcontractors, and products and completed operations. Major exclusions, which are covered by other types of insurance, include liability arising out of the ownership, maintenance, or use of watercraft, aircraft, and automobiles, and professional liability.
Hired auto physical damage coverage. This insurance provides comprehensive and collision coverage, subject to a deductible, for damage to rented vehicles.
Intellectual property insurance. This insurance covers third-party liability, defense, and indemnity costs incurred by the business in suits claiming infringement of patent, copyright, and trademark. Offensive coverage is also available, which provides funds to pursue alleged infringers of the business’s products or processes.
Key employee life insurance. This is a special form of life insurance that protects a business against financial loss resulting from death or disability of a key employee.
Limit of liability. The maximum amount of money a policy will pay in the event of a claim.
Occurrence. The term “occurrence” commonly refers to an accident, including continuous or repeated exposures to substantially the same general harmful conditions. Many policies have a different definition of “occurrence,” and what triggers a claim.
Occurrence limit. The most the insurer will pay for any one occurrence.
Off-premises disruption of utilities. Standard business interruption insurance covers a direct loss of income and continuing expenses because of an insured interruption of production on the business’s premises. This covers such interruptions as destruction of electrical generators at a plant, but does not contemplate an indirect exposure such as a shutdown or power outage at the local power station. An off-premises power extension, when added to business interruption insurance, would cover this additional exposure.
Patent litigation coverage. Coverage may be purchased for the defense of patent infringement allegations or expenses related to enforcement of patents. See “Intellectual Property Insurance.”
Personal injury insurance. Personal injury insurance covers injury claims other than bodily injury arising out of offenses such as false arrest, detention or imprisonment; malicious prosecution, wrongful eviction, libel, slander, and violation of the right of privacy.
Political risk/expropriation coverage. Companies with international operations are often concerned about the potential for contract repudiation and/or expropriation of their foreign assets by a foreign power. Coverage is available to protect a business from these losses.
Pollution liability coverage. Standard commercial general liability and umbrella liability policies absolutely exclude pollution damage to others. In order for pollution to be covered, a specific pollution liability policy must be purchased. Limited pollution damage and clean-up expenses to the business’s property are available through the business’s property policy.
Premises/operations liability. Bodily injury or property damage arising out of the physical hazards on the insured’s premises or operations and occurring on premises it owns or rents are covered by this insurance. The most common example of a covered event is a “trip and fall.”
Property insurance. Property insurance covers a business for direct losses to equipment, computers, furniture, fixtures, leasehold improvements, etc. resulting from fire, windstorm, theft, and other perils.
Retroactive date. For certain types of coverage to apply, the wrongful act must have occurred after the retroactive date, and the claim must be made during the policy term. See “Claims Made Coverage.”
Self-insured retention (SIR). The amount of loss for which the insured agrees to be responsible before the insurer begins to pay for a loss. Unlike a deductible, the insured is usually responsible for handling claims within the self-insured retention.
Umbrella liability policy. An umbrella liability policy raises the limits of all “primary” or “underlying” liability insurance policies; and provides coverage in some areas not covered under primary policies.
Workers’ compensation & employer’s liability insurance. Workers’ compensation insurance provides statutory protection against bodily injury, sickness, or disease sustained by employees while in the scope of their employment. Employer’s liability coverage is included in standard workers’ compensation policies. It covers common-law claims of injured employees made in lieu of or in addition to a workers’ compensation claim.
This publication and the information included in it are not intended to serve as a substitute for consultation with an attorney. Specific legal issues, concerns and conditions always require the advice of appropriate legal professionals.