Know Your Policy
Plain-English definitions for the insurance terms you'll encounter — so you can make informed decisions about your coverage.
34 terms found
Additional Insured
A person or organization added to your policy who receives the same liability protections as the named insured, often required by contracts.
Aggregate Limit
The maximum amount an insurer will pay for all covered losses during a policy period, regardless of how many claims are filed.
Binder
A temporary insurance contract that provides coverage while a formal policy is being prepared and issued.
Bodily Injury Liability
Coverage that pays for injuries you cause to another person, including medical bills, lost wages, and pain and suffering.
Business Income Coverage
Also called Business Interruption Insurance. Replaces lost income when your business is forced to shut down due to a covered loss.
Certificate of Insurance (COI)
A document issued by an insurer summarizing the key terms of an insurance policy — commonly required by clients and project owners before work begins.
Claims-Made Policy
A policy that covers claims filed during the policy period, regardless of when the incident occurred. Common for professional liability.
Commercial General Liability (CGL)
A standard business liability policy covering third-party bodily injury, property damage, and personal or advertising injury claims.
Completed Operations
Coverage for liability arising from work you have already finished. A key component of contractor insurance.
Deductible
The amount you pay out-of-pocket before your insurance kicks in. A higher deductible typically lowers your premium.
Endorsement
An amendment or rider added to a policy that modifies coverage — either expanding, restricting, or clarifying the original terms.
Exclusion
A specific condition, event, or type of damage that is not covered by an insurance policy.
Excess Liability
A policy that provides additional coverage above the limits of one or more underlying policies. Similar to an umbrella but more narrowly defined.
Experience Modification Rate (EMR)
A workers' compensation factor that adjusts your premium based on your past claims history compared to industry averages. An EMR below 1.0 is favorable.
General Aggregate
The total maximum amount your insurer will pay for all covered claims (excluding products/completed operations) during a policy year.
Hired & Non-Owned Auto (HNOA)
Coverage for liability arising from vehicles you or your employees rent, borrow, or use personally for business purposes.
Indemnification
A contractual obligation where one party agrees to hold the other harmless from financial losses or legal claims.
Inland Marine Insurance
Coverage for tools, equipment, and property while in transit or at job sites — not covered by standard commercial property policies.
Insurable Interest
A financial stake in something that could be damaged or lost. You must have an insurable interest in property or a person to obtain coverage.
Liability Limit
The maximum dollar amount your insurer will pay for a single claim or all claims during the policy period.
Loss Run
A report from your insurance carrier detailing your claims history over the past 3–5 years. Underwriters use this to assess risk.
Named Insured
The individual or entity listed on the policy as the primary policyholder, with full rights and responsibilities under the contract.
Occurrence Policy
A policy that covers incidents that occur during the policy period, regardless of when a claim is filed. Common for general liability.
Per Occurrence Limit
The maximum amount an insurer will pay for a single covered claim or incident.
Premium
The amount you pay — monthly, quarterly, or annually — to maintain your insurance coverage.
Products & Completed Operations
Coverage for bodily injury or property damage caused by your products or completed work after they leave your control.
Professional Liability (E&O)
Insurance protecting businesses from claims of negligence, errors, or omissions arising from professional services or advice.
Property Damage Liability
Coverage that pays for damage you cause to someone else's property.
Subrogation
The process by which your insurer, after paying your claim, pursues the responsible third party to recover the amount paid.
Surety Bond
A three-party agreement guaranteeing a contractor will fulfill obligations. The surety company compensates the project owner if the contractor defaults.
Umbrella Policy
A policy that provides additional liability coverage above multiple underlying policies — offering broader protection at a lower cost per million.
Underwriting
The process by which an insurer evaluates risk and determines whether to provide coverage, and at what premium.
Waiver of Subrogation
An endorsement where you give up your insurer's right to pursue a third party for a paid claim — commonly required in construction contracts.
Workers' Compensation
State-mandated coverage that pays for medical expenses, lost wages, and rehabilitation for employees injured on the job.
