General Insurance Terms

Deductible:

The amount the policyholder must pay out of pocket before the insurance coverage kicks in. Higher deductibles generally lower the insurance premium.

Premium:

The amount paid by the policyholder to the insurance company, typically on a monthly or annual basis, to maintain coverage.

Policy Limit:

The maximum amount an insurer will pay for a covered claim under the policy. Limits can apply per incident or over the life of the policy.

Exclusions:

Specific conditions or circumstances that are not covered by the insurance policy. Understanding exclusions is crucial to avoid unexpected out-of-pocket expenses.

Endorsement/Rider:

An addition or change to the standard policy terms, allowing for additional coverage or modifications to the policy. A rider can add or exclude specific types of coverage.

Minimum Earned Premium (MEP):

Specifies the portion of the premium that is non-refundable, even if the policy is canceled early. For example, if a policy has a minimum earned premium of $1,000, and the policyholder cancels the policy after a short period, the insurer will keep at least $1,000 of the premium paid. This is sometimes expressed in percentage terms.

Hired and Non-Owned Auto (HNOA) Insurance Terms

Hired Autos:

Vehicles that are rented, leased, or borrowed for temporary use by the business. HNOA insurance covers liability for these vehicles when used for business purposes.

Non-Owned Autos:

Vehicles owned by employees or contractors but used for business purposes. HNOA insurance covers the business's liability for accidents involving these vehicles.

Liability Coverage:

Protection against legal liability for bodily injury or property damage caused to third parties in an accident involving a hired or non-owned vehicle.

Comprehensive Coverage:

Optional coverage that can be added to HNOA insurance, protecting against non-collision-related incidents such as theft, vandalism, or natural disasters.

Collision Coverage:

Coverage for damage to a hired or non-owned vehicle resulting from a collision with another vehicle or object, typically optional in HNOA policies.

Commercial Auto Insurance Terms

Dispatch:

The period when a driver or delivery person is actively engaged in a job or delivery for the business. Coverage under "Active Dispatch Coverage" insurance is typically only in effect during this time.

Gap Coverage:

Insurance that fills coverage gaps when a contractor's personal auto insurance doesn’t cover business-related activities. "Active Dispatch Coverage" insurance often acts as gap coverage.

Legal Liability:

The responsibility for damages or injuries that a business or contractor may face if an accident occurs while the contractor is under dispatch.

Third-Party Liability:

Coverage for damages or injuries caused to a third party during the course of a dispatch. This is crucial for protecting the business from claims arising from accidents.

Policy Trigger:

The specific condition or event that activates the coverage. In "Active Dispatch Coverage" insurance, the trigger is typically when the contractor begins a job or delivery and ends when the task is completed.

Occupational Accident Insurance Terms

Accidental Death Benefit:

A payment made to the beneficiaries of the insured if they die as a result of a work-related accident.

Disability Benefits:

Payments made to the insured if they are unable to work due to a work-related injury. These benefits may be temporary or permanent, depending on the nature of the injury.

Medical Expenses:

Coverage for medical treatment, hospitalization, surgery, and rehabilitation costs associated with a work-related injury.

Temporary Total Disability (TTD):

Benefits provided when an insured is temporarily unable to perform any work due to a work-related injury but is expected to recover.

Permanent Partial Disability (PPD):

Benefits provided when an insured suffers a permanent injury that partially impairs their ability to work, such as the loss of a limb.

Commercial General Liability (CGL) Insurance Terms

Bodily Injury:

Coverage for physical injury to a third party that occurs on the business premises or as a result of business operations.

Property Damage:

Coverage for damage caused by the business to someone else's property. This could include damage to a client’s property while performing a job.

Personal and Advertising Injury:

Coverage for non-physical injuries such as libel, slander, false advertising, or copyright infringement that result from the business’s operations.

Products-Completed Operations:

Coverage for liability arising from products sold or services completed by the business that cause injury or damage after the work is finished.

General Aggregate Limit:

The maximum amount the insurance company will pay for all covered claims within a policy period. This limit applies to the sum of all claims, not just a single incident.

Cargo Insurance Terms

All-Risk Coverage:

A comprehensive type of cargo insurance that covers all potential risks of loss or damage except for those explicitly excluded in the policy.

Named Perils Coverage:

Cargo insurance that only covers the risks specifically listed in the policy, such as fire, theft, or collision.

In-Transit Coverage:

Protection for goods while they are being transported from one location to another. This coverage generally begins when the cargo is loaded and ends when it reaches its final destination.

Warehouse-to-Warehouse Coverage:

Coverage that extends from the point of origin to the final destination, including any temporary storage in warehouses along the way.

Salvage:

The process of recovering the value of goods that have been damaged or lost during transit. Insurance may cover the costs associated with salvage operations.

Errors & Omissions (E&O) Insurance Terms

Claims-Made Policy:

Only provides coverage if the claim is made during the policy period, regardless of when the error or omission occurred. Most E&O policies are claims-made, meaning you must have coverage in place when the claim is filed, not just when the alleged error occurred .

Retroactive Date:

Definition: The date from which your insurance policy will cover incidents. Claims related to events before this date are not covered.

Duty to Defend:

A provision that obligates the insurer to defend the insured in a lawsuit, even if the allegations are groundless, false, or fraudulent. This term is important because it signifies that your insurer will cover legal defense costs, which can be substantial.

Negligence:

Failure to exercise the care that a reasonably prudent person would exercise in similar circumstances, leading to unintended harm or loss. Most E&O claims are based on alleged negligence by the insured in providing professional services.

Extended Reporting Period (Tail Coverage):

Allows the insured to report claims after the policy has expired, for incidents that occurred during the policy period. Useful for coverage continuity when changing providers or retiring from a profession, as it covers claims made after the policy ends.