Glossary of Insurance Terms
RECOMMENDED COVERAGESPROPERTY Special Perils: This coverage will protect covered property against direct loss arising from any
cause not specifically excluded.
Coinsurance:
A policy may contain a coinsurance clause requiring that the limit of coverage be a minimum percentage (usually 80%) of the insurable value of your property. If the amount of insurance carried is less than what is required by this clause, any claim payment may be reduced by the same percentage as the deficiency. For example, covered property worth $100,000 may require a minimum of 80%, or $80,000. If only $60,000 of coverage is carried (25% less than the required limit), than any loss payment would be
reduced by 25%. Agreed Value Valuation:
This is used to remove the coinsurance requirement for covered property. With it your company agrees that the amount of coverage purchased is adequate, and any coinsurance requirements are waived if the limit of insurance equals the agreed value.
Replacement Cost Valuation:
This loss valuation method pays for the cost to repair or replace damaged items with like kind and quality without deduction for depreciation. This is important since you could face a substantial loss if you must replace property at today's prices but receive only the depreciated value of the property that was destroyed.
Selling Price Clause:
A provision that may be used in certain property insurance forms which obligates an insurer to pay the established market price of destroyed or damaged stock rather than it's cost to the insured. This coverage is only available to
manufacturers with finished products. Flood Insurance:
This coverage is used to provide protection against loss due to water damage arising from flooding, surface water, tides, tidal waves and the overflow of any body of water. Earthquake: Provides coverage for damage due to earth movement, including earthquake shocks and volcanic eruption. Business Income including Extra Expense:
This coverage is used to insure against loss of income (including any continuing normal operating expenses) that you experience because of a suspension of your business when insured property has been damaged by a covered peril. Under this form, extra expenses are included and rental values can be added. An extended period of indemnity provision is also included to provide coverage after you resume operations until your business returns to its normal level of activities.
Rental Value: This coverage is used to insure you against loss of income (rents) or your inability to use or rent the premises because of a covered peril.
Utility Services Interruption:
This coverage extends your business income and extra expense insurance to protect against loss when due to the interruption of services rendered to you by a specified utility that provides your business with water, power or communications.
Contingent Business Income:
Sometimes called Dependent Property Coverage, this coverage is used to insure against drop-off of revenue and the extra costs of obtaining services and supplies that arises out of the loss or damage to a non-owned and scheduled property. For example, if your primary supply sustains damage which prevents them from supplying you with a necessary product to keep you in operation, the resulting loss of income, due to your shutdown, would be covered.
Equipment and Machinery Breakdown:
Insurance against the sudden and accidental breakdown of boilers, machinery and electrical equipment. Coverage can also be included for production machinery. Coverage is provided on damage to the equipment, expediting expenses property damage to property of others, and can include consequential loss and business interruption
Spoilage:
This coverage provides coverage against loss to perishable stock when caused by a change in temperature or humidity that is the result of mechanical breakdown, contamination, or power outage.
Ordinance or Law:
A. Increased cost of construction coverage provides the additional cost of reconstruction where ordinances require rebuilding with more expensive materials, services, or techniques. B. Demolition Insurance provides the cost of demolition of the undamaged portion of the building when required due to ordinance or law.
Debris Removal( excess of policy limits):
Provides you with indemnification for expenditures incurred in the removal of debris produced by the occurrence of an insured peril. This amount can be substantial, especially when hazardous substances such as asbestos are present.
Electronic Equipment (EDP):
Coverage specifically designed to cover computer equipment, data systems and media. Loss of income and extra expense due to these losses can also be included. Glass: Provides coverage for plate glass, lettering, frames and ornamentation. This coverage frequently includes a "per pane" limit. Signs: Provides coverage for business signs, on premises, owned or occupied by the insured Equipment & Machinery Breakdown:
Insurance against the sudden and accidental breakdown of boilers, machinery and electrical equipment. Coverage is provided for damage to the equipment, expediting expenses, property damage to property of others, supplemental payments, and automatic coverage on additional objects. Coverage can be extended to cover consequential loss and loss from Interruption of Business
Accounts Receivable:
Insurance against the loss that occurs when an insured is unable to collect outstanding accounts because of damage to, or destruction of the accounts receivable records by an insured peril. Valuable Papers and Records:
This coverage is designed to pay for the costs to reconstruct original source materials including records, deeds, manuscripts, films, drawings, or other valuable papers or records that have NOT been converted into usable EDP data, and have been lost due to an insured peril.
Elevator Collision:
Coverage for damage caused by collision of an elevator, without regard to fault. This includes damage to personal property, the building and the elevator itself. Transportation Floater: Provides coverage for your property while in transit to you or while enroute to your customer by common carrier. CRIMEMoney & Securities: Protects against the loss of money & securities from almost any type of hazard, except forgery or employee dishonesty. Employee Dishonesty: Coverage to insure against loss of money, securities or other property belonging to you, or for which you are liable, that is caused by employee theft.
Depositors Forgery: Protection against the forgery or alteration of instruments such as checks, drafts, or promissory notes, purported to have been written by the insured.
Third Party Fidelity:
Coverage used to insure against claims arising from theft of customers' property, by your employees, while they are working at your customers' place of business. Fiduciary Liability:
Coverage insures against claims alleging breech of fiduciary obligations as outlined under the ERISA of 1974. Examples, for which fiduciaries could be held liable are: imprudent investment or conflict of interest in choosing an investment plan.
ERISA Bond: A bond which protects the assets of any approved retirement plan, subject to the ERISA act. Credit Card Forgery: Protects against losses caused by the forgery in the use of credit cards, or the alteration of them or of any other written instruments connected with them. LIABILITYCommercial General Liability:
Provides protection against liability claims for bodily injury and property damage, arising out of premises, operations, products and completed operations; and advertising and personal injury liability.
Product Liability:
The Liability for bodily injury or property damage incurred by a merchant or manufacturer as a consequence of some defect in the product sold or manufactured. Completed Operations:
Work of the insured that has been completed as called for in a contract; or work completed at a single job site under a contract involving multiple job sites; or work that has been put to it's intended use.
Vendors: Extends your products coverage to include vendors of your product.
Personal Injury:
Covers injury, other than bodily injury, arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or invasion of privacy, excluding advertising, publishing, broadcasting or telecasting done by or for you.
Advertising Injury: Coverage injury, other than bodily injury, caused by an offense committed in the course of advertising your goods, products or services. Products Recall: Provides coverage for specified costs associated with the recall, withdrawal, disposal, repair, replacement or adjustment of your product or work because of its
defect or deficiency. Exporters' Package: Provides coverage for products that are made or sold outside of the United States, Puerto Rico, or
Canada, and for suits arising from these products. The policy also includes International Voluntary Workers Compensation, Nonowned or Hired Automobile Coverage, and other international coverages, depending
upon the insurance carrier. Umbrella:
A policy designed to provide protection against catastrophic losses. It generally provides coverage over primary liability, automobile and employers' liability policies. Employee Benefits: Covers the faulty administration of the employer's benefit program, e.g. misstatement of health benefits, failure to enroll new employees in a benefit plan, etc.
Employment Practices: Insurance designed specifically to cover wrongful termination, sexual harassment, and discrimination, including liabilities that are assumed under the
Americans with Disabilities Act. Internet Liability: Provides coverage for any claim arising out of Internet activities, which are broadly defined as the
dissemination or use of "matter"(content) on the insured's web site, or the transaction of business over the site.
Directors & Officers: Insures corporate directors and
officers against claims, most often by the stockholders and employees, alleging financial loss arising from mismanagement.
Errors & Omissions: Insurance that protects the insured
against liability for committing an error or omission in performance of professional duties. Generally such policies are designed to cover financial losses rather than liability for bodily injury or property
damage. Malpractice:
Provides coverage for a professional error, omission or act of negligence in per-forming a professional act. Used to denote the type of professional liability coverage written to protect physicians, surgeons, accountants, lawyers, architects & engineers, among others.
Non-owned Automobile: Provides you, the employer, protection for autos that are not owned, leased, borrowed, or hired, but used in connection with your business. Coverage protects your company. It does
NOT protect the owner of the vehicle. Hired Automobile: Covers any auto leased, hired, rented or borrowed, in connection with your business. Hired Automobile Physical Damage: Provides physical damage
coverage (Comprehensive & Collision) for autos leased, hired, rented or borrowed, in connection with your business. WORKERS' COMPENSATION Workers' Compensation: The system by which
no-fault statutory benefits, prescribed in state law, are provided by an employer to an employee (or the employee's family) due to a job related injury(including death) resulting from an accident or
occupational disease.Employers Liability: This coverage is provided by Part 2 of the basic workers' compensation policy and pays on behalf of the insured (employer) all sums that the insured shall become
legally obligated to pay as damages because of bodily injury by accident or disease, sustained by any employee of the insured(employer) arising out of and in the course of his employment by the insured.
Longshore and Harbor Workers: Coverage used to protect employees engaged in maritime employment, or employed, in whole or part, on navigable waterways in the United States, including piers, terminals, docks
and other areas used for loading or unloading, or repairing of vessels. MISCELLANEOUS
Business Credit Insurance:
Covers your accounts receivables against bad debt losses to nonpayment and insolvency. Prepaid Legal: Legal Services Plan Installation Floater (Contractors): Property insurance which provides coverage while materials are in transit and at the job site. Coverage ceases once materials become a part of the building.
Equipment Rental Reimbursement (Contractors):
Pays the cost of renting temporary Replacement equipment in the event of coverage damage to covered equipment. Defective Materials (Contractors): Coverage for use of faulty materials Design Defect (Contractors): Coverage for faulty design which causes a loss(also see E & O)
Tools & Equipment Floater (Contractors):
This policy is designed to cover your mobile equipment while it is stored on your premises, in transit, or at temporary locations or jobsites. Larger equipment items are specifically scheduled with separate limits applying to each piece of equipment. Miscellaneous smaller items are grouped under a single blanket subject to a maximum value for any one item per loss.
False Pretense (Auto Dealers/Garages):
Covers the insured when 1: a covered automobile is taken in a fraudulent manner; 2: when the insured acquires an automobile from someone whom did not have legal title to the vehicle. Garagekeepers Legal Liability (Garages, Parking Lots, Apartment buildings, etc):
Covers the Insured for liability as bailees with respect to damage to automobiles left in their custody for safekeeping or repair. On Hook (Garages): This coverage will protect against your legal liability for loss to a vehicle by A covered peril while in tow to or from the insured's operations. Drive Away Collision (Auto Dealers): Affords coverage for the pickup or delivery of vehicles to or from a point greater than 50 miles from the dealership. LIFE AND HEALTHHealth Insurance: Insurance against loss by sickness or bodily injury. Available as a group or individual policy. Long Term Disability: Replaces earnings lost due to illness or disability occurring on or off the job. Available as a group or individual policy. Second to Die:
This policy covers the lives of two individuals, usually husband and wife, or co-owners of a business. The death benefit is paid only on the death of the second person to die and is an excellent and cost effective way to pay estate taxes. Premiums are generally lower than those for individual policies.
Long Term Care Insurance: Coverage to pay for stay in a nursing or assisted living facility. |
