Business Insurance Glossary

A person or business added to your policy who gains coverage under your insurance. Common in contracts when a client requires you to add them to your general liability policy to protect them from claims related to your work.

The maximum amount your commercial policy will pay for all claims during your policy period (usually one year). For example, if your general liability has a $2 million aggregate, that's the total available for all claims combined—not per claim.

Extension of inland marine insurance that covers tools, equipment, and materials while you're working on someone else's property. Essential for contractors, electricians, plumbers, and other tradespeople.

Insurance for businesses that temporarily hold customers' property—like dry cleaners, repair shops, or storage facilities. Covers damage to customer property while it's in your care.

Commercial property coverage that covers multiple locations or types of property under a single limit, rather than separate limits for each. Provides flexibility when property values shift between locations.

Commercial auto insurance covering vehicles used for business purposes. Includes company cars, trucks, vans, and can extend to employee-owned vehicles used for work. Required when personal auto policies won't cover business use.

Also called business interruption insurance. Replaces lost income and covers ongoing expenses (like rent and payroll) when your business can't operate due to a covered event like fire or storm damage.

A bundled insurance package combining general liability, commercial property, and business interruption coverage. Designed for small to medium-sized businesses and typically costs less than buying coverages separately.

A document proving you have insurance coverage. Clients and landlords often require COIs before you can start work or sign a lease. Your agent can issue these quickly—usually within minutes.

Professional liability coverage that only covers claims filed during your active policy period, regardless of when the incident occurred. Requires tail coverage when you cancel to protect against future claims for past work.

Core business insurance covering third-party bodily injury, property damage, and advertising injury claims. Protects your business if someone gets hurt on your premises or you damage a client's property.

Customizable insurance combining multiple commercial coverages (property, liability, crime, inland marine) under one policy. More flexible than a BOP but designed for larger or more complex businesses.

Part of general liability that covers claims arising after you've finished a project. For example, if faulty electrical work causes a fire six months after completion, this coverage responds.

Coverage for data breaches, cyberattacks, and network security failures. Pays for customer notification, credit monitoring, legal defense, regulatory fines, and business interruption from cyber incidents.

Protects company executives and board members from personal liability for decisions made in their roles. Covers legal defense costs and settlements when directors are sued for alleged mismanagement or breach of duty.

Coverage for employee lawsuits alleging wrongful termination, discrimination, harassment, or retaliation. Protects your business even if the claims are groundless—legal defense alone can cost tens of thousands.

Part of workers' compensation that covers lawsuits from employees or their families for work-related injuries. Separate from workers' comp benefits, this responds when employees sue for negligence or unsafe conditions.

A modification to your commercial policy that adds, removes, or changes coverage. Common endorsements include hired/non-owned auto, additional insureds, or scheduled equipment coverage.

Insurance for mechanical or electrical failure of equipment like HVAC systems, boilers, refrigeration, or computer systems. Covers repair costs and business income losses—not typically covered by property insurance.

Professional liability coverage for service providers and consultants. Protects when clients claim your advice, work, or services caused them financial harm. Also called Professional Liability Insurance.

A multiplier applied to your workers' comp premium based on your claims history. An EMR of 1.0 is average; below 1.0 means fewer claims and lower premiums, above 1.0 means more claims and higher costs.

Coverage protecting your business from employee theft, fraud, or dishonesty. Essential for businesses handling client funds or valuable property. Different from surety bonds, which protect your clients.

The total amount your general liability policy will pay for all covered claims (except products/completed operations) during the policy period. Typically twice your per-occurrence limit.

Liability protection when employees use rental cars (hired) or their personal vehicles (non-owned) for business purposes. Often added to general liability policies as an inexpensive endorsement.

Covers business property that moves or is used away from your primary location—like contractors' tools, mobile equipment, or goods in transit. The name is historical; it has nothing to do with water.

Inland marine coverage for property while being installed at a customer's location. Protects contractors installing equipment, fixtures, or materials against damage during the installation process.

Coverage for businesses that serve, sell, or manufacture alcohol. Protects against claims when an intoxicated patron causes injury or property damage. Required for bars, restaurants, breweries, and event venues.

See Business Income Coverage. Replaces revenue lost when your business temporarily shuts down due to covered property damage. Includes extra expenses needed to keep operating during repairs.

No-fault coverage that pays medical expenses for customers or visitors injured on your business premises, regardless of liability. Helps avoid lawsuits by quickly covering minor injuries like slips and falls.

Coverage that protects against claims based on when the incident happened, not when the claim is filed. If covered today, you're protected even if a claim is filed years later after you've cancelled the policy.

The maximum your policy pays for a single claim or incident. For example, with a $1 million per occurrence limit, one lawsuit could max out at $1 million, but you'd still have coverage for other separate claims (up to your aggregate).

Coverage for injuries or damage caused by products you manufacture, distribute, or sell. If your product is defective and causes harm, this pays for legal defense and settlements.

See Errors & Omissions (E&O) Insurance. Protects professionals who provide advice or services against claims of negligence, mistakes, or failure to deliver promised results.

Specialized coverage for environmental contamination claims. Standard policies exclude pollution, so businesses that handle hazardous materials, operate gas stations, or perform environmental work need dedicated pollution coverage.

Commercial property coverage that pays to replace damaged property with new items of similar quality—no deduction for depreciation. Costs more than actual cash value but provides full rebuilding/replacement protection.

The retroactive date on a claims-made policy. Your policy only covers incidents that occurred after this date. When switching carriers, negotiate a retro date matching your original coverage start date to avoid gaps.

A guarantee that you'll fulfill contractual obligations. Common types include contract bonds (guaranteeing project completion), license bonds (required for certain business licenses), and court bonds. Not technically insurance—bonds protect your clients, not you.

Extended reporting period coverage purchased when you cancel a claims-made policy. Allows you to report future claims for incidents that occurred while your policy was active. Critical for professionals switching carriers.

Extra liability coverage that kicks in after your primary commercial policies (general liability, auto, employers' liability) are exhausted. Provides an additional $1-10 million in protection against catastrophic claims.

The process insurers use to evaluate your business risk and determine coverage eligibility and pricing. They review your industry, revenue, claims history, safety practices, and other risk factors.

A policy endorsement where your insurer agrees not to pursue reimbursement from another party after paying your claim. Often required in commercial contracts to prevent insurers from suing clients or contractors.

Required in most states, workers' comp covers medical expenses and lost wages for employees injured on the job. Protects both your employees (guaranteed benefits) and your business (lawsuit protection).