|
Accounts
Receivable
Protects
you if you are unable to collect outstanding balances
as a result of covered loss or damage to your account
records.
Actual
Cash Value (ACV)
ACV
of property is calculated by determining what it would
cost to replace the property and then adjusting this
replacement cost by subtracting an amount that
reflects depreciation.
Audit
The
process an insurance company uses to compare whether
the premium it originally estimated reflects the
actual risk covered by the policy based on the
customer’s actual payroll, number
of autos or sales.
Audit
Period
The
period covered by an insurance audit. This is usually
the year
the policy has been in effect. If an insurance premium
is going to be determined by audit, the insurance
company will conduct their examination of the business’s
books and records at the end of the policy period.
Back-up
of Sewer or Drain Water Damage
Pays
for loss or damage to covered property caused by water
that backs up from a sewer or drain. This is not flood
insurance, so see your agent for details on the
differences.
Blanket
Limits
•
A way of increasing the limits on your individual
coverages without increasing your premium. With a
blanket limit, the limits for several common coverages
are bundled together in the policy under one blanket
limit (say, $150,000 for six coverages).
That way, the full blanket limit would apply if any
one of the blanketed coverages should have a loss,
instead of the usual lower limits per coverage of
about $10,000 -- $25,000.
•
Covers multiple buildings at different locations under
the same limit. That way, even if there are large
shifts of inventory from one location to another, the
policyholder is covered for maximum inventory worth.
Bodily
Injury
Physical
injury, sickness or disease sustained by a
person. Building and Contents Covers your shop,
warehouse or office structure and contents if they are
damaged or destroyed because of a covered loss.
Business
Income
Reimburses
you for lost earnings and continuing operating expenses,
including payroll, if your business is forced to shut
down because of a fire, windstorm, explosion or other
insured loss. Also covers extra expenses, such as
renting temporary space.
Business
Income for Off-Premises Utility Services
Protects
against loss of business income or extra expense at
your business caused by interruption of water,
communication or power supply services, when the
interruption is caused by a covered loss.
Business
Owners Policy
A
simplified property and liability policy created for
owners of small businesses which combines most of the
coverages they will need. It does not include workers’
compensation or commercial automobile coverages.
Coinsurance
For
property insurance, coinsurance reduces the amount
that will be paid for a loss occurring when the
property is underinsured. The value of the property,
as reflected in the policy limit, is supposed to
reflect “how big” the risk is. If by choosing too
low a policy limit you have indicated the risk is
smaller than it really is, then the premium will be
too low. A coinsurance clause sets a penalty for
underinsurance by reducing payment of any claim.
Commercial
Auto Liability
Auto
coverage that applies if the insured business is
responsible for bodily injury or damage to another’s
property as a result of a covered auto accident.
Completed
Operations
Pays
for covered losses resulting from bodily injury or
property damage that takes place away from the insured’s
premises and is caused by work finished by the insured’s
business and/or the materials included in that work.
Computers
and Media
Provides
coverage for covered damage to your computers,
computer equipment, data, software, and other business
electronic equipment. Also covers the costs to
research, replace or repair lost or damaged data or
software when the damage has been caused by a covered
loss.
Covered
Loss
A
covered loss is an insured loss that is either
expressly specified by a “named peril” policy or
not excluded in an “all risk” policy and not
otherwise excluded by the policy terms.
DBA
Abbreviation
that stands for “doing business as.” Declarations
Page The declarations page contains the basic
information of your policy. It generally shows the
policy number, named insureds, effective dates,
premium amounts and summary policy information.
Deductibles
Typically,
the deductible on a business owners policy is
$500. Optional deductibles of $1,000, $2,500,
and $5,000 are usually available. The higher
deductibles will generate a credit to your policy
premium. The deductible applies to all losses or
damages arising out of any one occurrence.
Defense
Costs
A
business owners policy typically covers the cost of
legal defense for liability coverages included in the
policy. Defense costs may be paid over and above the
policy limits.
Dependent
Property
Helps
protect you against loss of business income that
occurs because a major supplier cannot provide you
with the essential materials for your business. This
coverage is triggered by a covered loss to a supplier’s
property. It also provides reimbursement for loss of
business if a property such as an anchor store which
your business depends upon to bring you business
suffers a covered loss.
Depreciation
Loss
in value that occurs as items age, wear out, or become
obsolete.
Employment
Practices Liability Insurance (EPLI)
This
coverage is designed to provide employers protection
for liability connected with hiring and personnel
issues such as discrimination, sexual harassment and
wrongful termination.
Endorsement
An
addition or limitation to an insurance policy that
changes some aspect of the insurance contract.
Equipment
Breakdown
Covers
costs to repair or replace equipment vital to your
business, such as computers, air conditioners, phone
systems and boilers that are damaged by a covered
mechanical breakdown.
Errors
& Omissions
This
coverage is designed to reimburse customers for
economic loss when an insured business makes an error
or fails to act in accordance with the standards
applicable to the particular industry. Examples of
some of those businesses that may benefit from this
type of coverage are real estate, banking, printing
and claims adjusting.
Exposure
Being
at risk of loss because of some hazard or contingency.
Fine
Arts
Provides
increased protection for fine art and other valuable
collectibles lost due to covered a cause.
First
Named Insured
The
first individual or organization named on an insurance
policy. This entity may have certain rights and
obligations by virtue of being the first named
insured.
High
Liability Limits
These
optional policy limits are higher than the standard
business owners policy limits. In certain industries,
higher limits are sometimes required in order to be
eligible to bid for jobs.
Hired
Auto and Non-Owned Auto Coverage
Covers
auto liability for a business that does not own
vehicles but sometimes leases them. It also covers
auto liability when an employee drives his/her own
vehicle to perform tasks related to the insured’s
business.
Identity
Recovery Coverage for Business Owners
Coverage
designed to restore credit in the event of identity
theft.
Indemnify,
Indemnification
To
restore the insured to the same financial condition
enjoyed before the loss.
Inspection
Contact
The
individual who is contacted in the event of an audit,
physical inspection of your premises, or claim. This
contact is usually the first named insured on the
declarations page of your
policy.
Liability
Insurance
Broad
category of insurance that is designed to cover
accidental bodily injury or property damage losses for
which the insured is legally responsible.
Legal
Entity
A
person or organization with a separate and distinct
existence for
legal or tax purposes.
Lessor
One
who conveys property to another by lease.
Medical
Expense Coverage
Insurance
that covers expenses for medical treatment without regard
to fault. Its purpose is to get the injured party
taken care
of as soon as possible.
Named
Insured
An
insured specifically named in the policy.
Off-Premise
Utility Services
Covers
damage to your property and stock caused by interruption
due to a covered loss of off-premises water, communication
or power supply services not owned by you.
Operations
Liability
Covers
your liability for covered injuries to people and
their property
that occur when you are conducting your normal business
at another location.
Peak
Season
Provides
an increased insurance limit for your business content
to help cover seasonal variations in your inventory and
supplies.
Personal
and Advertising Injury
Designed
to cover publication of material that slanders or libels
another person or organization. Also can cover damages
and
legal defense costs from lawsuits that claim false, malicious
or misleading statements in advertisements, promotional
flyers, brochures, or Web sites, etc. Includes claims
or copyright infringement in an advertisement.
Personal
Property of Others
Provides
protection for property belonging to your customers or
suppliers while in your shop or business, without
regard to legal
liability.
Premium
The
price of insurance coverage provided for a specified period
of time.
Premises
The
building, its contents, and grounds that are covered under
the insurance policy.
Premises
Liability
Covers
your liability for injuries to people and damage to
their property
while on your insured business property.
Premium
Audit
The
periodic (usually annual) review of an insured’s
books and
records to determine the exact amount of premium owed.
(See audit.)
Products
Liability
Coverage
related to the responsibility of a merchant or manufacturer
for his or her products. If a defective product that
was sold or manufactured causes a covered bodily
injury or
property damage, this coverage helps protect the
merchant or
manufacturer responsible for that product.
Product
Recall & Replacement
Coverage
that pays for the expenses incurred when a product must
be recalled from the market as well as the costs of replacement
parts or products.
Products
and Completed Operations
A
coverage which combines the product liability and
completed operations coverages.
Professional
Liability
Coverage
for liability arising out of insured errors or
omissions in
the performance of professional duties in certain professions,
such as doctors, lawyers, dentists, architects and
engineers. It typically includes coverages for bodily
injury, property
damage and financial damages.
Property
Insurance
Broad
category of insurance which covers certain losses to the
insured’s property.
Replacement
Cost
The
cost to replace lost or damaged property subject to
the limit
of insurance on the policy.
Temperature
Change
Covers
loss of your perishable stock when there is direct
damage
caused by a covered interruption of electric power to,
or
mechanical breakdown of, your refrigerating or cooling
equipment.
Tenant’s
Liability
Protects
a tenant business if it is responsible for a covered damage
to the leased building it occupies or property
belonging to
other tenants in that building.
Umbrella
Policy
Additional
insurance that kicks in once you’ve reached the
limit of your basic policy. For example, if you
suffered a $1 million dollar
loss, and your property insurance covers $500,000, an umbrella
policy could cover the remaining $500,000.
Underwriter
In
insurance companies, an individual responsible for determining
which coverages will be made available and on what
terms, and how premiums will be set.
Valuation
There
are three forms of valuation used on business owners policies.
•
Actual Cash Value
•
Replacement Cost
•
Full Value Replacement Cost
All
of these are defined in this glossary.
Vandalism
Designed
to cover willful or malicious damage or destruction of
your property.
Workers’
Compensation
A
type of insurance that provides benefits to workers if
they suffer work-related sickness or injury.
From
Hartford's Business Owner's Guide to Insurance
|
