Business Insurance Glossary

Following are definitions of several terms commonly used to describe different aspects of business insurance coverage:

Actual Cash Value ACV) --Coverage for the dollar amount needed to repair or replace damaged property minus depreciation.

Blanket Insurance --Coverage for more than one type of property at a single location or similar types of properties at multiple locations.

Business Income also called "Business Interruption") Insurance --Coverage for lost net income and continuing expenses for a specified period of time, as a result of a cessation in normal business activities due to a covered loss.

Business Owner's Policy BOP) --A package policy that combines property, general liability, business income and other types of coverages into a single policy.

Coinsurance for property insurance) --A clause in the property policy requiring the policyholder to carry an amount of insurance equal to a specified percentage of the value of the property. Compliance will result in full payment on a covered loss minus the deductible. Failure to comply will result in a penalty for underinsurance.

Deductible --A dollar amount, usually a predetermined figure i.e., $1,000) or a percentage i.e., 2% of the value of the property) for which the policyholder must pay before the insurance company will pay for a covered loss.

Endorsement --A provision attached to an insurance policy that amends the policy's original terms.

Exclusion --A provision in a policy that eliminates coverage for certain losses, people, locations or conditions.

Liability Insurance --Coverage for covered claims of bodily injury or property damage for which the policyholder is legally liable.

Medical Payments --The specified amount for which the insurance company agrees to reimburse the policyholder for the medical expenses for bodily injury of a third-party. Medical expenses usually are paid regardless of fault.

Named-Peril Policy --An insurance policy that only covers losses resulting from perils specifically named in the policy.

Peril --An event or condition that causes a loss e.g., fire, windstorm, theft, etc.).

Professional Liability Insurance --Coverage for professionals as determined by their respective industry's expected standard of care for claims of negligence, errors or omissions causing damages to a client.

Replacement Cost --Coverage for the dollar amount needed to repair or replace damaged property without deducting for depreciation.

Special or "Open") Peril policy --An insurance policy that covers losses resulting from any peril not specifically excluded in the policy.

Umbrella --Coverage for losses above the limit of the underlying policy. Umbrella policies may also broaden coverage for losses not normally covered in the underlying policy.

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