Insurance Dictionary
Business & Commercial Insurance Dictionary
71 plain-English terms covering business insurance liability, property, professional, cyber and workers compensation concepts.
Business And Commercial Insurance
Plain-English definitions for this part of insurance. Read the simple meaning first, then the exact insurance meaning.
Additional insured endorsement
Simple meaning: A policy change that gives another person or business additional-insured status for specified risks.
Insurance meaning: An endorsement extending insured status to a designated party for the scope stated in the endorsement. Contract requirements do not automatically create coverage beyond the endorsement.
Audit premium
Simple meaning: Extra premium owed or returned after an insurance audit changes the exposure used for pricing.
Insurance meaning: The additional or return premium resulting from final audit calculations compared with the estimated premium.
Bailee coverage
Simple meaning: Coverage for customers’ property while a business has it.
Insurance meaning: Inland marine or property coverage for specified property of others in the insured’s care, custody, or control as a bailee.
Builders risk insurance
Simple meaning: Property insurance for a building while it is being built or renovated.
Insurance meaning: Course-of-construction property coverage for buildings, materials, and specified property during construction or renovation, subject to policy limits, covered causes, and project terms.
Also called: Course of construction insurance
Business income coverage
Simple meaning: Coverage that may replace certain lost business income after a covered property loss interrupts operations.
Insurance meaning: Coverage for qualifying loss of business income during a defined period of restoration when operations are suspended because of covered direct physical loss or damage, subject to the form and exclusions.
Also called: Business interruption insurance
Business insurance
Simple meaning: Insurance that protects a business from selected risks.
Insurance meaning: A broad category of insurance for business property, liability, employees, vehicles, income, cyber risks, professional services, and other exposures. No single policy covers every business risk. If you are comparing coverage for a business, see Commercial Insurance Quote Help.
Business owners policy (BOP)
Simple meaning: A package that combines common small-business coverages, usually property and liability, and often business-income protection.
Insurance meaning: A packaged policy designed for eligible businesses that commonly combines commercial property, commercial general liability, and business income or related coverages, subject to eligibility and policy terms.
Also called: BOP
Business personal property (BPP)
Simple meaning: A business’s furniture, equipment, inventory, and other movable property covered under a commercial property form.
Insurance meaning: Commercial property coverage for specified personal property owned by the business or for which it has responsibility, often at described premises.
Also called: BPP
Care, custody, or control
Simple meaning: Property someone else owns but your business is holding, handling, or controlling.
Insurance meaning: A liability concept that can affect exclusions or specialized coverage when the insured has possession or control of another party’s property.
Also called: CCC
Certificate holder
Simple meaning: The person or business listed to receive a certificate of insurance.
Insurance meaning: The entity named on a certificate of insurance as a recipient of coverage information. Being a certificate holder alone does not make that party an additional insured.
Claims-made-and-reported policy
Simple meaning: A claims-made policy that also requires the claim to be reported to the insurer within the required time.
Insurance meaning: A policy form requiring both that the claim be made and that it be reported to the insurer during the policy period or specified reporting window.
Claims-made policy
Simple meaning: A liability policy that generally requires a claim to be made during the policy period or allowed reporting period.
Insurance meaning: A policy form where coverage depends on a claim being first made against the insured during the policy period or applicable extended reporting period, subject to the policy’s retroactive date and reporting terms.
Commercial auto insurance
Simple meaning: Insurance for vehicles used or owned by a business.
Insurance meaning: Commercial coverage for business auto liability, physical damage, medical or no-fault benefits, uninsured motorists, and other exposures as selected and required. For a state-specific example, see New Jersey commercial auto insurance requirements. If you are shopping for business coverage more broadly, visit Commercial Insurance Quote Help.
Commercial crime insurance
Simple meaning: Coverage for certain losses from theft, fraud, robbery, forgery, or employee dishonesty.
Insurance meaning: Insurance covering specified crime losses, which may include employee theft, money and securities, forgery, computer fraud, or funds-transfer fraud, subject to the selected insuring agreements.
Commercial general liability (CGL)
Simple meaning: Business liability insurance for many claims involving injury, property damage, and certain personal or advertising injuries.
Insurance meaning: A standard form of commercial liability coverage for specified bodily injury, property damage, personal and advertising injury, and related exposures, subject to exclusions, limits, and endorsements. For broader business coverage shopping, see Commercial Insurance Quote Help.
Also called: CGL; General liability insurance
Commercial package policy (CPP)
Simple meaning: A business policy package that combines multiple commercial coverages.
Insurance meaning: A modular commercial insurance policy that can combine property, liability, crime, inland marine, and other coverage parts for a business.
Also called: CPP
Commercial property insurance
Simple meaning: Coverage for a business’s buildings, equipment, inventory, or other covered property.
Insurance meaning: Property insurance for business-owned or business-responsible buildings and personal property, subject to causes of loss, valuation, limits, deductibles, and exclusions.
Completed operations coverage
Simple meaning: Coverage for certain injury or damage caused by work after the job is finished.
Insurance meaning: CGL coverage for bodily injury or property damage arising from completed work away from the insured’s premises, subject to the products-completed operations hazard.
Contractors equipment coverage
Simple meaning: Coverage for tools and mobile equipment used by a contractor.
Insurance meaning: Inland marine coverage for scheduled or blanket contractor equipment, tools, and machinery, subject to valuation, territorial, and cause-of-loss provisions.
Contractual liability
Simple meaning: Liability someone takes on because of a contract.
Insurance meaning: Legal liability assumed under a contract. CGL policies cover some assumed liability but contain important exclusions and definitions, including insured-contract provisions.
Cyber extortion coverage
Simple meaning: Coverage for certain costs from ransomware or other cyber-extortion demands.
Insurance meaning: Cyber coverage for specified extortion-related expenses, response services, and potentially payments when lawful and approved under the policy, subject to sanctions and legal restrictions.
Cyber insurance
Simple meaning: Coverage for certain costs and liabilities caused by cyber events, data breaches, or technology incidents.
Insurance meaning: Insurance that can include first-party and third-party coverage for specified cyber incidents, privacy events, network interruption, incident response, extortion, and liability, subject to rapidly evolving policy terms.
Data breach coverage
Simple meaning: Coverage for certain costs after protected information is exposed or stolen.
Insurance meaning: Cyber or privacy coverage for qualifying breach-response expenses, notices, forensics, legal services, credit monitoring, and liability, depending on the policy.
Defense costs
Simple meaning: Money spent on lawyers and other costs to defend a covered claim.
Insurance meaning: Expenses incurred in defending a claim. Depending on the policy, defense costs may be paid outside the liability limit or may reduce the available limit.
Dependent property coverage
Simple meaning: Business-income coverage tied to certain important suppliers, customers, or other businesses.
Insurance meaning: Coverage for business-income or extra-expense loss caused by covered damage to specified dependent properties, such as suppliers or customers, subject to form definitions.
Also called: Contingent business interruption
Directors and officers liability (D&O)
Simple meaning: Coverage for certain claims against company directors and officers over decisions or actions in their management roles.
Insurance meaning: Liability insurance covering specified wrongful-act claims against directors, officers, and sometimes the organization, subject to policy structure and exclusions.
Also called: D&O
Duty to defend
Simple meaning: The insurer’s contractual duty to provide or pay for a legal defense when a claim meets the policy’s defense standard.
Insurance meaning: A liability-policy obligation to defend the insured against suits or claims that potentially fall within coverage, subject to policy wording and jurisdictional law.
Duty to indemnify
Simple meaning: The insurer’s duty to pay covered damages or settlements the insured legally owes.
Insurance meaning: The contractual obligation to pay covered sums the insured becomes legally obligated to pay, subject to limits and coverage terms.
Employers liability insurance
Simple meaning: Coverage for certain employee injury lawsuits that are not handled only through workers compensation benefits.
Insurance meaning: Liability coverage, commonly part of a workers compensation policy, for specified employer liability arising from employee injury or disease outside or in addition to statutory workers compensation obligations.
Employment practices liability insurance (EPLI)
Simple meaning: Coverage for certain workplace claims such as wrongful termination, discrimination, or harassment.
Insurance meaning: Liability coverage for specified employment-related wrongful acts, subject to exclusions, retentions, defense provisions, and claim-reporting requirements.
Also called: EPLI
Equipment breakdown insurance
Simple meaning: Coverage for certain sudden mechanical, electrical, or pressure-system breakdowns.
Insurance meaning: Commercial coverage for specified equipment breakdown events and resulting property damage, business income, spoilage, or other covered losses, subject to policy terms.
Also called: Boiler and machinery insurance
Errors and omissions insurance (E&O)
Simple meaning: Professional liability coverage for certain mistakes or failures in professional services.
Insurance meaning: A form of professional liability insurance protecting against covered claims alleging errors, omissions, negligence, or failure in specified professional services.
Also called: E&O
Excess liability insurance
Simple meaning: Extra liability limits above another policy.
Insurance meaning: Coverage that increases liability limits above scheduled underlying insurance, usually following the underlying terms more closely than a traditional umbrella.
Experience modification factor
Simple meaning: A number that can raise or lower some employers’ workers compensation premium based partly on their loss history compared with similar businesses.
Insurance meaning: A workers compensation rating factor comparing an employer’s actual loss experience with expected losses, using an approved formula and eligibility rules.
Also called: Experience mod; E-mod; EMR
Experience rating
Simple meaning: Pricing that uses a business’s own past loss experience as part of the rate.
Insurance meaning: A rating method adjusting premium based partly on the insured’s historical loss experience compared with expected results.
Extended reporting period (ERP)
Simple meaning: Extra time to report claims after certain claims-made coverage ends, for acts that happened within the covered time.
Insurance meaning: A provision allowing claims to be reported after policy termination for covered acts occurring after the applicable retroactive date and before coverage ended, subject to the ERP terms.
Also called: Tail coverage
Extra expense coverage
Simple meaning: Coverage that may pay extra costs to keep a business running or reduce a shutdown after a covered loss.
Insurance meaning: Commercial property coverage for necessary additional expenses incurred during the period of restoration to avoid or minimize business interruption, subject to policy terms.
Fidelity bond
Simple meaning: Protection against certain dishonest acts by employees or other covered people.
Insurance meaning: A bond or crime coverage protecting an employer or other insured from specified dishonest acts, such as employee theft, subject to the form.
Garagekeepers coverage
Simple meaning: Coverage for customers’ vehicles left with an auto business for parking, service, repair, or storage.
Insurance meaning: Coverage for physical damage to customers’ autos in the insured’s care, custody, or control, written on specified legal-liability, direct primary, or direct excess bases.
Garage liability
Simple meaning: Liability coverage for certain auto-related businesses.
Insurance meaning: Coverage for liability exposures of automotive businesses arising from garage operations, subject to the issued form and exclusions.
General liability insurance
Simple meaning: Coverage that can protect a business from certain third-party injury or property-damage claims.
Insurance meaning: A common name for commercial general liability coverage. It does not cover every business liability and commonly excludes professional errors, workers compensation, and many auto exposures.
Hold harmless agreement
Simple meaning: A contract promise intended to protect one party from certain claims or losses.
Insurance meaning: A risk-transfer agreement allocating responsibility between parties. It may overlap with indemnification and is subject to state law and contract interpretation.
Indemnification agreement
Simple meaning: A contract promise that one party will protect or repay another for certain losses.
Insurance meaning: A contractual risk-transfer provision requiring one party to indemnify another for specified claims or losses. Enforceability varies by state and context.
Inland marine insurance
Simple meaning: Insurance for certain movable property, equipment, goods in transit, or specialized property.
Insurance meaning: A broad property insurance category covering specified mobile property, property in transit, instruments of transportation or communication, and specialized exposures.
Installation floater
Simple meaning: Coverage for materials or equipment while they are being moved, stored, or installed at a job.
Insurance meaning: Inland marine coverage for property intended for installation, often covering transit, temporary storage, and installation until the project reaches a defined completion point.
Liquor liability insurance
Simple meaning: Coverage for certain claims against a business for causing or contributing to someone’s intoxication.
Insurance meaning: Liability coverage for qualifying bodily injury or property damage arising from selling, serving, or furnishing alcoholic beverages, subject to policy terms and state law.
Loss runs
Simple meaning: A report showing a business’s past insurance claims and losses.
Insurance meaning: A claims-history report listing prior losses, dates, status, paid amounts, reserves, and other claim information used in underwriting and insurance shopping.
Malpractice insurance
Simple meaning: Professional liability insurance for certain professionals, often in health care or law.
Insurance meaning: A professional liability policy covering specified claims alleging negligence or professional wrongdoing in the insured’s professional services. Terms vary by profession.
Motor carrier coverage
Simple meaning: Commercial auto coverage for businesses that transport goods or people.
Insurance meaning: Specialized insurance for trucking or transportation operations, with federal, state, contractual, and filing requirements depending on the operation.
Motor truck cargo insurance
Simple meaning: Coverage for goods a trucker is carrying for others.
Insurance meaning: Inland marine coverage for cargo in the insured motor carrier’s care, custody, or control, subject to causes of loss, valuation, and contractual liability terms.
Network business interruption
Simple meaning: Coverage for lost income and extra expense from a covered network or system outage.
Insurance meaning: Cyber coverage for qualifying income loss and extra expense caused by a covered interruption of the insured’s computer systems or specified dependent systems.
Obligee (surety)
Simple meaning: The person or organization that requires the bond and receives its protection.
Insurance meaning: The party to whom the bonded obligation is owed.
Occurrence policy
Simple meaning: A liability policy generally triggered by a covered event that happens during the policy period, even if the claim is made later.
Insurance meaning: A liability coverage form triggered by covered injury or damage occurring during the policy period, subject to policy language and applicable law.
Payroll audit
Simple meaning: A review after the policy period to compare estimated business exposures with what actually happened.
Insurance meaning: An insurance audit, common in workers compensation and general liability, that verifies payroll, sales, classifications, subcontractor costs, or other rating bases and can change final premium.
Period of restoration
Simple meaning: The policy-defined time used to measure certain business-income losses after covered property damage.
Insurance meaning: The period beginning and ending as defined in the business-income form, often tied to the time reasonably required to repair, rebuild, or replace damaged property, subject to policy provisions.
Pollution liability insurance
Simple meaning: Coverage for certain pollution cleanup costs or liability claims that standard policies may exclude.
Insurance meaning: Specialized coverage for specified pollution conditions, cleanup costs, bodily injury, property damage, or environmental liability, subject to detailed triggers and exclusions.
Primary and noncontributory
Simple meaning: Words used when one policy is intended to pay before another policy and not ask that other policy to share first.
Insurance meaning: An insurance requirement or endorsement addressing order of coverage and contribution between policies. Exact effect depends on policy wording and applicable law.
Principal (surety)
Simple meaning: The person or business that promises to perform the bonded obligation.
Insurance meaning: The party whose performance or obligation is guaranteed by a surety bond.
Prior acts coverage
Simple meaning: Claims-made coverage for eligible acts that happened before the current policy started.
Insurance meaning: Coverage for wrongful acts occurring before a policy’s inception but on or after the retroactive date, subject to known-circumstance and other exclusions.
Product liability insurance
Simple meaning: Coverage for certain claims that a product caused injury or damage.
Insurance meaning: Liability coverage for covered bodily injury or property damage arising from products manufactured, sold, distributed, or handled by the insured, subject to policy terms.
Products-completed operations aggregate
Simple meaning: The total limit for covered product and completed-work claims during the policy period.
Insurance meaning: The CGL aggregate limit applying to covered bodily injury and property damage within the products-completed operations hazard.
Professional liability insurance
Simple meaning: Coverage for claims that a professional service caused financial harm because of an error, omission, or failure.
Insurance meaning: Liability insurance for specified wrongful acts in the rendering or failure to render professional services, subject to policy terms and exclusions.
Also called: Errors and omissions insurance; E&O
Retroactive date
Simple meaning: The earliest date a wrongful act or event can happen and still qualify for coverage under many claims-made policies.
Insurance meaning: A date in a claims-made policy before which acts, errors, or omissions are not covered, even if the claim is made during the current policy period.
Self-insured retention (SIR)
Simple meaning: The amount the insured must pay or handle before an applicable liability policy starts paying.
Insurance meaning: A retained amount below which the insured is responsible for defense or loss as specified by the policy, before the insurer’s obligation attaches.
Also called: SIR
Spoilage coverage
Simple meaning: Coverage for certain loss of perishable stock after a covered event like equipment breakdown or power problem.
Insurance meaning: Commercial property or equipment-breakdown coverage for qualifying deterioration of stock due to specified causes, subject to limits and exclusions.
Surety
Simple meaning: The company that backs the principal’s bonded promise.
Insurance meaning: The party guaranteeing the principal’s obligation under a surety bond, subject to bond terms and indemnity rights.
Surety bond
Simple meaning: A three-party promise that one party will perform an obligation, backed by a surety.
Insurance meaning: A bond involving a principal, obligee, and surety. If the principal fails to meet the bonded obligation, the surety may respond under the bond and generally has rights to recover from the principal.
Important: A surety bond is not the same as ordinary insurance.
Umbrella liability insurance
Simple meaning: Extra liability limits that can sit above certain underlying policies and may sometimes cover additional risks.
Insurance meaning: Excess liability coverage providing additional limits over scheduled underlying policies and, depending on the form, broader coverage subject to a retained limit.
Also called: Commercial umbrella
Waiver of subrogation
Simple meaning: An agreement or endorsement limiting the insurer’s right to recover money from a specified party after paying a loss.
Insurance meaning: A contractual provision or policy endorsement under which subrogation rights are waived to the extent stated and permitted by law.
Workers compensation class code
Simple meaning: A code used to group workers by the type of work they do for pricing workers compensation.
Insurance meaning: A classification code assigning payroll or exposure to occupational categories with corresponding rates, subject to state and rating-bureau rules.
Workers compensation insurance
Simple meaning: Coverage that provides state-defined benefits to employees for qualifying job-related injuries or illnesses.
Insurance meaning: A statutory insurance system providing medical, wage-loss, disability, rehabilitation, or death benefits for covered work-related injury or disease, subject to state law.
Also called: Workers comp
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