Insurance Terms

Accident

A sudden, unintended, unforeseen and unexpected event.

Aggregate Limit of Indemnity

The maximum amount an insurer will pay for all accumulated claims arising within a specified period of insurance.

All Risk Insurance

The name given to a policy which covers against the loss caused by all perils except those that are specifically excluded by the terms of the policy.

Binder

A contract for temporary insurance issued either in writing or orally pending issuance of a policy of insurance.

Blanket Coverage

Coverage for liability and property that extends to more than one class of property, location, or employee.

Bodily Injury Liability

Insurance protection against loss arising out of the liability imposed upon the insured by law for damages because of bodily injury, sickness or disease sustained by any person or persons other than employees.

Builders Risk Insurance

Insurance designed to cover buildings in the course of construction. Also known as course of construction insurance.

Business Auto

Coverage for vehicles used primarily for business purposes, or owned, leased or titled to a business. Also known as a fleet policy or commercial auto policy.

Business Interruption

Loss of income due to property damage to a business facility.

Business Owner’s Policy

Business insurance typically combining property, liability, and business interruption coverage.

Calendar Year Deductible

In health insurance, the amount that must be paid by the insured policyholder in one calendar year before the insurer becomes responsible for additional costs.

Claim

A demand for payment under an insurance contract or bond. The estimated or actual amount of a loss incurred and covered under a policy agreement.

Commercial General Liability

Coverage against third-party claims for injury, bodily injury, and property damage.

Convertible Term Insurance Policy

A life insurance policy which may be converted from term to permanent without a medical assessment, and renewed regardless of the health of the insured subject.

Coverage

Protection under an insurance policy. In property insurance, coverage lists perils insured against properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits.

Deductible

The amount of a loss paid by the policyholder.

Effective Date

The date that coverage starts under an insurance contract.

Exclusion

This is a restriction in your business liability insurance limiting and/or excluding coverage for certain potential catastrophic events, people, property or locations.

Grace Period

This is a period of time that insurance coverage continues beyond the actual expiration date of a policy that you intend to renew. A policy will lapse if the premium is not paid by the end of this period.

Gross Premium

Total amount paid by insured.

Hazard

A specific situation that introduces or increases the probability of the occurrence of a loss arising from a peril, or that may influence the extent of a loss.

Insurance Broker

A person who sells, solicits, or negotiates insurance for a client.

Liability Insurance

Provides protection from lawsuits of others.

Liability Limits

The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy. The majority of policies covering liability for bodily injury have two limits: a limit of liability to any one person; and another limit, usually higher, for any single accident where more than one person is involved.

Loss

Physical damage to a person or property, including loss of income or loss of use.

Minimum Premium

The minimum amount an issuer will accept to issue a policy even if the gross premium is a lesser amount.

Named Insured

The individual defined in the policy contract as the insured.

Named Peril

Coverage for losses explicitly defined in the policy contract.

Occurrence

An accident or incident, including injurious exposure to conditions, neither expected or intended which results in bodily injury or property damage during the policy period.

Package Policy

Two or more separate policies combined into one single contract. Also known as “bundling.”

Peril

The cause of personal injury or property damage, the cause of loss.

Policy

A written contract. Legally bound insurance agreement.

Policy Limit

The policy limit is the dollar amount of coverage shown in the contract.

Proof of Loss

A written document which must be filled by an insured when a loss occurs under a property insurance policy.

Reinstatement

The restoration of a lapsed or cancelled policy.

Rider

An amendment to an insurance policy agreement.

Risk

The probability of an insured loss occurring.

Schedule

Policy section stating the main details of the insured, their business activities, the application of any special terms or restrictions plus other details specific to the particular insurance and premium.

Subrogation

The insurance company’s right to pursue legal action in the policyholder’s name against the party considered legally liable for the loss or damage.

Third Party

The person other than the insured who has incurred losses or is entitled to receive payments.

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