Install
Commercial Lines terms
The core coverages businesses buy.
BinderTemporary written or oral evidence that coverage is in force on stated terms before the formal policy is issued.Declarations pageThe front section of a policy that names the insured, policy period, covered locations or operations, limits, deductibles, premium and the forms attached.DeductibleThe amount of a covered loss the policyholder bears before the insurer pays, set in the policy and subtracted from the loss.EndorsementA written amendment to an insurance policy that adds, removes or changes coverage, limits or conditions, and controls over the base form where they conflict.ExclusionA policy provision that removes coverage for specified perils, property, people or types of loss that the insuring agreement would otherwise include.First named insuredThe party listed first as a named insured on the declarations, who the policy treats as the contact for premium, cancellation notices and changes.IndemnityThe principle that insurance restores your financial position after a loss, no better and no worse; also a contract promise to make good another's loss.Insurable interestA real financial stake in the thing insured, such that you would lose money if it were damaged or a person died; without one a policy generally cannot pay.Manuscript policyAn insurance policy whose wording is drafted or heavily negotiated for one insured rather than taken from a standard ISO or insurer form.Minimum earned premiumA policy provision letting the insurer keep a stated percentage of the full premium if the policy is cancelled early, however little of the term has elapsed.Monoline policyA policy covering just one line of insurance, such as general liability or commercial property, instead of a package or BOP combining several coverages.Named insuredThe person or entity identified as the insured in the policy's declarations, which holds the coverage and its duties; others qualify only if the policy says so.Premium financeA loan from a licensed finance company that pays an insurance premium up front, repaid by the policyholder in installments with a finance charge.SublimitA lower cap on what a policy pays for one coverage, peril or item, set beneath the policy's overall limit.Actual cash valueA property valuation basis that pays the cost to replace damaged property minus depreciation for age and wear, not the price of a brand-new item.Actual loss sustainedA way of paying business income claims with no dollar limit: the insurer reimburses documented lost income and expenses for a stated period.Agreed valueA property policy option where insurer and insured agree on the covered value in advance, which suspends the coinsurance penalty for the agreed period.AppraisalA property policy procedure for settling a dispute over the dollar amount of a loss, using two appraisers and an umpire instead of a lawsuit.Blanket limitA single property limit applied across several buildings, locations or types of property, so the insurer pays a loss at any one up to the total.Builder's riskProperty insurance for a building under construction or renovation, covering the structure, materials and temporary works until completion or occupancy.Business incomeProperty coverage that replaces net income and continuing operating expenses, including payroll, while a covered physical loss suspends operations.Business owner's policy (BOP)A package policy that bundles commercial property, business income and general liability for small, lower-hazard businesses at a single premium.Causes of loss formThe part of a commercial property policy that lists which perils are covered, offered in basic, broad and special versions of increasing breadth.Civil authorityBusiness income coverage for a shutdown when a government order blocks access to your premises because of damage to nearby property.CoinsuranceA property policy condition requiring you to insure to a set percentage of value, or share the loss. (Health plans use the word for a cost share.)Commercial multiple peril (CMP)A policy bundling property and liability coverage for one business, and the annual statement line insurers use to report that package business.Commercial package policyA policy made of two or more commercial coverage parts, such as property and general liability, sharing one set of declarations and common conditions.Concurrent causationHow a property loss is treated when a covered peril and an excluded peril combine to cause it, which court rules and policy wording answer differently.Contingent business incomeCoverage for income lost when physical damage at a supplier, customer or other business you rely on, not your own premises, slows or stops your operations.Debris removalProperty coverage that pays to clear the wreckage of covered property after a covered loss, capped at a share of the loss plus a fixed extra amount.Difference in conditions (DIC)A stand-alone property policy that fills gaps in a primary policy, usually adding flood, earthquake and broader terms, often from surplus lines insurers.Equipment breakdownCoverage for sudden damage to mechanical, electrical and pressure equipment such as HVAC units and boilers, plus the spoilage and income losses that follow.Extra expenseProperty coverage for the added costs of staying open after a covered loss, such as a temporary location, rented equipment or overtime.Insurance to valueCarrying a property limit that matches the full value of what you insure, so a loss is paid in full and no coinsurance penalty applies.Named perilsProperty coverage that pays only for losses caused by perils the policy lists, such as fire, lightning and windstorm; an unlisted cause is not covered.Newly acquired propertyA property policy extension that automatically covers buildings and contents you buy or build after the policy starts, for a short time and up to a set limit.Ordinance or lawCoverage for the extra cost of rebuilding to current building codes after a covered loss, which a standard property policy excludes or sharply limits.Ordinary payrollIn a business income policy, rank-and-file wages and related costs that coverage can keep paying during a shutdown, often for a limited number of days.Period of restorationIn a business income policy, the time for which lost income is covered, from a waiting period after damage until repairs should be done or operations resume.Proof of lossA signed, sworn statement detailing a property loss and the amount claimed, which the policyholder gives the insurer within a set period after it asks.Protection classA 1-to-10 grade of a community's fire protection, from its fire department, water supply and alarm dispatch, that insurers use to rate property.Public adjusterA state-licensed professional hired by the policyholder, usually for a share of the recovery, to document, present and negotiate a property claim.Replacement costA valuation basis that pays the cost to repair or replace damaged property with like kind and quality, without deducting for depreciation.Special form (open perils)A property causes-of-loss form covering direct physical loss from any cause not specifically excluded or limited, rather than only the perils it lists.Spoilage coverageProperty coverage for perishable stock that spoils when temperature or humidity changes after equipment breakdown, refrigerant contamination or a power outage.Statement of valuesA schedule listing each insured location with its building, contents and income values and construction details, used to rate and model a property program.Tenants' improvements and bettermentsFixtures, alterations and additions a tenant pays for but cannot legally remove, insured by the tenant as its use interest under its own property policy.Utility service interruptionProperty endorsements covering loss when power, water, gas or communications to your premises are cut off by damage at an off-premises utility facility.Vacancy clauseA commercial property condition that removes or reduces coverage for certain losses once a building has been vacant more than 60 consecutive days.Valuable papers and recordsProperty coverage for the cost of replacing or restoring irreplaceable documents, plans and records, normally under a small limit.Additional insuredA person or business added by endorsement to someone else's liability policy so it can claim directly for suits tied to the policyholder's work or premises.Aggregate limitThe most an insurer will pay for all covered claims during a policy period, however many separate occurrences or claims there are.Attachment pointThe loss amount at which an excess, umbrella or reinsurance layer starts paying, normally the top of the underlying limits or retention beneath it.Bodily injuryPhysical injury, sickness or disease suffered by a person, including death resulting from it; the harm that triggers liability coverage for injuries.Care, custody and controlA liability policy exclusion for damage to other people's property that the insured has in its possession or charge, such as a customer's car or goods.Commercial general liability (CGL)The standard business policy for claims that your operations, premises or products injured someone or damaged property, usually on ISO form CG 00 01.Completed operationsLiability coverage for injury or damage that occurs after a contractor or service provider finishes a job and leaves, arising out of the finished work.Contractual liabilityResponsibility you take on by agreeing in a contract to cover another party's losses, and the limited way a general liability policy responds to it.Damage to rented premisesA separate CGL limit that pays when you damage a building you rent, in the standard form by fire, despite the exclusion for property you rent or occupy.Defense costsThe attorney fees, expert fees and other expenses of fighting a claim, which some policies pay on top of the limit and others deduct from it.Employee benefits liabilityCoverage for claims that an employer's negligent mistakes in administering employee benefit plans, such as failing to enroll someone, caused a loss.Excess liabilityLiability coverage that pays only after the limits of underlying policies are used up, adding limit above them without necessarily broadening the terms.Following formAn excess or umbrella policy that adopts the terms, conditions and exclusions of the policy beneath it, except where its own wording says otherwise.General aggregateThe most a general liability policy pays in one policy period for all claims other than products-completed operations, however many occurrences there are.Insured contractA contract in which you assume another's tort liability, which the CGL covers despite its contractual liability exclusion if it fits a listed type.Liquor liabilityCoverage for injury or damage caused by an intoxicated person that an alcohol-selling business served, which a general liability policy excludes for sellers.Medical payments coverageNo-fault liability coverage that pays small medical bills for people hurt on your premises or by your operations, whoever was at fault.Notice of claimThe report a policyholder must give an insurer about a loss, claim or lawsuit. The policy sets the timing, and late notice can put coverage at risk.OccurrenceIn liability insurance, the event that triggers coverage and determines which limit and deductible apply; the ISO CGL form defines it as an accident.Occurrence policyA liability policy that covers injury or damage happening during the policy period, no matter when the claim is made, even after the policy has expired.Other insurance clauseA policy condition that decides which policy pays first, or how insurers share the cost, when more than one policy covers the same loss.Per-occurrence limitThe most a liability policy will pay for all damages arising from a single occurrence, however many people are hurt or claims are made.Personal and advertising injuryCGL coverage for listed offenses such as defamation, invasion of privacy, wrongful eviction, false arrest and copying another's advertising idea or slogan.Premises liabilityA property owner's or occupier's legal responsibility for injuries to visitors caused by unsafe conditions on the property, insured mainly under the CGL.Primary and noncontributoryWording that makes your liability policy respond first to a party you named as an additional insured, without drawing on that party's own insurance.Product liabilityA manufacturer's, distributor's or seller's legal responsibility for injury or damage caused by a defective or unreasonably dangerous product.Products-completed operations aggregateThe most a general liability policy pays per policy period for injury or damage in the products-completed operations hazard, apart from the general aggregate.Property damageIn liability policies, physical injury to tangible property including its loss of use, or loss of use of tangible property that was not physically injured.Umbrella policyA liability policy that adds limits above underlying general liability, auto and employers' liability policies and may cover some claims they do not.Waiver of subrogationAn endorsement in which an insurer gives up its right to recover a paid claim from a named party, usually one the policyholder contracted with.Wrap-up (OCIP/CCIP)A single insurance program, bought by a project owner or lead contractor, that covers the owner and all enrolled contractors on one construction project.Business auto policy (BAP)The commercial policy covering liability and physical damage for vehicles a business owns, hires or borrows, with covered autos chosen by numbered symbols.Combined single limitOne dollar cap per accident on everything a liability policy pays for injuries and property damage together, instead of separate caps for each.FleetA group of business vehicles insured together under one commercial auto program, often five or more, and rated more on the group's losses than on any one unit.Garagekeepers coverageCoverage for damage to customers' vehicles while they are in your care, such as at a repair shop, parking lot, car wash or valet stand.Hired and non-owned autoLiability coverage for accidents in vehicles your business rents or borrows, or that employees and others use on your behalf but you do not own.MCS-90A federal endorsement on a trucker's liability policy that guarantees payment of judgments to the public up to the federal minimum, even for excluded losses.Motor truck cargoCoverage for a trucker's legal liability when a customer's freight is lost, stolen or damaged while in the carrier's care during transport.BaileeA person or business holding someone else's property temporarily, such as a repair shop, dry cleaner or warehouse, with a duty to care for it and return it.Bid bondA surety bond guaranteeing that a contractor who wins a bid will sign the contract and furnish the required performance and payment bonds.Bonding capacityThe most bonded work a surety will back for a contractor, set as a limit per project and a total for all uncompleted bonded jobs.Claims-made policyA liability policy that covers claims first made against you and reported to the insurer during the policy period, whenever the underlying act occurred.Computer fraudA crime-policy coverage for money, securities or property lost when someone uses a computer to fraudulently move it out of your premises or accounts.Contractor's equipmentAn inland marine coverage for the mobile machinery and power tools contractors move between job sites, which a standard property policy mostly leaves out.Directors and officers (D&O) insuranceLiability insurance protecting a company's directors and officers, and often the company itself, against claims alleging wrongful acts in managing the business.Employee dishonestyCrime coverage for money, securities or other property lost through dishonest acts by your own employees, intended to harm you and benefit them.Employment practices liability (EPLI)Claims-made coverage for employee lawsuits alleging discrimination, harassment, wrongful termination, retaliation and similar wrongful employment acts.Errors and omissions (E&O)Insurance for claims that a professional or service business's mistakes, missed work or bad advice caused a client a financial loss.Excess and surplus linesInsurance placed with non-admitted insurers for risks the standard market declines or cannot price, with freer forms and rates but less regulatory protection.Extended reporting periodA window after a claims-made policy ends during which claims can still be reported for incidents that happened while the coverage was in force.Fidelity bondA two-party bond that works like insurance, reimbursing an employer or its clients for theft and other dishonest acts by employees.Fiduciary liabilityCoverage for claims that the people running an employee benefit plan breached their duties, such as imprudent investments, excess fees or administrative errors.Forgery and alterationA crime coverage that pays when a check, draft or promissory note you issued is forged or altered, plus the cost of defending a suit over it.General averageA maritime principle under which everyone with an interest in a voyage shares, in proportion to values saved, the cost of a sacrifice made to save the venture.General indemnity agreementThe contract in which a bonded business, and usually its owners, promise to reimburse a surety for any bond losses and costs.Hammer clauseA policy provision that caps the insurer's payments if you refuse a settlement it recommends, leaving you to bear the extra cost of going on.Inland marineProperty coverage for goods in transit, movable equipment and certain specialty property, written outside the standard building and contents forms.Insured vs insured exclusionA D&O exclusion removing coverage for claims brought by one insured against another, such as a company suing its own directors.Jones ActA federal law letting injured seamen sue their employer for negligence, which replaces workers' compensation for crew members of vessels.License and permit bondA surety bond a government agency requires before issuing a license or permit, guaranteeing the holder will follow the law and pay those harmed.Ocean marineInsurance for ships, their cargo and the liabilities of shipowners and shippers at sea; one of the oldest forms of insurance and separate from inland marine.Payment bondA surety bond guaranteeing a contractor will pay its subcontractors, laborers and suppliers on a project; unpaid parties can claim against the bond.Performance bondA surety bond guaranteeing a contractor will finish a project under its contract; if it defaults, the surety completes the work or pays the owner.Prior acts coverageCoverage under a claims-made policy for wrongful acts committed before the policy began, reaching back to its retroactive date or without a limit.Professional liabilityCoverage for claims that a professional's advice, design or service was negligent, incomplete or not delivered as promised and cost a client money.Retroactive dateThe date in a claims-made policy before which wrongful acts are not covered, even if the claim is made and reported while the policy is in force.Surety bondA three-party guarantee in which a surety promises an obligee that a principal will perform or pay, with the principal bound to repay the surety for any loss.Tail coverageAn option that lets a claims-made policyholder report claims after the policy ends, for wrongful acts that happened while it was in force.Trade credit insuranceInsurance that reimburses a seller when a customer fails to pay a valid invoice because of insolvency or prolonged default.