Glossary of Insurance Terms

Accounts Receivable
Covers the inability to collect billings owed to your company, after supporting records are damaged in a property loss.

Advertising Injury
Unintentional slander, libel infringement of copyright, trademark or slogan arising from your company's advertising.

Best's Insurance Report
A guide, published by A.M. Best, Inc., that rates insurers' financial integrity and managerial and operational strengths.

Business Income
Business Income (also known as Business Interruption Insurance) is part of a Businessowners Policy. Coverage provides for the loss of business income during a business shutdown caused by a covered loss to your property. Salaries of "key" people are normally covered, and coverage is available for "ordinary" payroll.

Business Interruption
Business Interruption Insurance (as part of a Businessowners Policy) covers the loss of income during a business shutdown caused by a covered loss. This coverage is critical because your business could lose income for several months if your premises were seriously damaged. Salaries of "key" employees are normally covered, and coverage is available for "ordinary" payroll. It also can include the extra expense of operating out of a temporary location.

Claims-made Coverage - Professional Liability Insurance
Claims-made means that the incident that led to the claim must have happened on or after the effective date of a policy (which could include a period of time prior to the policy inception date -- see "Prior Acts Coverage"). In addition, claims-made coverage means that the claim must be first made and reported while the policy is in force. It is this second requirement, the making of claims while the policy is in force, that differentiates claims-made policies from other types of policies you may purchase.

The requirement that a claim be made and reported during a period that the policy is in force necessitates the maintenance of continuous coverage once established. If a claims-made policy is not in force when a claim is made, no coverage will be available. By maintaining continuous coverage, you ensure that services performed under previous policies' periods will be covered should a claim be made and reported.

Coinsurance requires you to maintain an amount of insurance equal to a specified percentage, usually 80% or 90% of the Replacement Cost (or Actual Cash Value if coverage is written on that basis) of the covered property.

Crime Coverage
Crime Coverage is available to Businessowners and protects against loss of money and/or loss involving employee dishonesty. These types of coverage are usually excluded or may be restricted under standard property policies. Crime policies offer a package of coverages that are important to many organizations.

A deductible is that portion of a loss considered the responsibility of the insured. Property policies require that you pay a certain amount of all losses. Only that portion of the loss, in excess of the deductible, will be paid by your insurer. You may wish to solicit quotes for various deductible levels to determine what cost savings are possible.

Employee Benefits Liability
This covers errors and omissions in the administration of Employee Benefit Plans.

Employee Dishonesty
This covers the theft of your company's money, securities and inventory by employees acting alone or in collusion with other employees or outsiders.

Errors and Omissions (Technology Errors and Omissions)
Coverage for claims alleging negligence in the provision of technology services or due to the failure of technology products. May cover, or be endorsed to cover:
  • Intellectual Property (copyright, trademark only. not patent - that is a separate product. not trade secret - usually not insurable)
  • Media Liability
  • Internet services
Extended Claim Reporting Period (ECRP) Endorsement - Professional Liability Insurance
This special provision added to a professional liability claims-made policy addresses work performed during the policy period which gives rise to a claim after the policy has expired. This type of endorsement extends the period of time after policy expiration in which a claim can be made, or filed, and still be covered. Typical options are one-, three-, and five-year claim reporting periods.

Extra Expense
Covers extra expenses (over normal operating costs) incurred to remain in operation following a covered property loss.

Fiduciary Liability
This policy covers the liability of a person who acts as a fiduciary for his or her company's Employee Benefit Plans.

Fire Damage Legal Liability Your liability for fire damage to leased or rented premises that your company occupies.

General Liability
General Liability covers your company's legal responsibility for the harm it may cause to others. This includes bodily injury, property damage or loss, personal injury which includes slander or libel, and advertising injury. General Liability also covers the cost of your legal defense. Note that General Liability does not cover loss due to your professional errors or negligence, which is normally covered by Errors and Omissions insurance.

Internet Media
Internet Media includes advertising, webcasting, electronic publishing, transmission, republication, retransmission utterance, dissemination, distribution, serialization, creation, production, origination, exhibition or displaying of your material over the Internet.

Loss of Service
Loss of Service is the inability of an authorized third party to gain access to your professional services through the Internet.

Malicious code
Malicious code is an unauthorized corrupting or harmful piece of code. Malicious code includes, but is not limited to, "Trojan horses", "worms", and "time or logic bombs."

Modification Factors
Policies are subject to an "experience modification factor." This factor increases or decreases your premium based upon your company's loss experience. Companies with adverse loss experience will pay a higher rate than a company with good loss experience.

Monopolistic States
Five states require that Workers' Compensation insurance be purchased from the state. They are Nevada, North Dakota, Ohio, Washington, and Wyoming. Monopolistic states do not include Employer's Liability coverage with their policies.

Non-Owned & Hired Automobile Liability
Coverage for suits against your company resulting from the use of hired or non-owned vehicles by you and your employees.

Physical Damage
Coverage for your company's vehicles. Collision coverage insures damage to your vehicles from collision or overturning. Comprehensive coverage covers other types of damage such as fire, theft or vandalism.

Prior Acts Coverage/Retroactive Coverage
Most professional liability claims-made policies offer optional coverage for services performed prior to the effective date of the policy. This is called prior acts coverage. Prior acts coverage is typically extended to the effective date of a firm's first claims-made policy (when claims-made coverage has been maintained continuously) or to some date that your firm and the insurance company agree upon for pricing or underwriting reasons. The date established is called the prior acts date or retroactive date. Generally, the date remains the same with each subsequent renewal. If an act, error or omission happened before the prior acts date, it will not be eligible for coverage. With prior acts coverage, you may be able to move your coverage from your insurance company to ours without losing protection for covered services you performed in the past.

Products/Completed Operations
Liability for injury or damage caused by your products or by your completed work.

Property insurance covers damage to property that you own. The most common type of property insurance covers direct physical damage to a building and any furniture, fixtures, stock or equipment and other contents inside that building in the event of damage by fire, theft, or other means.

Stop Gap Liability
Since Monopolistic states do not provide Employer's Liability in their Workers' Compensation policy, it must be purchased separately. Stop Gap Liability provides Employer's Liability coverage for those states.

Technology product(s) include any computer hardware, software or related electronic product, equipment or device that is created, manufactured, developed, distributed, licensed, leased or sold by or for you by others acting under your trade name to others, including training in the use of such computer hardware, software or related technology products.

Technology service(s) include any computer or electronic information technology services performed by you, or others acting under your trade name, for others, including systems analysis, systems programming, data processing, system integration, outsourcing development and design and the management, repair and maintenance of computer products, networks and systems.

Unauthorized Access means the gaining of access to a computer, computer system, or computer network by an unauthorized person or persons or an authorized person in an unauthorized manner. (Hacking and cracking are types of unauthorized access.)

Unauthorized Use means the use of a computer, computer system, or computer network by an unauthorized person or persons or an authorized person in an unauthorized manner, including the theft by electronic means of credit card numbers.

Umbrella and Excess Liability
Umbrella policies provide additional amounts of insurance over other existing (underlying) liability coverages. Typically, umbrella policies go over your Automobile Liability, General Liability and Employer's Liability (part of a Workers Compensation policy) coverages. When the liability limits of existing policies are exhausted, additional coverage is provided by an umbrella policy.

Workers Compensation
Workers Compensation policies include two basic coverages. The first coverage provides benefits for employees injured on the job. These benefits are determined by state law. The second coverage is Employer's Liability. This section covers suits by employees against their employers for job-related accidents. Suits can also come from family members of employees. Workers Compensation laws often limit the liability of employers to employee suits, but suits are still possible.