Business Insurance Term Glossary

Business insurance is a broad term for policies that protect a company from financial losses tied to property damage, lawsuits, employee injuries, vehicle accidents and other business risks.

An insurance policy is the contract between a business and an insurer that explains what is covered, what is excluded, how much the insurer may pay and the conditions that apply.

The premium is the amount a business pays for insurance coverage, billed monthly, quarterly or annually.

An insurance quote is an estimate of what coverage may cost based on information about the business, its operations and the insurance being requested.

The company that issues an insurance policy and pays eligible claims is known as the insurer or insurance carrier.

An insurance agent helps businesses find and purchase coverage and may represent one insurance company or several carriers.

Unlike an agent representing an insurer, an insurance broker generally works on behalf of the customer to compare coverage options from multiple insurance companies.

An underwriter evaluates a business's risk and helps an insurer decide whether to offer coverage, what terms to apply and how much to charge.

The policyholder is the person or business that owns the insurance policy and is responsible for meeting its terms, including paying premiums.

A named insured is the person or business specifically identified on the policy as an insured party and generally receives the broadest protections available under it.

General liability insurance can protect a business against certain third-party claims involving bodily injury, property damage and personal or advertising injury.

Workers' compensation insurance helps pay eligible medical expenses and lost wages when employees suffer work-related injuries or illnesses and is required for many businesses under state law.

Businesses that provide professional advice or services may use professional liability insurance to protect against certain claims alleging mistakes, negligence or failure to perform professional duties.

Errors and omissions insurance or E&O insurance, is another name for professional liability coverage, which covers you for claims arising from errors, omissions or negligence in professional services.

Commercial auto insurance covers vehicles used for business and can provide liability protection along with optional coverage for damage to insured vehicles.

Buildings, equipment, inventory and other business property may be protected through commercial property insurance against covered causes of loss.

A business owners policy, commonly called a BOP, combines several common small business coverages, usually general liability and commercial property insurance, into one policy.

Cyber insurance helps businesses manage certain financial losses resulting from cyber incidents such as data breaches, ransomware attacks or network disruptions.

Following certain covered property losses, business interruption insurance can replace qualifying lost income and help pay continuing operating expenses while the business recovers.

Commercial umbrella insurance provides additional liability limits above certain underlying business insurance policies after those policies' applicable limits are exhausted.

Businesses using rented vehicles or employees' personal vehicles for work may need hired and non-owned auto insurance to address certain liability exposures not covered by a standard commercial auto arrangement.

Business personal property coverage protects items a business owns or uses, such as furniture, equipment, inventory and supplies, against covered losses.

A coverage limit establishes the maximum amount an insurer will pay for a particular type of covered loss.

The per-occurrence limit is the most an insurance policy will pay for a single covered event or claim, subject to any other policy limits.

Across multiple claims, the aggregate limit sets the maximum amount an insurer will pay during the applicable policy period.

A deductible is the portion of a covered loss the business must pay before insurance begins contributing.

An insurance exclusion identifies a loss, activity, property type or circumstance that the policy does not cover.

Businesses can use an endorsement to add, remove or modify coverage or other terms in an existing insurance policy.

A rider changes or adds to the terms of an insurance policy and is often used similarly to the term endorsement.

An occurrence policy generally responds to covered incidents that happen while the policy is active, even if the resulting claim is reported later.

For a claims-made policy, coverage generally depends on when a claim is made and reported, along with when the underlying incident occurred.

The retroactive date marks how far back a claims-made policy may cover incidents, provided the resulting claim is made while qualifying coverage is in force.

After a claims-made policy ends, tail coverage can give a business additional time to report claims arising from incidents that occurred during the covered period.

Personal and advertising injury is a part of general liability insurance that can help cover certain nonphysical claims against a business, such as libel, slander, wrongful eviction, privacy violations and some advertising-related offenses.

Products and completed operations coverage is part of general liability insurance that can help cover claims of bodily injury or property damage caused by a business’s products or completed work after the product has been sold or the job has been finished.

A certificate of insurance, often called a COI, provides a summary of a business's insurance coverage and is commonly requested by clients, landlords and contractors as evidence of insurance.

A client, landlord, contractor or other party may ask to become an additional insured, which can give that party certain protections under another business's liability policy.

An additional insured endorsement formally changes an insurance policy to provide specified coverage to another person or organization.

When a contract requires a waiver of subrogation, an insurer generally agrees to give up certain rights to recover money from the party protected by the waiver after paying a covered claim.

A primary and noncontributory requirement generally means one business's insurance must respond before another party's policy and without seeking contribution from that other coverage.

Proof of insurance is documentation showing that required coverage is active, often provided through a certificate of insurance or policy documents.

Contractual liability refers to certain legal responsibility a business assumes through a contract, although insurance coverage for those obligations depends on the policy's terms and exclusions.

Indemnification is an agreement in which one party accepts responsibility for specified losses, damages or legal costs incurred by another party.

A claim is a formal request asking an insurance company to provide coverage or payment for a loss that may be covered by a policy.

In insurance, a loss is an event or financial harm that may trigger coverage, such as damaged property, a lawsuit or an accident.

Bodily injury generally means physical injury, sickness or disease suffered by another person and can include resulting medical costs or other damages.

When someone else's physical property is damaged, destroyed or loses its use, the resulting harm may qualify as property damage under a liability policy.

Negligence occurs when a person or business fails to use reasonable care and that failure causes injury or damage to someone else.

Liability is a business's legal responsibility for injury, property damage or other harm caused to another party.

An insurer's duty to defend is its contractual obligation to provide or pay for a legal defense against certain claims covered by the policy.

A settlement resolves a claim or lawsuit through an agreed payment or other terms rather than a final court judgment.

Through subrogation, an insurer that pays a covered loss may seek reimbursement from another party responsible for causing that loss.