Terms related to personal and commercial insurance, including life, health, property, casualty, and other types of coverage.

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Accounts Receivable

Accounts receivable coverage protects you from the inability to collect billings owed to you after supporting records are damaged in a property loss.

Aircraft Liability

Aircraft liability provides coverage for liability arising out of the use of aircraft owned by your company or held under long-term lease. Damage to your airplane is normally covered as well. Liability resulting from an airplane accident can be substantial. Consequently, these policies are complicated and require special skills to create.

Allowed Amount

Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance” or “negotiated rate.” If your provider charges more than the allowed amount, you may have to pay the difference. (See Balance Billing.)


A request for your health insurer or plan to review a decision or a grievance again.

Automobile Insurance

Automobile policies cover your liability for bodily injury and property damage arising out of the use of a covered auto.

Balance Billing

When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

Boiler and Machinery Insurance

Boiler and machinery insurance is an important coverage that is sometimes overlooked. Insurers sometimes refer to this coverage as “energy systems” insurance to emphasize that it does not apply solely to boilers.
Boiler and machinery policies add coverages that are normally excluded under the standard property policy. In addition to damage to and from steam boiler and pressure vessels, these policies can cover electrical injury (damage from artificially generated electrical current) and mechanical breakdown (sudden breakage or rupture of machinery or equipment).
Business Owners Policy/Commercial Package Policy (BOP/CMP)
A BOP/CMP is a multi-peril policy that packages Property and Liability with the option of adding Business Interruption, Non-Owned Auto, Exterior Signs and several other coverages to a single policy. The advantage to the policy holder is one policy to protect the key exposures to the business, one bill and most carriers apply discounts to the coverage saving the business money.

Broker of Record

The broker of record is the Insurance agent designated by the policy holder (business owner) and recognized by an insurance carrier to represent and manage the policyholder’s insurance policy
It means a client has the right to choose an agent to represent them if the agent is appointed with the insurance carrier

Builders Risk Coverage

Builders risk policies are specifically designed to insure buildings and structures, such as bridges, while they are being constructed.

Business Interruption

Business interruption coverage covers lost profits and ongoing expenses during a business shutdown caused by a covered property loss. This coverage is critical because many businesses could lose their income for several months if their premises were seriously damaged. Coverage can be written to include loss of rental income from damaged rental property.
Salaries of “key” employees are normally covered by business interruption coverage because these people are needed to get the firm back in operation. Coverage is available for “ordinary” payroll as well, typically covering their salaries for 90, 120, 365 days or more. You should consider that employees might seek other jobs if they aren’t kept on the payroll during an extensive office closure, so this can be an important coverage decision.

Cargo Insurance

Provides coverage for goods/materials while in transit


Your share of the costs of a covered health care service, calculated as a percent (ie. 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.

Complications of Pregnancy

Conditions due to pregnancy, labor and delivery that require medical care to prevent serious harm to the health of the mother or the fetus. Morning sickness and a nonemergency caesarean section aren’t complications of pregnancy.

Commercial Automobile Insurance

Automobile policies cover your liability for bodily injury and property damage arising out of the use of a covered auto. These policies can also cover damage to your own vehicles and other related types of loss. Below are some of the main features of a business automobile insurance policy.


A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.


The declarations page will show which of the following coverages apply:

  • Liability covers your company’s legal liability for bodily injury and for damage to the property of others. Injury to your company’s employees is excluded because this should be covered under Workers Compensation insurance.
  • Physical damage covers your organization’s vehicles. Collision coverage insures damage to your vehicles from collision or overturning. Comprehensive coverage responds to other types of damage such as fire, theft, or vandalism.
  • Uninsured motorists provides coverage under your own policy for the possibility of an accident with an uninsured motorist.
  • Underinsured motorists provides coverage if you are involved in an accident with a motorist with insufficient liability insurance. That is, when the responsible driver has enough liability insurance to meet the state’s minimum requirements but not enough to cover a serious injury.
  • “No-fault” coverage allows you to collect for injuries under your own policy in certain cases and others involved in the accident to collect under their policy, thus avoiding lengthy and costly lawsuits. Many states have enacted no-fault laws, but, in practice, there is still litigation in no-fault states. The protection afforded under no-fault benefits varies considerably from state to state.
  • Medical payments coverage allows for a nominal sum to pay medical bills for customers and others injured while passengers in your company’s car.

Crime Insurance

The loss of money is usually excluded under standard property policies. Losses involving employee dishonesty can also be restricted. Crime policies offer a package of coverages designed to protect you from these types of losses.
Employee dishonesty (also known as commercial blanket bond) covers the theft of your firm’s money, securities, and inventory by employees acting alone or in collusion with other employees or outsiders. Losses often occur over a long period of time and can be substantial before discovery.
The Employee Retirement Income Security Act (ERISA) requires an Employee Dishonesty bond for employee benefit plans. The bond limit must be equal to ten percent of the plan’s assets. The bond limit must be at least $1,000 but need not exceed $500,000 per fiduciary, per plan.
Theft of money inside premises and/or theft of money outside premises coverage should be considered by organizations with any accumulation of cash. Other property can also be covered.

Data Breach Coverage (Cyber Liability)

Provides coverage against unauthorized access to nonpublic information or data. Coverage can be written to provide for the cost of recovery of the data, notifications to the individuals whose information was compromised, and even ongoing credit monitoring. A covered breach can occur on a website/system or from a paper file. Most breaches begin with acts of employees. These types of breaches are covered with cyber insurance.


The amount an insured person has to pay for health care before his or her health-insurance begins paying.

Directors and Officers

Insurance for suits against directors and officers for management decisions that hurt the value of the business. Financial institutions and public companies all purchase this. It helps them attract qualified directors which could help grow the business.

Directors & Officers Liability

Directors & Officers (D&O) liability is an errors and omissions coverage for corporate directors and officers. Not only public companies, but private companies as well as should consider this coverage. Industry surveys have shown that many directors and officers liability claims—as much as half—come from sources other than shareholders. Claimants can include competitors, suppliers, customers, employees, and government agencies.

Electronic Data Processing Equipment

An Electronic Data Processing (EDP) equipment endorsement adds coverage to your property policy for mechanical breakdown of computer equipment.

Employee Benefits Liability

Employee Benefits Liability coverage applies to errors and omissions in the administration of employee benefit plans. Say for example your company accidentally fails to enroll an employee in the medical insurance program, leaving substantial medical bills uninsured following an illness. Employee benefits liability would protect your company in this situation and can be added to a general liability policy. You can also obtain this coverage under a fiduciary liability policy.

Environmental Impairment Liability

Environmental impairment liability is a specialized policy covering bodily injury and property damage liability resulting from a pollution incident. These policies are also written on a claims-made basis. Environmental risks are complicated and require sophisticated legal, environmental, and insurance advice. A few common environmental risks include the following:
  • operational exposures from the use of hazardous substances
  • potential of pollution from discontinued operations and practices
  • existing pollution in land or buildings that you acquire
Environmental concerns are now a major consideration in real estate and financial transactions.

Employment Practices Liability

Provides protection for suits by employees for improper termination, discrimination, harassment etc.

Environmental Impairment Liability

Environmental impairment liability is a specialized policy covering bodily injury and property damage liability resulting from a pollution incident.

Extra Expense

Extra expense coverage covers expenses over normal operating costs incurred to remain in operation following a covered property loss. Typical examples include the costs of setting up temporary quarters and subcontracting work that would normally be done at the damaged premises. This coverage is particularly important to businesses that must remain in operation or risk losing customers. Coverage is often subject to a monthly limitation. For example, 40 percent of the limit is available in the first 30 days after a loss, 80 percent if the period of restoration exceeds 30 days, and 100 percent if the period exceeds 60 days.

Fiduciary Liability

A fiduciary liability policy covers the liability of a person who acts as a fiduciary for his or her company’s Employee Benefit Plans. The Employee Retirement Income Security Act (ERISA) imposes fiduciary responsibilities upon the employers for the administration of such plans. A fiduciary can be held personally liable for shortages in the benefit plan’s assets resulting from a breach of fiduciary duty, such as improper investment of funds.

Fine Arts

Sometimes coverage is specifically endorsed for valuable paintings, statuary, and other art objects on the property. An appraisal may be required to establish an object’s value.

Force Placed Insurance

A borrower is required to have insurance on loan collateral and if he fails to provide evidence of insurance coverage, a “Force Placed Insurance Policy” allows the financial institution/lender to “force place” the insurance and bill the borrower for the premium. For instance, if someone pledged a house as collateral and it burned down and the owner didn’t have a homeowner’s policy in place, a force placed policy would protect the financial institution’s interest in the loan.

FSA account

A flexible spending account offers the same savings and pretax benefits as an HSA, but to someone in a higher cost health plan – one with a higher premium and lower deductible. It essentially works the same as an HSA, but you can’t contribute as much money to it – a maximum of $2,500 a year – and the funds don’t roll over if you don’t use them. They get absorbed back into your employer’s fund.

Important Note

There’s a 20% penalty for using HSA or FSA funds for non-qualified expenses.

General Liability

Protects a business if one or more employees or products/service sold causes injury to a non-employee or their property. This coverage will include legal fees that result from claims

Group Health Insurance

Provides medical, dental, life and disability insurance for the employees and their families. The business usually needs to have 2 employees to qualify as a group.

HSA account

It is a medical savings account, similar to an IRA. You have to be enrolled in a high-deductible plan to be eligible for a health savings account. That means your insurance has a minimum deductible of $1,250 as an individual or $2,500 for a family. If that’s the case, you’ll be able to opt into a health savings plan.
The plan lets you designate a certain amount of your paycheck to be funneled into the account pretax. The funds can then be used for any qualifying medical expense, from surgery to prescriptions. An individual can contribute up to $3,300 a year, while a family can give a maximum of $6,550. The funds also roll over year-to-year, so you never lose the money

Even if you don’t usually have high medical expenses throughout the year that you think you’ll need HSA funds for, the account can be used strictly as a way to build up savings and reduce your taxable income.

Inland Transit

Inland transit coverage covers personal property while it is being transported to or from your location, usually by truck, railroad, or airplane.

Kidnap and Ransom Insurance

A kidnap and ransom insurance policy is a specialty coverage and not really a liability policy. Kidnap and ransom insurance covers ransom payments and related expenses.

Life Insurance

A type of insurance that would provide funding to a business if a key employee were to die and leave a void.

Medically Necessary

Health care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.


The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.

Non-Owned Aircraft Liability

Non-owned aircraft liability insurance covers suits against your company arising out of the use of non-owned aircraft on company business.

Non-Owned and Hired Automobile Liability

If your company does not own autos, you should have the non-owned and hired automobile liability endorsement added to your general liability policy. This endorsement adds coverage for suits against your company resulting from the use of hired or non-owned vehicles by employees.

Non-Preferred Provider

A provider who doesn’t have a contract with your health insurer or plan to provide services to you. You’ll pay more to see a non-preferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance or plan has a “tiered” network and you must pay extra to see some providers.

Ocean Cargo

Ocean cargo covers personal property while ocean-going ships, barges, etc. are transporting it, but could also cover property being carried by airplane from one continent to another. Ocean cargo can also be broadened to include all forms of transit such as trucking and railroad.

Out-of-network Co-insurance

The percent (for example, 40%) you pay of the allowed amount for covered health care services to providers who do not contract with your health insurance or plan. Out of network co-insurance usually costs you more than in network co-insurance.

Out-of-network Co-payment

A fixed amount (for example, $30) you pay for covered health care services from providers who do not contract with your health insurance or plan. Out-of-network copayments usually are more than in-network co-payments.

Out-of-Pocket Limit

The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn’t cover. Some health insurance or plans don’t count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit.

Owners and Contractors Protective Liability (OCP)

OCP policies are written in connection with construction projects. The property owner or general contractor is usually the insured. This policy is not intended to cover the contractor’s liability for their own work (contractors purchase policies for own liability).

Pollutant Cleanup

Many property policies limit coverage for the cleanup of pollutants released in a covered property loss, for example, if your chemicals or other substances are spread by water used to put out a fire.

Professional Liability

Professional liability policies offer coverage to a wide range of technology professionals. Professional liability insurance covers errors and omissions in the performance of professional duties and is an important coverage for anyone acting in a professional capacity.
Most professional liability policies are written on a claims-made basis.

Property Insurance

Property insurance covers damage to property that you own, but can be amended to cover damage to the property of others in your possession. Policies can also be endorsed to cover the consequences of damage, such as lost profits or extra expenses. There are many other modifications and supplemental coverages available. Coverage is sometimes written on a package basis, which combines property and liability coverage.
The most common type of property insurance covers direct physical damage to a building and to the furniture, equipment, and other contents inside that building. If you are renting or leasing your premises, the policy probably covers only furniture, equipment, and other contents. However, you can purchase coverage that would cover the building if required by your lease. Renters can also modify their policies to cover damage to the internal improvements they’ve made, such as new walls or shelves.

Property Insurance

Protects businesses property from fire, theft, wind damage and many other causes of loss. Coverage can be added for loss of profits or extra expense to set up temporary operation because of a loss.

Rental Cars

Some auto insurers offer an endorsement that extends the auto liability coverage to include liability assumed under car rental agreements.

Stop-Gap Liability

Stop-gap liability coverage is generally associated with workers compensation policies, but some insurers add it to the general liability policy. The stop-gap liability endorsement provides employer’s liability coverage for specified monopolistic states.

Umbrella Excess

Provides additional limits of coverage above the liability, automobile, and workers compensation.

Umbrella and Excess Liability

Umbrella policies provide additional amounts of insurance over other insurance policies. Typically, umbrella policies go over your automobile liability, general liability and employer’s liability (part of a workers compensation policy) coverages. Umbrella insurers may agree to provide coverage over additional underlying coverages.

Utility Service Interruption

Utility service interruption covers the property damage and loss of income that can occur when your business is interrupted as a result of a property loss at one or more of the utilities (electrical, water, telecommunications, sewers, steam) that service your property.

Valuable Papers

A valuable papers endorsement provides coverage for the additional costs to research or restore damaged documents, drawings, or records.

Voluntary Compensation

Voluntary compensation adds coverage for categories of employment not subject to workers compensation laws, which vary from state to state.

Workers Compensation

Workers compensation policies include two basic coverages. The first coverage provides benefits for employees injured on the job or having an illness related to the job. State law determines these benefits.
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.

Workers’ Compensation Insurance

Provides medical payments and wage replacement for workers injured on the job. The coverage is mandated and tracked by the state, and employers can receive fines if they do not purchase the coverage.