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Glossary of Business Insurance Terms Actual Cash Value: The cost to replace an item of property derived by subtracting depreciation from replacement cost. Agency: Principles governing the authority of any agent that represents a principal. Agent: An individual that legally represent another. A state- licensed professional who is the direct link between the insurance company and the policyholder. All Risk Policy: Insurance policy that protects against losses caused by any peril not specifically excluded . Binder: Legal statement that provides immediate insurance protection providing temporary coverage until a policy is issued or denied. Business interruption: If you're unable to run your business due to fire, storm damage, vandalism, business interruption insurance will replace lost income, expenses involved in set up in a temporary facility or until the business is operating again. California Earthquake Authority: (CEA) A state-sponsored partnership between private companies and the government offering earthquake insurance policies in the state. Common Policy Declarations: Form that must be included in the Commercial Package Policy that contains information about the insured that applies to all coverage. Casualty Insurance: Insurance that covers losses caused by injuries to persons and any liability that may derive from injury or damage to anothers. COBRA Benefits: COBRA requires companies with 20 or more employees to offer employees the option to continue group health-care coverage at their own expense when they leave the job. COLA: Changes in wages or benefits to compensate for the effects of inflation. Commercial Lines: Refers to insurance for businesses, professionals and commercial establishments. Chartered Property and Casualty Underwriter (CPCU): Professional designation given by the American Institute for Property and Liability Underwriters. The designation covers such areas of expertise as insurance, risk management, economics, finance, management, accounting, and law. Claim: A demand made by the insured or the insured's beneficiary for the benefit payments of the policy. Dependent Property: Business interruption clause in a commercial policy that protects you against losses caused by property not owned by you that you need for your business operations. Destroyed or damaged records: This insurance will compensate you if you are unable to collect recievables owed and for the cost of reproducing the records. Earthquake coverage: Quake coverage is additional coverage to standard commercial property and casualty policies. Employers Liability Insurance: Coverage against the liability of an employer for accidents to employees, different from liability as defined workers' compensation law. Errors and Omissions ( E&O) : Policies that protect professionals for negligence that materially harms a client. Employment practices: Defends against employment-related claims such as sexual harassment, age discrimination, or wrongful termination. Exclusions: Section of an insurance policy that lists property, hazards, persons, or situations that are not covered. Floater: Insurance policy that covers property wherever it is located. Flood: Coverage for damage caused by floods must be added as an endorsement. Flood insurance, which also covers damage caused by mudslides, is available through the Federal Insurance Administration. General liability and property coverage: Protects you if someone gets hurt while using your product or service or is injured while on your property. The poilicy covers your physical assets such as the building, fixtures and inventory. The insurer will pay damages and your legal defense. Impaired Insurer: An insurer which is in financial difficulty and may be unable to meet financial obligations. Market Value: The amount property could be sold for at the time of loss. It could be used to measure the amount of reimbursement for a loss. Package Policy: Policy that includes more than one type of insurance coverage. Also called a Multi-Line Policy. Reinsurance: Insurance that an insurance company buys for its own protection. The risk of loss is spread so a large loss under a single policy doesn't fall on one company. Subrogation: The right of an insurer to pursue remedies against a third party. Surety Bonds: Surety bonds provide reimbursement to policy holders if a firm fails to complete a contract Underwriter: An individual trained to evaluate risk and determine pricing for policy holders. Umbrella policy: Provides additional liability coverage after the limits of your underlying policy are reached. Workers' compensation: Most employers are required by law to provide workers' compensation insurance through the state. Workers comp pays an employee's medical expenses and provides some income when a worker is injured on the job. Also covers the insured's liability for work-related injuries.
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