Actual Cash Value (ACV)
A property valuation method generally based on replacement cost minus depreciation. The policy’s valuation provisions determine the actual calculation.
Insurance glossary
Insurance terms,
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Search plain-language explanations of common commercial insurance terms and policy concepts.
31 terms
Additional Insured
A person or organization added to another party’s liability policy for specified coverage arising from the named insured’s operations, work, premises, or agreement, subject to the endorsement.
Admitted Carrier
An insurer licensed by the California Department of Insurance and generally subject to state rate, form, and guaranty-association requirements.
Aggregate Limit
The maximum amount an insurer will pay for all covered claims during a stated policy period or applicable coverage period.
Business Income
Coverage that may replace qualifying lost income and continuing expenses when operations are suspended because of covered direct physical loss or damage.
Business Owner’s Policy (BOP)
A policy that commonly combines commercial property and general liability coverage for eligible small or midsize businesses, often with optional endorsements.
Certificate of Insurance
A document providing evidence of insurance in force on the date issued. It does not amend, extend, or alter coverage and is not the policy itself.
Claims-Made Coverage
Coverage generally triggered when a claim is first made and reported during the policy period, subject to the policy’s retroactive date and reporting requirements.
Coinsurance
A property-policy provision requiring insurance equal to a stated percentage of value. Failure to carry the required amount may reduce a covered loss payment.
Commercial Auto Insurance
Coverage for vehicles used in business, which may include liability, physical damage, uninsured motorist, medical payments, and other selected protections.
Cyber Liability
Coverage that may respond to specified data breaches, privacy claims, cyber extortion, network interruption, recovery expenses, and incident-response costs.
Deductible
The amount the insured is responsible for before the insurer pays a covered loss, subject to the applicable policy provisions.
Employment Practices Liability (EPLI)
Coverage for certain employment-related allegations, such as discrimination, harassment, retaliation, or wrongful termination, subject to exclusions and reporting requirements.
Endorsement
A document attached to a policy that adds, removes, or changes coverage, terms, conditions, exclusions, limits, or insured parties.
Excess and Surplus Lines (E&S)
Insurance placed with an eligible non-admitted insurer, often for specialized, higher-hazard, unusual, or difficult-to-place risks that do not fit standard markets.
Experience Modification
A workers’ compensation rating factor that compares an employer’s actual loss experience with expected losses for similar businesses, subject to applicable rating rules.
General Liability
Coverage that may respond to covered third-party bodily injury, property damage, personal and advertising injury, and related defense costs.
Hired and Non-Owned Auto
Liability coverage that may apply when a business uses rented vehicles or when employees use personal vehicles for business, subject to the policy’s terms.
Indemnification
A contractual obligation under which one party agrees to compensate or protect another party from specified loss, liability, or expense.
Liability Limit
The most an insurer will pay for a covered claim or group of claims, as shown in the declarations and modified by policy terms.
Liquor Liability
Coverage for certain claims arising from selling, serving, or furnishing alcoholic beverages. It is distinct from limited host-liquor coverage.
Loss Runs
Reports showing an insured’s claims history, often including dates, descriptions, paid amounts, reserves, and current claim status.
Occurrence Coverage
Coverage generally triggered by covered injury or damage occurring during the policy period, even if the claim is reported later, subject to policy terms.
Professional Liability / Errors & Omissions
Coverage for certain claims alleging negligence, errors, omissions, or failure to perform professional services.
Replacement Cost
A property valuation method generally based on the cost to repair or replace damaged property with comparable property without deduction for depreciation, subject to policy conditions.
Retention
An amount the insured must pay or absorb before certain policy obligations apply. A retention can operate differently from a deductible.
Retroactive Date
The date after which an act, error, or incident must occur to potentially qualify for coverage under many claims-made policies.
Subrogation
An insurer’s right, after paying a covered loss, to pursue recovery from a responsible third party.
Umbrella and Excess Liability
Coverage that may provide additional liability limits above scheduled underlying policies. An umbrella may also offer broader terms in limited circumstances, subject to its own conditions.
Waiver of Subrogation
A policy provision or endorsement under which an insurer agrees to waive specified recovery rights against a person or organization, subject to its terms.
Workers’ Compensation
Coverage providing statutory benefits for employees who suffer qualifying work-related injury or illness, along with employer’s liability coverage subject to policy terms.
These definitions are general summaries for educational purposes and are not legal advice, coverage interpretations, or guarantees of coverage. Insurance terminology and application can vary by policy and jurisdiction. The applicable policy’s declarations, forms, endorsements, exclusions, conditions, and insurer interpretation control.