A

Actual Cash Value (ACV): The value of property or goods at the time of loss, taking into account depreciation. It represents the cost to replace or repair the item minus its depreciation.

Additional Insured: A person or entity added to the policy to receive coverage under the insured’s policy, usually for liability purposes.

All-Risk Coverage: Insurance that covers a broad range of perils except those specifically excluded. Also known as open perils or comprehensive coverage.

B

Broker: A licensed professional who acts as an intermediary between an insurer and a client. Brokers work to find the best insurance policies for their clients and typically represent the insured rather than the insurer.

Builder’s Risk Insurance: A type of property insurance that covers buildings under construction, including materials, fixtures, and equipment used in the construction or renovation.

Business Interruption Insurance: Coverage that compensates a business for lost income and extra expenses during the period it is unable to operate due to a covered peril.

C

Coinsurance: A policy provision that requires the insured to bear a portion of the loss, based on a percentage of the property’s value. If the insured does not maintain coverage up to the specified percentage, they may face a penalty in the event of a loss.

Commercial General Liability (CGL): A broad type of insurance policy that provides liability coverage for general business risks, excluding professional services or automotive liability.

Coverage Limit: The maximum amount an insurance company will pay under a policy for a covered loss.

D

Declarations Page: The section of an insurance policy that summarizes the key details, including the insured’s name, coverage limits, and premium amount.

Deductible: The amount the insured must pay out of pocket before the insurance company pays a claim.

Depreciation: The decrease in value of an asset over time due to wear and tear, age, or obsolescence.

E

Endorsement: An amendment or addition to an existing insurance policy that changes or adds coverage, terms, or conditions.

Exclusion: Specific conditions or circumstances for which the policy does not provide coverage.

Experience Rating: A method used to adjust the premium of a policy based on the insured’s previous loss experience.

F

Fidelity Bond: A form of insurance that protects a business from losses caused by fraudulent acts committed by its employees, such as theft or embezzlement.

Flood Insurance: A separate type of insurance policy that covers property damage caused by flooding, which is generally not covered under standard property insurance policies.

Force Majeure: A clause in contracts that frees parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs, such as natural disasters or acts of God.

G

General Aggregate Limit: The maximum amount an insurance company will pay for all claims during a policy period under a general liability policy.

Geographical Limitation: The coverage area specified in an insurance policy, which defines where the insured events must occur for the coverage to apply.

Glass Coverage: Insurance that specifically covers damage to windows or glass within the insured property.

H

Hazard: A condition that increases the likelihood or severity of a loss. Hazards can be physical (e.g., faulty wiring), moral (e.g., dishonest behavior), or morale (e.g., careless attitude).

Hold Harmless Agreement: A contractual arrangement where one party agrees to assume the liability of another, protecting them from certain risks or damages.

Hurricane Deductible: A higher deductible applied to damage specifically caused by hurricanes, typically a percentage of the property’s insured value.

I

Indemnity: The principle of compensating for a loss, placing the insured in the same financial position they were in prior to the loss.

Inflation Guard: A provision in insurance policies that automatically adjusts the coverage limit to account for inflation, ensuring adequate coverage over time.

Inland Marine Insurance: Coverage for goods, tools, and equipment that are in transit over land or temporarily housed at different locations.

J

Joint Loss Agreement: A provision that allows two or more insurers to work together to settle a claim involving multiple types of coverage, ensuring coordinated payment and handling of claims.

Jurisdictional Inspection: Inspections mandated by jurisdictional authorities to ensure compliance with safety regulations, often required for equipment like boilers or elevators.

K

Key Person Insurance: A policy that provides financial protection to a business in the event of the death or disability of a key employee whose loss would significantly impact the company.

Knowledgeable Insured: A clause in some policies that limits coverage if the insured knew or should have known about a risk but failed to disclose it or take preventive action.

L

Liability Insurance: Coverage that protects against claims arising from injuries or damage to other people or property.

Loss Payee: A party named in the insurance policy to receive payment for a claim on property, often a lender or lessor with a financial interest in the insured property.

Loss of Use: Coverage for expenses incurred when a property cannot be used due to damage from a covered peril, often included in business interruption insurance.