Glossary
Actual Cash Value (ACV) - A basic type of loss settlement in property and auto physical damage insurance that establishes a value of insured property for the amount the insurer will pay in the event of loss. ACV is typically calculated by the cost to repair or replace the damaged property, minus depreciation.
Additional Insured - A person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured providing the additional insured has an insurable interest.
Agreed Value (AV) - A type of loss settlement provision in property insurance that suspends the coinsurance clause until a specified expiration date whereby an insurer determines the amount of loss settlement to an insured based on the agreed value of insured property.
Bodily Injury Liability (BI) - A type of protection for an insured for liability exposures in the event physical harm is caused to others. Bodily Injury Liability is an insurance term that can include bodily harm, sickness, disease or death.
Comprehensive & Collision (COMP/COLL) - Comprehensive protection is a a type of automobile insurance coverage that can reimburse an insured against loss or damage to a covered automobile in the policy not involved in a collision accident. Examples of comprehensive coverage can include fire, theft, windstorm, flood, and vandalism. Collision protection is a type of automobile insurance coverage that can reimburse an insured for physical damage loss to a covered automobile in the policy involved in a collision with another vehicle(s), object, or overturn.
Cyber Liability - A type of commercial insurance protection for liability exposures arising from communications and/or conducting business online. A person or organization may face liability exposures such as breaches of privacy rights, defamation, and even the spreading of computer viruses. Cyber liability coverage helps protect a person or organization from negligence and can include defense costs.
Directors and Officers (D&O) - A type of commercial liability insurance protection covering directors and officers for claims made against them while serving on a board of directors and/or as an officer. D&O liability insurance can help protect the directors and officers from managerial decisions that have adverse financial impacts on the organization.
Earthquake Protection - Earthquake (or earth movement) coverage is typically excluded from most property insurance policies. Earthquake coverage must be purchased by endorsement to a policy or as a stand alone coverage on its own policy.
Employee Benefits Liability - A type of commercial liability insurance protection covering an employer for an error or omission in the administration of an employee benefit program, such as failure to advise employees of benefit programs. Coverage of this exposure is normally excluded from a general liability policy but can typically be added by endorsement.
Employment Practices Liability (EPLI) - A type of commercial liability insurance covering wrongful acts arising from employment practices. EPLI exposures typically include wrongful termination, discrimination, sexual harassment and retaliation but can include other forms of inappropriate workplace conduct. Directors and officers, management personnel and employees are typically covered as insureds on the policy.
Equipment Breakdown - A type of insurance coverage for loss due to mechanical or electrical breakdown of equipment. Typically the protection covers the cost to repair or replace the equipment. Equipment Breakdown coverage is normally excluded on a insurance policy but can typically be added by endorsement and a separate deductible may apply.
Flood Protection - A type of property insurance coverage for damage caused by rising waters and/or storm surge resulting from flooding.
General Liability (GL) - A type of commercial liability Insurance that covers general liability exposures such as slip and fall accidents. GL can include exposures like advertising injury and/or products and completed operations. Normally GL excludes liability coverage from other exposures such as automobile and/or professional liability.
"Hired" or "Non-Owned" Auto - A type of commercial automobile insurance coverage that helps protects an organization from liability exposures arising from the use of vehicles not owned by the organization but used in connection with business operations. "Hired Auto" coverage is an insurance term that typically refers to autos the named insured leases, hires, rents, or borrows. "Non-Owned Auto" coverage is an insurance term that typically refers to autos not owned, leased, hired, rented, or borrowed, such as employee owned autos used in connection with the named insured's business. The term typically applies to private passenger type autos. Coverage for "Hired or Non-Owned Auto" is normally excluded from a commercial automobile insurance policy but can typically be added by endorsement.
Key Person - A type of life insurance plan to provide benefits for an organization should a key person die. It can be owned by an organization and have various beneficiary options, such as the organization itself, an employee, or split beneficiaries. Tax considerations are important and a tax professional should be consulted.
Liquor Liability - A type of commercial liability insurance coverage for exposures arising from the sale of alcoholic beverages. Coverage for Liquor Liability is normally excluded from General Liability insurance policies but can typically be added by endorsement.
Loan/Lease Gap - A type of automobile insurance coverage that can increase the recovery amount of a claim in the event of a total loss to a covered auto that is under a loan or lease agreement and the outstanding debt on the auto is greater than what the insured could recover under actual cash value (ACV) or cost to repair or replace. Loan/Lease Gap coverage is normally excluded on an automobile insurance policy but can typically be added by endorsement to qualifying autos.
Loss of Business Income - A type of commercial property insurance covering loss of business income suffered when damage to premises is caused by a covered loss resulting in a slowdown or suspension of business operations. Loss of Income is normally excluded on commercial insurance policy but can typically be added by endorsement.
Ordinance or Law Coverage - A type of insurance coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged structures. In the event of a covered loss, a damaged structure may face building code upgrade requirements that must be addressed. Some building ordinances require a structures total demolition and reconstruction if the extent of damage exceeds a certain limit (typically 50%). The increased costs associated with upgrades (and demo/reconstruction of undamaged portions of a structure) have very limited coverage on a property insurance policy and may even exclude coverage altogether, but the option to add ordinance or Law coverage to a property insurance policy can typically be done by endorsement.
Professional Liability (PL) - A type of insurance liability coverage that helps protect those working in a profession against exposures arising from an error and omission while performing their professional responsibilities. Coverage can typically be purchased for those working in professions such as accounting, law, real estate or consulting but other professions can apply. Professional Liability can refer to other coverage forms depending on the profession in which it applies, such as Errors and Omissions (E&O) for financial professionals or Medical Malpractice for medical professionals.
Property Damage Liability (PD) - A type of physical damage insurance that covers a named insured from liability exposures for loss to physical property and/or even loss of use to physical property.
Property Insurance - A type of Insurance protection that indemnifies the owner of a covered property(s) for loss or damage caused by a covered peril, such as fire or lightning. Property insurance can include structures and/or contents.
Replacement Cost (RC) - A type of property insurance coverage that establishes the valuation method to determine the payment amount due an insured for a covered loss. Replacement Cost is usually defined in an insurance policy as the cost to repair or replace the damaged property with materials of like kind and quality without deduction for depreciation.
Sexual Misconduct Liability - A type of commercial liability Insurance protection that helps protect an organization against liability exposures arising from sexual misconduct and/or molestation. Coverage typically with expensive defense costs associated with allegations of such conduct.
Umbrella Protection - A type of liability insurance coverage that helps protect a person or organization against catastrophic losses. An umbrella insurance policy provides excess limits of coverage when the limits of coverage on underlying policies (i.e. homeowners, auto, boat, commercial liability, etc.) are exhausted by the payment of claims. The limits of liability on an umbrella policy will pick up where underlying policy limits leave off for covered losses.
Uninsured or Underinsured Motorist (UM/UIM) - Types of automobile insurance coverages that each have specific and separate functions. In some States, Uninsured Motorist coverage (UM) can provide protection for bodily injury (BI) and/or property damage (PD) to an insured when an accident is caused by a motorist who is not insured. A situation involving a "Hit and Run" incident can typically be defined under Uninsured Motorist coverage. Underinsured Motorist coverage (UIM) however, involves a situation when coverage limits are not enough to indemnify an insured for covered losses. UIM coverage can provide additional limits of protection. In some States, Uninsured Motorist Coverage is mandatory protection on an automobile policy whereas Underinsured Motorist Coverage is optional.
Waiver of Subrogation - A term typically used in commercial insurance referring to an agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss. The waiver is intended to prevent one party's insurer from pursuing subrogation against the other party. Waiver of subrogation is normally excluded on an insurance policy but may be available by endorsement.
Water and Sewer Backup Coverage - A type of Insurance protection against the backup of water or waterborne materials through a sewer or drain. Water and Sewer Backup can include the accidental discharge or backup from a sump pump or septic tank. Coverage is normally excluded on an insurance policy but can typically be added by endorsement.
Workers Compensation Protection - A type of commercial liability insurance that covers an employer from workplace related accidents involving employee injury (including death) or occupational disease. In some State, Workers Compensation insurance coverage is mandatory based on the amount of employees within an organization.
Glossary Disclaimer: The terms described above are meant to assist readers with common insurance terms and do not represent official insurance language for an insurance policy. Official language for insurance coverage terms and definitions are contained within an insured's policy issued by their respective insurance company.