Business Insurance Terms
When it comes to knowing the business of insurance, understanding what people are talking about and being able to communicate clearly is essential to making sure that you have the proper coverage for your business and will help you save time, stress and money. Take a few minutes to familiarize yourself with some of the common terms that you’ll come across in your search for the right business insurance coverage.
Accounts Receivable Coverage – This protects for among other things: Entire sums due the business owner from customers, provided you are unable to collect as a result of loss or damage to records of accounts receivable; interest charges for any loan to offset impaired collections pending repayment of like sums deemed uncollectable through loss or damage; collection costs topping normal collection expenses due to such loss or damage; other costs, when reasonably incurred by the business owner in re-establishing records of accounts receivable after loss or damage.
Advertising Injury Liability Coverage - "Advertising Injury" is injury from an offense committed due to your advertising activities, if such injury rises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.
Auto Coverage - Any insurance related to use or ownership of a vehicle. Typical coverage\ includes liability, physical damage and personal injury.
Blanket Coverage - For property insurance, a blanket coverage places a single limit (maximum payout) for numerous buildings or risks. For health insurance, a blanket covers a full group for a list of coverages (i.e. medical, dental, etc.).
Business Owners Package (BOP) - A single insurance policy providing numerous types of coverages like business auto, liability and property. BOPs are formed and available for small to medium sized businesses and specifically for numerous specialized industries.
Commercial General Liability Coverage (CGL) - Insurance policy covering all liability exposures for all locales and causes of loss minus those specifically excluded in the policy.
Employee Benefits Plan Liability Coverage - Protects the insured employer from claims by employees or former employees due to negligent acts or omissions in the administration of the insured's employee benefits programs. This includes group life insurance and group accident and/or health insurance; profit sharing plans; employee stock subscription plans; and workers comp, unemployment insurance, social security benefits, disability benefits, etc.
Host Liquor Liability Coverage – These policies cover special event liquor liability for companies that choose to serve alcohol to their employees, prospects and clients. This coverage is also required by individuals and businesses serving or providing alcohol to customers, guests or employees for a charge or for free.
In a number of states, the manager or owner and the business can be liable for bodily injury and physical damage claims caused by individuals you served alcohol to that drank too much. Before serving alcohol, know what is and isn’t covered as it relates to host liquor liability.
Key Employee Insurance - An insurance purchased by a company or organization on key employees, naming the company as beneficiary. This type of policy is designed to lessen the financial hardship to a company should a key employee die or become permanently disabled.
Non-Owned and Hired Car Coverage – This is for policies written with limits of liability of $1 million or more. It offers coverage for rental or borrowed autos provided the insured does not own any private passenger vehicles, pick-up, panel truck or van and the use doesn’t surpass 30 days.
Package Policy – A package policy leans toward a cafeteria style plan where each coverage is suited to the specific risk and requirements of the company. This is found most often in large companies and those small-to-medium-sized businesses proving more unique or requiring special needs.
Professional Liability Coverage - Consultants and companies giving advice and services of any kind have exposures typically not insured by a Commercial General Liability policy. Among the more common types of organizations that have professional exposure are accountants, lawyers, computer consulting firms, investment advisors, insurance agents, data processing service firms, publishers, third-party administrators, teachers and anyone providing consulting services.
Sexual Harassment Defense Coverage – Protects companies against legal fees and costs arising from charges of sexual harassment by current and former employees and/or clients.
Umbrella Liability Coverage - This provides excess liability protection. Your business would consider this protection for the following three reasons:
- It offers excess coverage over the "underlying" liability insurance you carry.
- It offers coverage for all other liability exposures, excepting a few specifically excluded exposures. This is subject to a large deductible of $10,000.
- It offers automatic replacement coverage for underlying policies that have been decreased or exhausted through loss.