Insurance Glossary- A Quick Guide on Understanding Insurance Terms

 

Welcome to myCOI!

We’re here to make insurance tracking simple and stress-free. Below is a guide to common insurance terms and policies to help you feel confident and informed. Let’s dive in!

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Table of Contents

1. What’s a Certificate of Insurance?
2. Who’s Who in an Insurance Policy?
   • Named Insured
   • Additional Insured
3. Understanding Liability Insurance
   • Commercial General Liability (CGL) Policy
   • Umbrella Liability Policy
   • Professional Liability Insurance (Errors & Omissions)
4. Workers' Compensation: Keeping Employees Safe
5. Car Insurance for Businesses
   • Non-Owned and Hired Autos
6. Property Insurance Basics
   • Commercial Property Policy
   • Named Perils vs. Special Perils Coverage
   • Replacement Cost Coverage
7. Important Extras
   • Endorsements (Policy Add-Ons)
   • Loss Payees
   • Waivers of Subrogation
   • Primary and Noncontributory
8. Bonus Insurance Terms You Should Know
   • Aggregate Limit
   • Deductible
   • Exclusions
   • Retroactive Date
   • Subrogation

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1. What’s a Certificate of Insurance?

A certificate of insurance is like a receipt for your coverage. It’s a one-page document that proves you’re insured. This is often shared with clients, landlords, or contractors to show you’ve got the right coverage.

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2. Who’s Who in an Insurance Policy?

• Named Insured: The main person or business covered by the insurance policy.
• Additional Insured: A person or organization added to the policy to share in the coverage, often because of a contract or close relationship.

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3. Understanding Liability Insurance

• Commercial General Liability (CGL) Policy:
  Protects businesses if someone gets hurt on your property or if your business accidentally causes damage to someone else’s property.

• Umbrella Liability Policy:
  Provides extra protection when your standard liability limits aren’t enough. Think of it as a backup shield for big claims.

• Professional Liability Insurance (Errors & Omissions):
  Covers mistakes or errors made in professional services (e.g., consultants, accountants, or IT specialists).

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4. Workers' Compensation: Keeping Employees Safe

This insurance helps cover medical expenses and lost wages if an employee gets injured or sick because of their job. It’s a win-win: peace of mind for your team and legal compliance for your business.

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5. Car Insurance for Businesses

• Non-Owned Autos: Covers employees’ personal vehicles if used for business errands.
  Example: An employee drives their car to deliver products for your business and gets in an accident.

• Hired Autos: Covers rented or borrowed vehicles used for business purposes.
  Example: You rent a truck to transport event supplies, and it gets damaged.

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6. Property Insurance Basics

• Commercial Property Policy:
  Protects your business’s buildings and contents against risks like fire or vandalism.

• Named Perils vs. Special Perils:

  • Named Perils: Covers only the specific risks listed in the policy.
  • Special Perils: Covers everything except what’s explicitly excluded—like an all-you-can-eat buffet with a few restrictions.

• Replacement Cost Coverage:
  Pays to replace damaged property with new items of the same kind and quality, without subtracting for wear and tear.

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7. Important Extras

• Endorsements (Policy Add-Ons):
  Custom changes or additions to your policy. For example, adding flood coverage to a property policy.

• Loss Payees:
  If someone has a financial interest in your property (like a bank or lender), they may get insurance proceeds first if there’s a loss.

• Waiver of Subrogation:
  Prevents your insurer from trying to recover costs from another party after paying a claim. This keeps things friendly and often fulfills contract requirements.

• Primary and Noncontributory:
  Ensures your policy pays first in the event of a claim and doesn’t ask other policies to pitch in.

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8. Bonus Insurance Terms You Should Know

• Aggregate Limit: The most your insurance will pay during a policy period for all claims combined.

• Deductible: The amount you agree to pay out of pocket before your insurance kicks in.
  Example: If you have a $500 deductible and a $2,000 claim, your insurance pays $1,500.

• Exclusions: Situations or risks that aren’t covered by your policy. Always read this section to know what’s not included!

• Retroactive Date: For some policies, like professional liability, this is the date from which your coverage applies. Claims for events before this date aren’t covered.

• Subrogation: When your insurer pays a claim and then tries to recover that money from a third party who caused the loss.

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Still Have Questions?

Insurance doesn’t have to be confusing or intimidating! If you’re unsure about anything or need more help, let us know. We’re here to help!