Terms And Definitions

Aggregate Limit:
Maximum Dollar amount of coverage in Force under a health insurance policy, a property damages policy, or a liability policy.

Boiler & Machinery Coverage:
Covers losses resulting from the malfunction of boilers and machinery.

Business Automobile:
Coverage for automobiles used by a business when a liability judgment arises from the use of a covered automobile, or if the automobile is subject to damage or destruction.

Business Income & Extra Expense:
In the event of loss from a covered peril which results in closing your business for a period of time, this coverage pays for lost income and the extra expenses involved in renting temporary office space, furniture, etc., until your space can be restored for use.

Business Interruption Insurance:
Indemnification for the loss of profits and the continuing fixed expenses.

Business Owners Policy (BOP):
A Combination of a property, liability, and business interruption policy. It is usually written to cover expenses for small and medium size businesses resulting from (1) damage or destruction of business’s property or (2) when actions or non-actions of the business’s representatives result in “Bodily Injury” or “Property Damage” to another individual (s).

Business Property:
Protection of the property of the business that is damaged or destroyed by perils such as fire, smoke and vandalism.

Co-insurance clause:
The clause states that the insured must carry property coverage limits equal to or greater than a stated percentage of total property values noted in the policy. If a loss occurs and property values have increased to a point where coverage limits are less than the required coinsurance percentage of total property values, a reduced payment will be made to the claimant. It is vital for you and your broker to keep track of property purchases (especially computers) to ensure that coverage limits are above the minimum coinsurance requirement. Some policies do not have a coinsurance clause.

Crime:
Protection for the assets of a business (including merchandise for sale, real property, money and securities) in the event of robbery, burglary, larceny, forgery, and embezzlement.

Directors and Officers Liability Insurance:
Directors & Officers Liability provides financial protection for the directors and officers of your company in the event they are sued in conjunction with the performance of their duties as they relate to the company. Think of Directors & Officers Liability as a management Errors and Omissions policy.

Employee Dishonesty:
Provides coverage for losses resulting from employee dishonesty and it covers money, securities and property other than money & securities.

Employment Practices Liability:
Employment Practices Liability Insurance is a relatively new form of liability insurance. It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your firm, including its Directors and Officers.

Equipment Floater:
Coverage of property that moves from location to location, from a covered cause of loss.

ERISA:
(Employee Retirement Income Security Act of 1974)

Errors and Omissions:
Policies generally available to the various professions that require protection for negligent acts and/or omissions resulting in bodily injury, personal injury, and/or property damage liability to a client. For example, insurance agents are constantly exposed to the claim that inadequate or improper coverage was recommended, resulting in the client suffering a loss of indemnification. If sustained, the agent (or the carrier) would have to make good the claim of the client without the adequate insurance coverage.

General Liability:
Coverage for an insured when negligent acts and/or omissions result in bodily injury and/or property damage on the premises of a business. Also provides coverage when someone is injured as the result of using a product manufactured or distributed by a business, or when someone is injured in the general operation of a business.

Hired and Non-Owned Automobile Liability Insurance:
Hired Auto coverage provides your business with liability insurance for vehicles that you rent, on a short-term basis, for business purposes. It replaces or augments the liability coverage offered by auto rental agencies. Non-Owned Auto coverage protects your company in the event that your company is sued as a result of an auto accident that you or one of your employees has in a personal vehicle while on company business.

Indemnity:
Compensation for loss

Inland Marine:
Coverage for (1) property damage or destruction of an insured’s property and (2) liability exposure of an insured for damage or destruction of someone else’s property under his or her care, custody, and control. The insured (shipper) needs this insurance because the carrier (who can also be the insured and purchase inland marine insurance) may be found not at fault for damage to a property; or the carrier may not have any insurance or adequate insurance.

Mechanical Breakdown Coverage:
Covers repair or replacement of electrical systems, heating, air conditioning or other machinery (except computers) in the event of unexpected breakdown. Many policies also cover lost business that results from the equipment breakdown.

Occurrence Limit:
Maximum amount that an insurance company is obligated to pay all injured parties seeking resource as the result of the occurrence of an event covered under a Liability Insurance policy. In order for the coverage to apply, the policy must have been written on an Occurrence Basis.

Ocean Marine:
Coverage in the event of a marine loss. Marine loss is damage or destruction of a ship’s hull and the ship’s cargo (freight) as the result of the occurrence of an insured peril. Perils insured against include collision of the ship with another ship or object; the ship sinking, capsizing, or being stranded; fire; piracy; jettisoning (throwing overboard of property to save other property); barratry (fraud or other illegal act by a ship’s master or crew, resulting in damage or destruction of the ship and/or cargo), and various other liability exposures. To be covered, an act cannot involve prior knowledge by the owner of the ship or its cargo. Excluded are wear and tear, dampness, decay, mold, and war.

Ordinance & Law:
Pays for losses resulting from enforcement of those building laws or ordinances that require that the property be restored in accordance with current building codes, prohibit repair of obsolete structures, or require demolition even of undamaged portions of the structure. Three specific types of losses are covered by the ordinance or law endorsement: value of the undamaged portion that must be demolished, demolition cost of the undamaged portion of a building, and increased cost to rebuild in conformance with the building code.

Professional Liability:
Liability created when an individual who offers services to the general public claims expertise in a particular area greater than the ordinary layman. Today, suits are frequently brought alleging that a professional, such as a physician, attorney, or CPA, has committed negligent acts or omissions in performing the purchased service.

“Replacement Cost” vs. “Actual Cash Value” coverage:
“Replacement Cost” coverage will pay the cost to replace your property lost due to a covered peril with property that is equivalent to the quality of the goods lost. "Actual Cash Value" coverage pays an amount equal to the original value of the property, minus depreciation. This is typically lower than the cost to replace lost property with like and kind quality property. Replacement Cost coverage is especially important when covering a firm's media and computers since technology is constantly changing as are costs.

Umbrella Liability:
Excess liability coverage above the limits of a basic business liability insurance policy.

Workers Compensation:
Workers Compensation covers the medical expenses and lost income of your employees if they are hurt in the course of doing work-related activities. It is important for IT companies to have Workers Compensation in all the states in which they have employees.

Bonds

Administrator’s Bond:
Used when a person dies and leaves an estate with no will or when the executor nominated in the will dies, resigns or otherwise becomes disqualified, a successor known as the administrator may be appointed. An Administrator can also be appointed if the descendent left a will and the validity of the will is being contested or the executor is a minor or absent.

Executor’s Bond:
Used when a person dies and leaves an estate and a will that names a person responsible for the estate and the will.

Conservator’s Bond:
When a person disappears or is reported missing in action or interned in a neutral country or captured by an enemy and has an interest in property in this state, a court having probate jurisdiction may appoint a conservator.

Guardian’s Bond:
When a person under the age of 21 has or becomes entitled to receive property, the court may appoint a guardian to take possession of and manage it. The duties of which are to preserve, invest and use the property for the benefit of the minor under direction of the court. These are generally risks of long duration continuing in force until the ward becomes of legal age. They guarantee honesty and faithful performance of duty.