MENU

Glossary of Insurance Terms

Curious about what it all means? We are always happy to chat about your policies and help explain some of the more complicated terms and concepts, but if you’re more of a read-and-learn type of person, we’ve got you covered. Here is a glossary of some insurance terms you’ll hear, and a brief explanation of what they mean.

Accident

A sudden, unintended, unforeseen and unexpected event, To be insurable, a loss must be accidental with respect to acts of the insured.

Aggregate limit of indemnity

The maximum amount an insurer will pay for all accumulated claims arising within a specified period of insurance.

All risk insurance

The name given to a policy which covers against the loss caused by all perils except those that are specifically excluded by the terms of the policy

Attractive Nuisance

A dangerous place, condition or object, which is particularly attractive to children. In these cases the courts have frequently held that where attractiveness exists, the owner is under a duty to take steps to prevent injury to those that may be attracted and the owner may be held liable for failure to do so.

Binder

A contract for temporary insurance issued either in writing or orally pending issuance of a policy of insurance

Bodily injury liability

Insurance protection against loss arising out of the liability imposed upon the insured by law for damages because of bodily injury, sickness or disease sustained by any person or persons other than employees.

Builders Risk Insurance

Insurance designed to cover buildings in the course of construction. See our Builders Risk Insurance page for more.

Claim

A demand for payment under an insurance contract or bond. The estimated or actual amount of a loss.

Coverage

Protection under an insurance policy. In property insurance, coverage lists perils insured against properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits.

Deductible

The amount of a loss, which the insured has to pay

Effective Date

The date that coverage starts under an insurance contract.

Exclusion

This is a restriction in your business liability insurance limiting and/or excluding coverage for certain potential catastrophic events, people, property or locations.

Fleet policy

Also called commercial auto or commercial vehicle insurance, a fleet policy is an insurance contract covering a number of vehicles with a single owner.

Grace period

This is a period of time that insurance coverage continues beyond the actual expiration date of a policy that you intend to renew. A policy will lapse if the premium is not paid by the end of this period.

Gross Premium

Total amount paid by insured.

Hazard

A specific situation that introduces or increases the probability of the occurrence of a loss arising from a peril, or that may influence the extent of a loss.

Insurance broker

A person who sells, solicits, or negotiates insurance for a client.

Liability Insurance

Provides protection from lawsuits of others.

Liability limits

The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy. The majority of policies covering liability for bodily injury have two limits: a limit of liability to any one person; and another limit, usually higher, for any single accident where more than one person is involved.

Minimum Premium

The minimum amount an issuer will accept to issue a policy even if the gross premium is a lesser amount.

Policy Limit

The policy limit is the dollar amount of coverage shown in the contract.

Proof of Loss

A written document which must be filled by an insured when a loss occurs under a property insurance policy.

Reinstatement

The restoration of a lapsed or cancelled policy.

Risk

The probability of an insured loss occurring.

Risk Management

The practice of analyzing all noncompetitive (non-production) exposure to risk of loss (loss by fortuitous or accidental means) and taking steps to minimize those potential or real losses to levels acceptable to the organization.

Schedule

Policy section stating the main details of the insured, their business activities, the application of any special terms or restrictions plus other details specific to the particular insurance and premium.

Subrogation

The insurance company’s right to pursue legal action in the policyholder’s name against the party considered legally liable for the loss or damage.

Stay Connected