Actual cash value (ACV): The cost to replace an item of property at the time of loss, less an allowance for depreciation; often used to determine the amount of reimbursement for a loss.

Additional Coverages: Supplemental insurance coverages that apply only in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable; also called coverage extensions, other coverages, or extended coverages.

Additional Insured: An individual or company, in addition to the insured, who is listed in the declarations; an example is a mortgage company that has an insurable interest in the property insured.

Aggregate Limit: Type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

A.M. Best Company: Organization that rates the financial stability of insurance companies doing business in the United States.

Audit: Survey of the insured's financial records to gather information used to calculate the premium, such as exposures and limits.

Backup Sewer: Covers physical loss to property covered by your policy if the loss is caused by a discharge of water or waterborne material from a sewer, drain or sump. For a loss to be covered, the sewer, drain or sump must be located on premises listed in the endorsement.

Bailee: A person or concern having possession of property committed in trust from the owner.

Bailee's Customers' Policy: A policy providing coverage for loss of or damage to property of bailee's customers, payable to customers, regardless of whether the bailee is at fault or not for the loss.

Binder: Written statement that provides immediate insurance protection for a specified period; designed to provide temporary coverage until a policy is issued or denied.

Bodily Injury Liability: The liability which may arise from injury or death of another person.

Bond (3-party contract): An obligation of the surety company (a.k.a. guarantor) to protect another (a.k.a. oblige) against financial loss caused by the acts of another (a.k.a. principal or obligor).

Building Coverage: Commercial property coverage form that covers the building up to the limits of the policy.

Business Personal Property: Coverage for moveable items owned by your business. It includes office supplies, furniture, computers, point of sales systems and machinery. (Does not include tenant improvements to the building)

Business Income Coverage Form: Commercial property coverage forms that pay for loss of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt, or replaced with reasonable speed; available with or without extra expense coverage. Must be a property listed on the policy.

Cancellation: Termination of an insurance policy by the insured or the insurance company during the policy period.

Cargo Insurance: Provides insurance on the freight or commodity hauled by a For-hire trucker. It covers your liability for cargo that is lost or damaged due to causes such as fire, collision, or striking of a load.

Casualty Insurance (a.k.a. Liability): Insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to the property of others.

Certificate of Insurance: Written form that verifies a policy has been written; provides a summary of the coverage provided under the policy.

Claims-Made Coverage Form: A policy providing coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place. (The one exception is when a retroactive date is applicable to a claims-made policy. In such instances, the wrongful act that gave rise to the claim must have taken place on or after the retroactive date.)

Coinsurance: A provision in insurance that says the insured agrees to insure to a certain value (such as 80%, 90% or 100%). If there is a loss and the insured has breached this agreement, only a proportional share of the loss will be paid.

Commercial General Liability (CGL): A standard insurance policy issued to business organizations to protect them against third-party liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.

Commercial Package Policy (CPP): The insurance services office (ISO) commercial lines policy that contains two or more lines of insurance or two or more coverage parts; it will include some forms and/or endorsements that are common to all lines of insurance or coverage parts, as well as the individual forms and endorsements required for the individual coverages selected; the CPP can include almost any commercial coverage the insured might need, with the exception of ocean marine, aviation, and workers' compensation insurance.

Crop Insurance: Covers loss to crops due to natural disasters, disease, insect damage or fire.

Cyber liability Insurance: Provides important protection if your business experiences a cyberattack or data breach.

Damage to Premises Rented: One of the limits of liability prescribed by the standard commercial general liability (CGL) policy; it applies to damage by fire to premises rented to the insured and to damage regardless of cause to premises (including contents) occupied by the insured for 7 days or less. The basic limit is typically $100,000.

Declarations: Section of an insurance policy/contract that shows who is insured, what property or risk is covered, when and where the coverage is effective, and how much coverage applies.

Deductible: Dollar amount the insured must pay on each loss to which the deductible applies; the insurance company pays the remainder of each covered loss, up to the policy limits.

Deposit premium: Premium paid at the beginning of the policy period that is based on an estimate of what the final premium will be; this premium is adjusted based on reports submitted by the insured to the insurer; also called an estimated premium.

Directors and Officers Insurance (D&O): D&O insurance covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in lawsuits against the company. There is a variety of Directors and Officers coverage available such as corporate reimbursement coverage, personal liability, and entity coverage. D&O policies may be broadened to include coverage for employment practices liability as well.

Earned Premium: Premium an insurance company has actually earned by providing insurance protection for the designated period of time.

Employment Practice Liability Insurance: Covers wrongful acts arising from the employment process. The most frequent type of claims covered, wrongful termination, discrimination, sexual harassment and retaliation.

Endorsement: Document attached to an insurance policy that changes the policy in some way.

Equipment Breakdown: Coverage for loss due to mechanical or electrical breakdown of near any type of equipment. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown.

Excess Liability: Provides additional coverage after an underlying general liability policy has reached its limit. It covers any claims that would have been covered in the underlying policy.

Exclusions: Section of an insurance policy that lists property, products, operations, perils, persons, or situations that are not covered under the policy.

Extended reporting period (ERP): Period of time provided by the claims-made coverage form during which coverage will be provided for claims made after the expiration date of the policy if certain conditions are met; the basic ERP runs 60 days and can be extended to five years; the supplemental ERP runs for an unlimited duration, but is available only by endorsement for an additional premium.

First Named Insured: First person listed in the declarations as an insured; the first-named insured may have a higher level of duties or rights under the policy.

Flat cancellation: Cancellation of a policy by the insured or the insurance company on its effective date.

Gross Sales: Exposure base in commercial general liability (CGL) insurance for insureds in the manufacturing/processing or mercantile business classifications. Gross sales as an exposure base is defined as "the gross amount charged by the named insured, concessionaires of the named insured or by others trading under the insured's name for all goods or products, sold or distributed; operations performed during the policy period; rentals; and dues or fees.

Harvested Cannabis Material: Product that has been harvested but not processed or bagged for resale

Hired and Non-Owned Auto Liability Endorsement: General Liability endorsement used to cover hired or non owner autos used by the business.

Inventory / Stock Coverages: Covers the cost (up to the limits of the policy) to replace your inventory or stock in the event of a covered loss.

Loss Runs: Periodic reports of claim information provided by insurance companies to their insureds.

Named Insured: Person, business, or other entity named in the declarations to whom the policy is issued.

Non-Renewal: Decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires.

Occurrence Form: Commercial general liability coverage form that covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is made.

Ordinance or Law: Coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings. Older structures that are damaged may need upgraded electrical, heating, ventilating and air conditioning (HVAC) and plumbing units based on city codes. Many communities have a building ordinance requiring that a building that has been damaged to a specified extent (typically 50 percent) must be demolished and rebuilt in accordance with current building codes rather than simply repaired.

Policy Limit: Maximum amount the insurance company will pay for particular loss or for losses sustained during a period of time; also called limit of coverage, limit of insurance or limit of liability.

Policy Period: The date and time specified in the declarations for when coverage begins and ends.

Primary & Noncontributory: This term is commonly used in contract insurance requirements to stipulate the order in which multiple policies triggered by the same loss are to respond. For example, a contractor may be required to provide liability insurance that is primary and noncontributory. This means that the contractor's policy must pay before other applicable policies (primary) and without seeking contribution from other policies that also claim to be primary (noncontributory).

Products and Completed Operations Liability: Business liability exposure arising out of defects in the company's products or completed operations.

Professional Liability: Liability coverage designed to protect against liability incurred as a result of errors and omissions in performing your professional services. Although there are a few exceptions (e.g., physicians, architects, and engineers), most professional liability policies only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims. This is because the latter two types of loss are typically covered under commercial general liability (CGL) policies. The vast majority of professional liability policies are written with claims-made coverage triggers.

Property Insurance: Line of insurance that includes many types of coverage designed to handle the risk that a person will suffer financial loss because something they own is damaged or destroyed. First-party insurance that indemnifies the owner or user of property for its loss, or the loss of its income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion. In this sense, property insurance encompasses inland marine, crop, boiler and machinery (BM), and crime insurance, as well as what was once known as fire insurance, now simply called property insurance: insurance on buildings and their contents.

Replacement cost: The cost to replace a damaged or destroyed item of property without deduction for depreciation; may be the basis of reimbursement for some losses.

Retroactive Date: Under the Claims-Made “Cause of Loss” form, a date stipulated in the declarations as the first date on which an event may occur and be covered by the policy if a claim is filed.

Tenant Improvements & Betterments: Many commercial property insurance policies define tenants improvements and betterments as fixtures, alterations, installations, or additions to a building that you occupy but don't own. TIBs are items you've purchased or installed at your expense, but that you can't legally remove. As an example, we'll say that Larry owns Luxury Leathers, a leather goods shop located in a strip mall. He operates his business out of space he rents from the mall owner, Shopping Centers, Inc. Larry has made various improvements to his rental space since Luxury Leathers moved in two years ago, including new recessed lighting, new carpeting, and a small office constructed behind the retail area. The office, lighting, and carpeting Larry has installed in his store are TIBs. They're now part of the building. Larry doesn't own them, so he can't take it with him if he moves to another location. He could damage the building if he attempted to remove them.

Terrorism Risk Insurance Act of 2002 (TRIA): Federal law designed to ensure that insurance coverage for terrorism losses under commercial lines policies will be available and affordable; it requires insurers to pay a specified amount for terrorism losses in a given calendar year; once that limit is reached, the federal government will reimburse insurers a percentage.

Warranty: A specific agreement between the insured and the insurer that becomes a part of the insurance policy; a breach of warranty can void the policy.

Waiver of Subrogation: A waiver of subrogation is a contractual provision whereby an insured waives the right of their insurance carrier to seek redress or seek compensation for losses from a negligent third party. Typically, insurers charge an additional fee for a waiver of subrogation endorsement. Many construction contracts and leases include a waiver of subrogation clause. Such provisions prevent one party’s insurance carrier from pursuing a claim against the other contractual party in an attempt to recover money paid by the insurance company to the insured or to a third party to resolve a covered claim.

Workers' Compensation Insurance : Covers medical costs and partial salaries of employees injured at work. It also provides liability protections to employers.

Workers' Compensation "Stop Gap": An endorsement that is primarily used to provide employers liability coverage for work-related injuries arising out of exposures in monopolistic fund states (fund workers compensation policies do not provide employers liability coverage). If the employer has operations in non monopolistic states, the endorsement is attached to the workers compensation policy providing coverage in those states. For employers operating exclusively in a monopolistic fund state, the endorsement is attached to the employer's general liability policy.