Glossary

Disclaimer: these are general terms and descriptions. See your policy for actual language and definitions.

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ACT OF GOD

An unpreventable accident or event that is the result of natural causes, such as floods, earthquakes, or lightning.

ACTUAL CASH VALUE (ACV)

An amount equal to the replacement cost of lost or damaged property at the time of loss, minus depreciation.

ADDITIONAL LIVING EXPENSE

Any necessary increase in living expenses incurred by the insured so the household can maintain its normal standard of living after a covered loss.

APPLICANT

A person who fills out and signs a written application for insurance.

APPLICATION

A written statement by a prospective policyholder that gives the information the company relies upon when evaluating the applicant and issuing the policy.

APPRAISAL

A survey by a Claims Representative or Claims Appraiser estimating the amount of damage to property and either the cost to repair or the determination of a complete loss. Appraisals are also required if you are scheduling items on your homeowners' policy such as a diamond ring, artwork or silver.

BASIC LIMITS

The lowest coverage amount, as prescribed by law or the company, for which an insurance policy can be written. Basic limits primarily refer to limits of liability.

CANCELLATION

Termination of an insurance contract before its expiration date by either the insurance company or the policyholder.

CATASTROPHE

A sudden, severe disaster that causes a large loss.

CLAIM

A demand for payment under an insurance contract for the estimated or actual amount of loss.

CO-INSURANCE CLAUSE

A clause requiring the insured to maintain insurance on the property for at least a minimum stipulated percentage of its value in order to collect payment for total or partial losses in full.

CONDITIONS

Provisions that set forth the rights, duties, and responsibilities of the parties in an insurance contract. Conditions may be found anywhere in the contract.

DAMAGES

A sum of money that a party is legally obligated to pay to another as compensation for bodily injuries or property damage incurred.

DECLARATIONS

The part of the policy that provides detailed information about the insured, the insurer, and the coverages.

DEDUCTIBLE

The amount of a claim that the policyholder has agreed to pay. This amount is deducted from a claims payment.

DEPRECIATION

A decrease in the value of any type of tangible property over time.

EFFECTIVE DATE

The date the coverage begins on an insurance contract (policy). Also referred to as inception date.

ENDORSEMENT

An amendment to your policy written especially to cover unique items just for you. An endorsement is also a change to your policy that is made during the policy's term. An endorsement is attached to your policy to modify the terms of the insurance contract.

EXCLUSION

Part of an insurance contract that excludes coverage of certain perils, persons, property, or locations.

EXPIRATION DATE

The ending date of an insurance contract (policy).

EXTENDED COVERAGE

A clause in an insurance policy or in an endorsement that provides additional coverage for other hazards or risks than those provided under the basic policy provisions.

FIRE INSURANCE

Contract prescribed by each state insuring against direct loss by fire, lightning, and other defined causes.

FLOOD INSURANCE

Coverage against damage caused by the rising or overflowing of bodies of water. This is available through the National Flood Insurance Program (NFIP) and must be bought separately.

HAZARD

A situation or condition that increases the possibility or extent of a loss.

HOMEOWNERS' POLICY

A packaged policy which provides coverage for owner-occupied dwellings, detached structures, personal belongings and loss of use. Covered perils include fire, theft, vandalism. Also included is comprehensive personal liability and medical payments to others. The premium is stated as one amount.

INSURANCE DEPARTMENT

A state's department that has responsibility for the enforcement of the state's insurance code. It is charged with the supervision and licensing of insurance companies and agents, as well as the general administration of insurance laws of the state.

INSURANCE TO VALUE

The amount of insurance written on property is approximately equal to its replacement value. An insured should insure all property to value.

INSURING AGREEMENTS

Part of an insurance policy that states the coverage of the contract.

INSURED

A person or entity who will be compensated for loss by an insurer under the terms of a contract called an insurance policy.

INSURER

The company that issues a policy to a policyholder; the party in the insurance contract that promises to pay losses and render services.

LIABILITY INSURANCE

Liability insurance pays on behalf of the insured for certain types of injury to others.

LIMIT OF LIABILITY

The maximum amount an insurer agrees to pay in the case of liability claim.

LOSS

A value reduction in an insured's property caused by an insured peril, the amount sought in a claim, or the amount paid on behalf of an insured under an insurance contract.

LOSS PAYABLE CLAUSE

A policy condition that enables an insured to direct the company to pay any loss that may be due to a third party.

LOSS OF USE

Compensation for loss because the policyholder lost the use of his or her property.

MOBILE HOME INSURANCE

A special policy designed to meet the needs of mobile homeowners or occupants, covering physical damage to the home, contents, and personal liability while the home is used as a permanent residence.

MORTGAGEE CLAUSE

A clause in an insurance policy that makes a claim jointly payable to the policyholder and the party that holds a mortgage on the property.

MUTUAL INSURANCE COMPANY

A company with no capital stock that is owned and controlled by policyholders.

NAMED INSURED

The person or entity designated in the policy as the insured and shown on the declarations page, as opposed to someone who may have an interest in a policy but is not shown by name.

NATURAL AND PROBABLE CONSEQUENCES

Consequences of a given act that a reasonable person could foresee.

NON-RENEWAL

A policy that the insurer does not continue after its expiration date.

OCCURENCE

An accident or loss, including continuous or repeated exposure to the same general harmful conditions, resulting in bodily injury or property damage.

PARTIAL LOSS

A loss that does not completely destroy the insured property that is covered by an insurance policy.

PAYROLL DEDUCTION

The policyholder authorizes his or her employer to deduct amounts from the employee's earnings to cover the premium.

PERIL

The cause of a loss. Examples of perils are fire, wind, accidents, and acts of vandalism.

PERSONAL INLAND MARINE INSURANCE (PERSONAL ARTICLES FLOATER)

Worldwide coverage on an all-risk basis subject to certain exclusions for scheduled valuable personal property.

POLICY

A formal written contract of insurance.

POLICY ANNIVERSARY

Date on which an insurance policy must be renewed for it to remain active.

POLICY HOLDER

The party to whom a policy is issued and who agrees to pay a premium to an insurer in exchange for the latter's insurance protection.

PREMISES

The building insured or containing the insured property. Depending on policy conditions, it may also include an adjacent area.

PREMIUM

The amount a policyholder agrees to pay the insurance company for an insurance policy.

PROPERTY DAMAGE

Physical damage to, destruction of, or loss of use of tangible property.

PROPERTY INSURANCE

First party insurance of real and personal property against physical loss or damage.

PROTECTION

Coverage afforded by an insurance contract.

RATE

The cost of insurance per unit; used as a base for the determination of premiums.

REAL PROPERTY

All buildings; also known as real estate.

REINSTATEMENT

When coverage is put back into effect for a policy that has been suspended or cancelled for part of a policy term.

RENEWAL

A policy issued to replace one that has expired.

REPLACEMENT COST

This is the amount of money it would cost to replace the property with property of the same quality and construction. No deduction is made for depreciation or obsolescence.

RESIDENCE EMPLOYEE

An employee of an insured whose duties are related to the maintenance or use of the insured residence premises.

RESIDENCE PREMISES

Principal residence of the named insured.

SCHEDULED PROPERTY

Insuring higher-value personal property for a stated value with an appraisal showing current worth for an additional premium. This is usually written for valuable items that are subject to coverage limitations on a homeowners’ policy or are unique in nature and cannot be reproduced or replaced in the event of a loss.

TENANTS' POLICY

A form of homeowner policy sold to person(s) who rent their living quarters.

TOTAL LOSS

Loss to the insured of the entire value of goods or other property insured, or a loss entailing the payment of the full face amount of an insurance contract.

UNDERWRITING

A process that evaluates an applicant and their property against pre-established criteria for insurability to determine whether the applicant will be accepted or rejected for coverage and what rate may apply.

ADDITIONAL INTEREST

An individual or organization covered by an insurance policy, other than the named insured, that has an insurable interest. Examples of this would be a lien holder, leasing company, or a co-signer on your car. They should be listed under Additional Interests on your policy to protect their financial interest in the event of a loss.

APPRAISAL

A survey by a Claims Representative or Claims Appraiser estimating the amount of damage to a vehicle and either the cost to repair or the determination of a complete loss. You will also need an appraisal to write a stated value policy on your antique or classic auto.

ASSIGNED RISK PLAN

An association of insurers in a state in which automobile risks that are unable to get insurance in the voluntary market are shared among insurers in proportion to the amount of automobile liability insurance each insurer writes in that state. All companies writing this class are required to participate in this activity.

AUTO LOAN / LEASE COVERAGE (GAP COVERAGE)

Provides coverage, in case of a total loss, for the 'gap' between the amount due under the terms of the vehicle's loan/lease and the actual cash value of the vehicle at the time of the loss. Please note there are vehicle eligibility requirements and the coverage may not be available from your carrier.

BASIC LIMITS

The lowest coverage amount, as required by law or the company, for which an insurance policy can be written. Basic Limits primarily refer to limits of liability.

BODILY INJURY

Injury to the body of a person. In insurance, people often refer to Bodily Injury as the coverage afforded for financial protection against injury of a person resulting from an accident.

CANCELLATION

Termination of an insurance contract before its expiration date by either the insurance company or the policyholder.

COLLISION INSURANCE

Collision insurance covers a loss to the insured's vehicle caused by its impact with another vehicle or object or overturn of insured vehicle.

COMPREHENSIVE COVERAGE

Comprehensive insurance protects against any loss or damage to an automobile except those caused by collision or by upset. Examples are coverage against fire, theft, vandalism, and glass replacement.

COMPULSORY AUTO INJURY LAWS

Laws which make it illegal to operate a vehicle without first having proof of the ability to pay for a judgement that may result from an accident.

COVERED AUTOS

Any vehicle shown in the declarations, or, in some cases, a substitute vehicle used temporarily because of breakdown or repair of the insured's own covered vehicle.

DAMAGES

A sum of money that a party is legally obligated to pay to another as compensation for injury or property damage.

DECLARATIONS

The part of the policy that provides detailed information about the insured, the insurer, and the coverages.

DEDUCTIBLE

The amount of a claim that the policyholder has agreed to pay. This amount is deducted from a claims payment.

DEPRECIATION

A decrease in an automobile's value over time.

EFFECTIVE DATE

The date the coverage begins on an insurance contract (policy).

ELECTRONIC EQUIPMENT ENDORSEMENT

Provides coverage for your covered autos' permanently installed electronic equipment or electronic equipment designed to be permanently installed but can be removed as an anti-theft measure. This endorsement also covers direct and accidental loss to any accessories used with such equipment. There are eligibility requirements for this coverage and this coverage may vary in your state.

EMPLOYER'S NON-OWNED AUTO LIABILITY

Liability faced by the employer when an employee uses his or her own personal vehicle on company business.

ENDORSEMENT

An amendment to your policy written especially to cover unique items just for you. An endorsement is also a change to your policy that is made during the policy's term. An endorsement is attached to your policy to modify the terms of the insurance contract.

EXCLUSION

Part of an insurance contract that excludes coverage of certain perils, persons, property, or locations.

EXPIRATION DATE

The ending date of an insurance contract (policy).

FINANCIAL RESPONSIBILITY CLAUSE

Financial Responsibility ensures that a policy conforms to the financial responsibility laws of any state or Canadian province in which the insured's vehicle operates.

GLASS INSURANCE

Coverage for accidental or malicious breakage to glass.

GROSS VEHICLE WEIGHT (GVW)

As it applies to auto coverage, this is the total of the combined weight of the vehicle itself plus the weight or tonnage the vehicle is capable of carrying.

INSURED

A person or entity who will be compensated for loss by an insurer under the terms of a contract called an insurance policy.

INSURER

The company that issues a policy to a policyholder; the party in the insurance contract that promises to pay losses and render services.

LIABILITY

This coverage pays for bodily injury or property damage you become legally responsible for as a result of driving your vehicle. Family members living with you who are listed with the insurance company as drivers on your policy and anyone driving your car with your permission will be covered by the liability coverage for injuries or property damage you or they become legally responsible for while driving your vehicle.

MEDICAL PAYMENTS INSURANCE

An optional coverage under an automobile liability policy which pays the medical expenses of the policyholder and any of the passengers injured by the insured automobile, irrespective of who was responsible for the accident. In addition, it pays the medical expenses of the policyholder and members of the immediate family if they are injured while being passengers in any other automobile or when struck by an automobile.

MUTUAL INSURANCE COMPANY

A company with no capital stock that is owned and controlled by policyholders.

NAMED INSURED

The person or entity designated in the policy as the insured and shown on the declarations page, as opposed to someone who may have an interest in a policy but is not shown by name.

NO-FAULT INSURANCE

In certain states, No-Fault insurance permits automobile accident victims to be directly reimbursed for medical and hospital expenses and loss of income by their own insurance company regardless of who is at fault.

NON-OWNED AUTO

Liability coverage an employer is exposed to when an employee is driving another employer's auto or an employee's personal auto.

OCCURRENCE

An accident or loss, including continuous or repeated exposure to the same general harmful conditions, resulting in bodily injury or property damage.

PARTIAL LOSS

A loss that does not completely destroy the insured automobile that is covered by an insurance policy.

PAYROLL DEDUCTION

The policyholder authorizes his or her employer to deduct amounts from the employee's earnings to cover the premium.

PERIL

The cause of an accident, loss, or claim.

PERSONAL INJURY PROTECTION (PIP)

May also be referred to as No-Fault insurance. In certain states, this provides insurance that can cover for medical costs, loss of earnings, additional living expenses, and funeral costs for occupants of the insured automobile and pedestrians, other than those insured under other policies.

POLICY HOLDER

The party to whom a policy is issued who agrees to pay a premium to an insurer in exchange for the latter's insurance protection.

PREMIUM

The amount a policy holder agrees to pay to the insurance company for an insurance policy.

PROPERTY DAMAGE

Damage to tangible property. In insurance, Property Damage is the coverage afforded for financial protection against damage to another’s property resulting from an accident.

RATE

The cost of insurance per unit; used as a base for the determination of premiums.

RATING BUREAU

A state-supervised organization that classifies and computes rates, gathers data, and measures individual risk hazards. This information is made available to all insurance companies who are members of such a bureau.

RECOVERY

Money or other valuables the insurance company obtains through subrogation, salvage, or reinsurance.

REINSTATEMENT

When coverage is put back into effect for a policy that has been suspended or cancelled for part of a policy term.

RENEWAL

A policy issued to replace one that has expired.

RENTAL REIMBURSEMENT

Rental reimbursement coverage is optional. If you must rent a car because your own car was out of service due to a covered loss, rental coverage pays you back for money you spent on your rental car (up to a specific limit you select). Be sure to review your policy for any restrictions which may apply such as a maximum dollar amount allowed per claim or specific time limitations, among other items.

SAFE DRIVER PLAN

A system for adjusting standard rates up or down according to good or bad driving records of the insureds.

SUBROGATION

When your insurance company pays for a loss caused by another driver, your company may have the right by law or policy provision to recover an amount of the loss from the other person or their insurer.

TOWING / LABOR

Towing is an optional coverage. It pays the cost of having your car towed and on-site road repairs (up to a specific limit you select) each time your car breaks down (whether or not there is an accident involved). You are covered for the on-site labor costs at the breakdown site (not any additional parts) needed to get your car running again. Be sure to review your policy for any restrictions which may apply such as maximum dollar amount allowed per claim or specific time limitations, among other items.

UNDER-INSURED MOTORIST

This covers your property damage and personal injury caused by another party, when the amount of damage exceeds the other party’s liability limits. This coverage will pick up after the other party’s liability limit is exhausted.

UNDERWRITING

A process that evaluates an applicant and their automobiles against pre-established criteria for insurability to determine whether the applicant will be rejected or accepted for coverage and whether at standard or modified rates.

UNINSURED MOTORIST

This covers your property damage and personal injury in the event you're hit by an uninsured motorist.

UNINSURED MOTORIST PROPERTY DAMAGE

This covers you for damage to your car if someone hits you and doesn't have any or enough liability coverage to repair or replace your car. This coverage is not available in all states. Limits vary in the states that write coverage and sometimes a deductible may apply. It also covers you for hit-and-run accidents.

ACTUAL CASH VALUE (ACV)

An amount equal to the replacement cost of lost or damaged property at the time of loss, minus depreciation.

ADDITIONAL INSURED

An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to obtain additional insured status. The named insured's reason for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).

ADDITIONAL NAME INSURED

An individual or entity, other than the first named insured, that is identified as an insured in the policy declarations or an addendum to the policy declarations. Such an individual or entity would have the same rights and responsibilities as an individual or entity named as an insured in the policy declarations (other than those rights and responsibilities reserved for the first named insured only).

AGREED AMOUNT ENDORSEMENT

This endorsement is an agreement made by the insurance company that waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.

ALL-RISK INSURANCE

Insurance against loss or damage to property from any cause, except those specifically excluded. Most often associated with property coverage.

ANNUAL AGGREGATE

The total dollar amount that can be paid under a policy during a one-year period.

BAILEE

An individual or business that has been given temporary custody of another's property for the purpose of providing a service.

BINDER

An oral or written agreement to provide insurance. It is often considered a temporary insurance policy until a permanent policy has been issued.

BLANKET INSURANCE

A single amount of insurance covering several items.
Blanket insurance can provide coverage under a single limit for the following:

- Two or more items (building or contents)
- Two or more locations (location A and location B)
- A combination of items and locations

BOILER INSURANCE

Also known as equipment breakdown or mechanical breakdown coverage. Boiler Insurance provides protection for losses caused by the disruption of boilers and other types of machinery by an insured cause of loss, consisting of loss to the boiler and machinery, damage to other property, business interruption losses, or all three.

BUILDERS' RISK COVERAGE

Provides property insurance for buildings in the course of construction. Depending on the policy, this coverage can be for either the building's value at the time of loss or its full value at the time of completion.

BUILDING ORDINANCE COVERAGE

(See Ordinance or Law Coverage)

BUSINESS INTERRUPTION INSURANCE

Coverage for the loss of earnings as a result of the damage to or loss of business property. In addition to net profits that would have been earned during the period of interruption, reimbursement for salaries, taxes, rents, and other expenses can be included.

CERTIFICATE OF INSURANCE

A document which serves as evidence of the types of coverage, amounts of coverage, and policy effective dates that have been purchased by the insured.

CERTIFICATE HOLDER

The individual or business that receives the certificate of insurance. The certificate holder is usually listed on the certificate of insurance.

CLAIMS-MADE POLICY

A policy providing coverage that goes into effect when a claim is made against the insured during the policy period, regardless of when the event related to the claim occurred. (See Occurrence Coverage for comparison.)

COINSURANCE

In property insurance, this is policy provision requiring the insured to maintain insurance that is at least equal to a certain percentage of the property’s value in order to collect partial losses in full. If the limit of insurance is less than the amount required by the coinsurance percentage, then the amount paid for a partial loss is reduced by a proportionate amount.

CRIME COVERAGE

This coverage includes various types of crimes and protects against loss of money, securities, and other property by causes of loss such as employee dishonesty, forgery, theft, burglary, robbery, kidnapping, extortion, and fraud.

DEBRIS REMOVAL COVERAGE

Covers the cost of removing debris after damage from fire or other covered perils that must be removed before reconstruction of the damaged building can begin.

DIFFERENCE IN CONDITIONS (DIC) COVERAGE

DIC Insurance provides coverage designed to close specific gaps in standard insurance policies and is usually available only for larger industrial or commercial risks. It allows coverage to be customized for the insured to extend to such exposures as water damage, flood, collapse, earthquake, and landslides. DIC coverage may be provided by means of a separate insurance policy or it may be added by endorsement to the basic policy.

ELECTRONIC DATA PROCESSING COVERAGE

Coverage for computer equipment, software, and data, as well as some other types of electronic equipment. Typically includes coverage for property that is especially susceptible to liabilities such as mechanical breakdown, electrical injury, and changes in temperature and humidity.

EMPLOYEE BENEFITS LIABILITY

Protects the insured employer against claims by employees or former employees resulting from allegations of negligent acts or omissions during the course of administering the insured’s employee benefits programs.

EMPLOYEE DISHONESTY COVERAGE

Employee dishonesty coverage protects an employer from financial loss due to the fraudulent activities of one or more employees. The coverage includes protection for loss of money, securities, and other property of the insured.

FIDELITY BONDS

Provides coverage that reimburses an employer for losses resulting from the dishonest acts of employees.

FIDUCIARY LIABILITY COVERAGE

Fiduciary Liability, also known as Pension Trust Liability, provides coverage for loss the insured is legally liable to pay because of a claim made against them for any allegedly wrongful act by the insured or any other person for whom the insured is legally responsible. It also covers the defense costs in connection with a covered claim. The policy is generally written on a claims-made form. A wrongful act includes any violation of responsibilities, obligations, or duties imposed on fiduciaries by the Employee Retirement Income Security Act (ERISA), as well as acts, errors, or omissions in the performance of the duties of the plan administrator.

FORGERY OR ALTERNATION COVERAGE

Insurance that covers losses sustained through forgery or alteration of outgoing negotiable instruments made or drawn by you, drawn on your account(s), or made or drawn by one acting as your agent. This includes loss caused by any of the following:

- Checks or drafts made or drawn in your name, payable to a fictitious entity
- Checks or drafts, including payroll checks, executed through forged endorsements
- Alteration of the amount of a check or draft

GARAGE KEEPER'S LEGAL LIABILITY

Provides coverage for owners of service stations or parking lots for liability related to damage to automobiles left in their custody.

GENERAL AGGREGATE LIMIT

The total amount an insurance policy will pay regardless of the number of claims made against it in a single policy period.

GLASS COVERAGE

This provides coverage for breakage of glass, such as store and office windows.

INDEPENDENT AGENT

An insurance agent who is affiliated with more than one insurance company. An independent agent is able to compare polices from several insurance carriers for the best plan for a particular insured.

INLAND MARINE INSURANCE

Provides coverage to businesses for property that is mobile in nature or requires unique valuation. Many types of property are covered, including those related to construction, transportation, fine art, and communications.

INSURANCE FRAUD

Insurance fraud is any act or omission with the purpose of illegally obtaining a property and casualty insurance benefit. This definition encompasses the full range of fraudulent acts, from completely fabricated claims, to inflation or padding of legitimate claims, to false statements on insurance applications, to internal fraud.

LIQUOR LIABILITY

Liquor liability insurance provides coverage for bodily injury or property damage for which an insured may be held liable by reason of the following:

- Causing or contributing to the intoxication of any person
- Furnishing alcoholic beverages for a person under the legal drinking age or under the influence of alcohol
- Violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages

LOSS CONTROL

The steps and processes to reduce, eliminate, or control the frequency and severity of potential losses. Loss control is also referred to as safety engineering, accident prevention, accident control, or loss prevention.

LOSS OF LEASE INCOME OR VALUE

Coverage for the loss of income when rental property is damaged or destroyed. It also covers the loss of value when the owner of the rental property has rented some of its property to businesses. If the tenant of the destroyed or damaged building is forced to rent space elsewhere at a higher cost, this is called loss of lease value.

NAMED PERILS POLICY

An insurance policy which covers only defined perils or causes of loss. This is the opposite of an all-risk policy, which covers all perils except those specifically excluded.

NEGLIGENCE

Failure, under the given circumstances, to use the degree of care that would be used by an ordinary person of reasonable prudence. Negligence may be constituted by acts either committed, omitted, or both.

OCCURRENCE POLICY

A policy providing coverage for injury or loss that occurs during the policy period, regardless of when the claim is made. For example, a claim made after the expiration of a policy would be covered if the injury or loss occurred during the time the policy was in force. (See Claims-Made Coverage.)

ORDINANCE OR LAW COVERAGE

Coverage for the additional cost to rebuild or replace property after a loss due to the enforcement of ordinances or laws regulating construction or repair of damaged buildings. Older, damaged structures may need to be upgraded based on local or state building codes. Many communities have a building ordinance stating that when a building is damaged to a specified extent (usually 50%), it must be completely demolished and rebuilt in accordance with current building codes rather than repaired.

PERIL

The cause of a loss. Examples of perils are fire, wind, accidents, and acts of vandalism.

POLLUTION CLEANUP AND REMOVAL COVERAGE

Coverage that applies to your expense in extracting pollutants from land or water at your location if the release of the pollutants is caused by or results from a covered loss.

PRODUCTS LIABILITY COVERAGE

Products Liability Coverage refers to the liability for bodily injury or property damage incurred by a merchant or manufacturer because of a defect in the product sold or manufactured.

PROFESSIONAL LIABILITY INSURANCE

Insurance that protects professionals for loss or expense resulting from claims of mistakes, errors, or omissions allegedly committed by the insured in his or her professional activities.

REPLACEMENT COST

This is the amount of money it would cost to replace the property with property of the same quality and construction. No deduction is made for depreciation or obsolescence.

RETROACTIVE DATE

The date on a claims-made policy that triggers the beginning period of coverage prior to the effective date. A retroactive date is not required. If one is shown on the policy, any claim made during the policy period on a loss that occurred before the retroactive date will not be covered.

SURPLUS LINES TAX

A tax paid by the insured on insurance placed with surplus lines carriers. It is collected by the agent and paid to the state.

UMBRELLA LIABILITY POLICY

A liability policy designed to provide liability protection above and beyond that provided by the primary policies.

WORKERS' COMPENSATION

Protection which provides medical expenses and lost wages benefits to employees for any injury or contracted disease arising from their employment.