Insurance Terms & Coverage Definitions
Admitted Carrier(licensed insurer):
Is licensed in the State(and/or any other particular State), subject to that State's insurance code governing such aspects as company reserves and advertising.
Non-Admitted Carrier(non-licensed insurer):
Is not licensed to do business in the state where the risk is located, but can nevertheless write coverage through an excess and surplus lines broker that is licensed in these jurisdictions. Their unlicensed status also enables them to avoid assessment in connection with state guaranty funds, thus you have no guaranty fund protection.
Accounts Receivable:
Covers the money you are unable to collect from your customers because of the records such as invoices, ledgers, and credit card slips having been lost, damaged or destroyed.
Automobile:
Covers your legal liability to others for bodily injury or property damage, medical payments, uninsured motorists, and physical damage for autos, trailers or semi-trailers owned, leased, rented or hired by you.
Boiler & Machinery/Equipment Breakdown:
Covers you from the unexpected mechanical or electrical breakdown of nearly any type of equipment on your premises as well as any resulting loss of income and extra expense, usually not covered in a standard property insurance policy. Equipment includes refrigerating, heating and air conditioning systems, computerized equipment including production machinery, photocopiers, transformers or electrical apparatus/panels.
Building:
Covers your buildings or structures, completed additions, fixtures (including outdoor fixtures), permanently installed machinery and equipment, and personal property used to service or maintain the building, structure or its premises.
Tenants' Improvements & Betterments:
Covers permanent additions or changes made to a building you rent at your own expense that may not legally be removed. (If insured under Building rather than Business Personal Property, normally the rates would be significantly lower and the settlement would be actual loss vs. prorated based on the remaining term of the lease contract.)
Builder's Risk:
Covers the direct and indirect property exposures associated with your construction project without creating the coverage overlaps that would occur if each contractor tried to insure only its risk.
Business Income:
Cover the net income or loss before income taxes that you would have earned or incurred had there been no loss, plus reimbursement for continuing expenses, including payroll that are actually incurred.
Business Personal Property:
Covers your moveable business personal property that is in the building or within 1,000 feet of the premises, including the personal property waiting for installation, the personal property of others in your care, custody and control, to the extent of the legal liability required, leased personal property, to the extent of any contractual obligation required by the lease, your stock which includes raw materials and in-process or finished products, as well as any packing or shipping materials, .but excluding Computer Equipment (Best covered with a separate Electronic Data Processing Equipment (EDP) Policy as defined below.)
Claims-Made and Reported Policy:
A type of claims made policy in which a claim must be both made against the insured and reported to the insurer during the policy period for coverage to apply. Claims-made and reported policies are unfavorable from the insured's standpoint because it is sometimes difficult to report a claim to an insurer during a policy period if the claim is made late in that policy period. However, more liberal versions of claims-made and reported policies provide post-policy "windows" which allow insureds to report claims to the insurer within 30 to 60 days following policy expiration.
Computer Fraud:
Covers you against theft of money, securities, or property by using a computer to transfer covered property from your premises or banking premises but does not include transfer to a messenger. (There is no coverage for theft of information or for computer vandalism.)
Contractor's Equipment Floater:
Covers mobile equipment not licensed for road use, machinery and tools owned, leased or rented by you, regardless of its location, used in connection with your installation/construction activities. Valuation is actual cash value, subject to an 80% coinsurance requirement. (Coverage does not apply to contractors' equipment that's been leased or rented to others.)
Deductible:
Differs from a self-insured retention in that the dollar amount specified in the policy will be subtracted from the amount of loss and will counts against the limits of the policy.
Directors' & Officers' Liability (D&O):
Covers the personal assets of your corporate directors and officers as well as the financial well being of your company itself against claims, most often by shareholders, employees but even competitors, suppliers and customers, alleging financial loss arising from mismanagement.
Earned Premium (EP):
The amount of the premium that as been paid for in advance that has been "earned" by virtue of the fact that time has passed without claim. A three-year policy that has been paid in advance and is one year old would have only partly earned the premium.
Employer's Liability (EL):
Covers against the common law liability of an employer for injuries to employees, as distinguished from the liability imposed by the workers' compensation laws, subject to the exclusions and conditions of the policy.
Employee Dishonesty:
Covers your financial loss due to employee theft of money, securities, or property.
Employment Related Practices (EPL):
Covers lawsuits by your employees (past or present) alleging wrongful discharge, discrimination, sexual harassment and other workplace torts. (Acts outside of employment are excluded)
ERISA Bond:
Covers those individuals who handle funds of your employee benefit plans against acts of fraud or dishonesty. (The amount of the bond shall not be less than 10% of the amount of funds handled the previous year, up to a maximum of $500,000.)
Exclusions:
Items or conditions that are not covered by the general insurance contract.
Fiduciary Liability:
Covers your fiduciaries and the plan itself with respect to errors and omissions in the administration of your pension and employee benefit plans as imposed by the Employee Retirement Income Security Act (ERISA) and by common or statutory law.
Forgery or Alterations:
Covers your loss due to dishonesty in writing, signing or altering checks, bank drafts, and other financial instruments by someone other than an employee or owner. (Loss due to employee dishonesty is excluded, which can be covered separately with an Employee Dishonesty Bond.)
General Liability:
Covers your legal liability to others (third parties) for bodily injury (BI), property damage (PD), products-completed operations, or personal and advertising injury, but excludes Punitive Damages, Professional, Pollution, and Auto claims. (These exposures are better insured elsewhere by other types of liability policies.)
Indemnity (Hold Harmless) Agreement:
Requires one contracting party to agree to indemnify the other party by third parties not involved in the contractual agreement for certain liabilities arising out of the performance of the contract. Limited Form - Agreement obligates the indemnitor only to the extent of its own fault. Intermediate Form - The indemnitor assumes all liabilities of the indemnitee, except where the injury or damage is caused by the indemnitee's sole negligence. Broad Form - The indemnitor assumes an unqualified obligation to hold t he indemnitee harmless for all liabilities even if the injury or damage is due to the sole negligence of the indemnitee.
Installation Floater:
Covers the work and materials put in by you at an installation/construction site before the work is accepted as complete by the purchaser or until your interest ceases, whichever comes first, plus while in transit, and in temporary storage.
Key Person Life Insurance:
Covers your company against the financial hazards of losing an owner, officer, director or key person in the business.
Kidnap and Ransom:
Covers your company with financial protection in the event of a kidnapping or extortion crisis.
Money & Securities:
Cover you against loss by theft disappearance or destruction of money & securities inside/outside of your premises, bank?s premises, or while in the custody of a messenger.
Monopolistic Fund States:
Means those states where employers must obtain statutory workers compensation insurance from compulsory state funds or qualify as a self-insurer.
Notary Public E&O:
Covers losses due to innocent errors or omissions of your in-house notary pubic.
Occurrence:
Covers an incident occurring while the policy is in force regardless of when the claim arising out of that incident is filed - 1 or more years later (contrast with claims-made insurance).
Rental Cost Reimbursement:
Covers the cost of renting temporary replacement equipment in the event of covered damage to covered equipment.
Residual Wrap-Up(available but normally expensive):
Preserves your own liability insurance as excess over that provided in the wrap-up to pick up losses that are excluded under the wrap up policy.
Self-Insured Retention:
Differs from a deductible in that you must first pay the dollar amount specified in the policy out of your own pocket before insurance will hire an attorney, defend against or settle a clam in addition counts against the total limits of the policy.
Special Cause of Loss Form:
Covers loss from all causes except as limited or specifically excluded in the policy, such as earthquake and flood (can be covered by a separate Difference In Conditions (DIC) Insurance Policy).
Stop Gap Liability:
Provides Employers Liability coverage for work-related injuries arising out of your incidental operations or exposures in monopolistic fund states North Dakota, Washington, West Virginia, Wyoming, Puerto Rico and U.S,. Virgin Islands.
Third Party Insurance:
Bodily Injury covers damages due to bodily injury (including mental anguish, humiliation or shock), sickness, or disease (including resulting death). Property Damage covers both physical injury to tangible property and any resulting loss of use. Personal Injury covers certain non-bodily injuries such as libel, slander, defamation of character, false arrest, and similar offenses. Completed Operations covers claims for injury or damage arising from a defect in such projects following the completion of construction.
Third Party Over Action Against Workers' Compensation Employer:
Covers the upper tiers such as the project owner by way of an indemnification agreement in which you agreed when an injured employee of yours, after collecting workers compensation benefits from you, sues the project owner for contributing to his or her industrial injury who turned the suit over to you by prior agreement.
Transit:
Covers your property while in transit over land from one location to another by your own vehicle or common carrier (other than to and from the installation/construction site covered under a separate Installation Floater Policy).
Travel Accident:
Pays your employees or their beneficiaries for injury occurring during the course of their travel anywhere in the world, in addition to workers? compensation benefits (option to cover all employees or specific classes of employees).
Umbrella/Excess Liability:
Covers claims in excess of the limits of the primary (underlying) liability policies; drop down when underlying limits are reduced or exhausted by payment of claims; and cover certain areas that are not covered by underlying insurance, subject to the assumption, by you the named insured, of a self-insured retention.
Utility Services or "Off Premises Power Coverage":
Covers your property, business income or extra expense loss due to lack of incoming electricity caused by damage to the utility generating station away from your premises.
Valuable Papers & Records:
Covers the cost to reconstruct your business documents that have no duplicates, including but not limited to blue prints, customer lists, agreements, contracts, mailing lists, accounting and personnel records, except money or securities; data processing programs, data, and media available elsewhere by separate coverage.
Valuations for Property (at the time of loss):
Replacement Cost covers the cost to replace it today with property of like kind and quality without deduction for depreciation. Actual Cash Value covers replacement cost less accumulated depreciation for age and condition of the damaged property. Selling Price on finished stock covers profit in addition to the replacement cost.
Waiver of Subrogation:
Prohibits one party's insurer from bringing suit (or subrogating) against another party once a loss has been paid.
Workers' Compensation Experience Modifier:
Means a factor developed by measuring the difference between your actual past experience and the expected loss experience of your industry. This factor may be either a debit or a credit. For example, an employer with an 80% mod would be expected to incur less than the average amount of losses for the industry during the coming policy year; a 120% mod is greater than the average for that industry. The ex-mod is calculated using data reported to the WCIRB in accordance with the ERP.
Wrap Up:
Is an insurance program that "wraps up" certain insurance, safety and claims management strategies into a seamless, cost effective program, which protects the owner and all the participants in the construction project.