The glossary

An insurer licensed by a state's insurance department to write business there. Its rates and forms are generally filed with the state, and its policies are backed by the state guaranty fund.

The most a policy will pay for all covered claims during the policy period, as opposed to the per-occurrence limit, which caps any single claim.

Property coverage that replaces lost net income and pays continuing expenses while a business is shut down or slowed by covered physical damage.

A package policy for small and mid-sized businesses that combines property, general liability and business income coverage in one policy, at one premium.

The written notice an insurer must send before ending a policy mid-term. State law sets the reasons allowed, how many days' notice, and who must receive it.

Two ways a liability policy decides which year's coverage applies: occurrence policies cover injury that happens during the term; claims-made policies cover claims first made during the term.

A numeric code that describes a business's operations for rating. Workers comp uses bureau codes (such as NCCI's); general liability uses ISO or carrier codes. They aren't interchangeable.

A LexisNexis database report of a person's or property's past auto and home insurance claims, which insurers check when quoting personal lines.

A property policy condition that reduces a claim payment if the building or contents are insured for less than a set percentage, often 80% or 90%, of their value.

A single policy combining two or more commercial coverage parts, such as property, general liability and inland marine, each with its own forms and rating.

A bonus a carrier pays an agency on top of base commission, usually based on the profitability, growth or volume of the business the agency placed with it.

Earned premium is the part of a policy's premium for coverage already provided; unearned premium is the part for time remaining, which is refundable if the policy cancels.

A workers comp rating factor that compares an employer's actual losses with the losses expected for its class and size. Below 1.00 lowers premium; above 1.00 raises it.

A minimum-premium workers comp policy for an owner-only business that excludes the owner, so it covers no one today but provides a certificate for contracts.

Liability coverage for a business when employees drive rented, leased or borrowed vehicles, or their own cars, on company business.

Property coverage for things that move or don't fit a building policy: contractors' equipment, tools, goods in transit, installation work and similar property.

A party, usually a lender or lessor, named on a property or auto policy to receive claim payments for property in which it has a financial interest.

The share of a policy's premium the insurer keeps no matter when the insured cancels. Common on E&S policies, often 25% or more.

A state DMV report of a driver's license status, violations, accidents and suspensions, which insurers use to rate and underwrite auto policies.

The person or organization shown on the declarations page as the policyholder. The named insured has the broadest rights and duties under the policy.

Comparing an issued or renewed policy against the application, quote, binder and prior policy to catch carrier errors before the client finds them at claim time.

Contract wording that requires your client's policy to pay first for an additional insured, without asking the additional insured's own insurance to share the loss.

Two ways property claims are valued: replacement cost pays to repair or replace with like kind and quality; actual cash value deducts depreciation.

The part of a general liability application or policy that lists each location, classification code, exposure basis (such as sales or payroll) and rate used to calculate premium.

An amount the insured must pay itself, including defense costs, before a liability policy responds. Unlike a deductible, the insurer doesn't pay first and seek reimbursement.

A cancellation where the insurer keeps more than the pro-rata share of premium, as a penalty, usually when the insured cancels mid-term.

A schedule listing each insured location's building, contents and business income values, plus construction details, used to set property limits and price the risk.

Both add liability limits above underlying policies. An umbrella can also cover some claims the underlying policies don't; an excess policy usually follows the underlying terms only.

A policy provision or endorsement in which the insurer gives up its right to recover a paid claim from a third party, usually because a contract requires it.

The expiration date of a prospect's current policy. Agencies track X-dates to time their outreach so they can quote before the renewal.