By Travelers Insurance
Trying to understand how your small business insurance works, but having trouble with the language? We understand. Here are some of the more important terms to help you understand your policy.
Endorsement/Rider: Additional protection purchased in addition to your core business owners policy (BOP). You can use riders to add extra features to your policy.
Insurance Agent: Someone who sells insurance policies from one or more insurance companies.
Insured: The person or business, including employees and others, covered by an insurance policy.
Policy: A written contract, between the insurer and policyholder, that lays out the conditions of your insurance.
Premium: What you pay to your insurance company in exchange for coverage.
Quote: An initial estimate of how much your insurance will cost. The actual premium could be different.
Underwriting: A process where the insurance company reviews and evaluates your risks to decide whether you qualify for coverage, and at what premium.
Using Your Small Business Insurance
Appraisal: A professional estimate of the value of your property. The insurance company may require an appraisal during underwriting, or after you file a claim to calculate how much to pay for your loss.
Certificate of Insurance: A document that shows you have insurance and lists the types of policies you hold. It will also list the dates noting how long your coverage is in force.
Claim: When you notify your insurance company of a loss and request that they provide coverage that is covered by your policy.
Deductible: If you have a loss, this is the amount you’ll be required to pay before your insurance will start paying to cover a loss. For example, if you have a $2,000 deductible, you need to pay the first $2,000 of any loss before your insurance will pay out on a claim.
Grace Period: If you miss a premium payment, your insurer may give you a set amount of time (the grace period) to catch up before the policy is canceled.
Lapse: When your insurance policy has a gap in coverage, typically caused by a policyholder failing to pay the premiums to maintain the policy.
Loss: The financial cost of an incident, like damage to your car after an accident or a lawsuit from an upset client. Your insurance company may pay to cover the loss according to the conditions laid out in your policy.
Actual Cash Value (ACV): The value of an asset after depreciation is factored in. Some insurance policies only cover the actual cash value of property after a loss. For example, the value of damage to a 5-year-old car will be less than that of a brand-new car due to depreciation from time and wear-and-tear.
Depreciation: Wear and tear on property, like a car or equipment. Over time, these assets become less valuable because of the depreciation.
Exclusion: A situation where your insurance policy will not cover damages.
Named Peril Policy: An insurance policy that only covers the situations listed in the policy. Losses from anything else will not be covered.
Peril: Something that causes a loss. Fires, hurricanes and theft are examples of perils. It’s important to understand exactly which perils your coverage covers.
Policy Limit: The maximum amount your insurance will pay for a loss. The insurance company will not pay beyond the policy limit, even if your loss total was more than that.
Primary Policy: If you have multiple insurance policies covering the same situation, the company holding the primary policy will generally lead the claims handling process.
Replacement Value: The cost to replace damaged property. If a piece of equipment breaks, you likely will need to buy a brand-new one. A policy that covers replacement value will pay for this full cost, even if the actual value of your property is lower because of depreciation.
Types of Small Business Insurance
Business Interruption Insurance: If you have to temporarily close your business, such as to make repairs after a fire, business interruption insurance covers lost income and ongoing expenses. This way, you can pay your bills during a time when you might not be earning income.
Business Owners Policy (BOP): This covers a broad range of property and liability risks. It can help protect your business in case of things like fire (property damage), suspended operations (business income) or lawsuits (liability) resulting from bodily injury, property damage, personal injury or advertising injury.
Commercial Auto: Insurance that covers driving a vehicle for your business. Your personal auto insurance policy may not cover losses from business use. A commercial auto policy covers physical damage and liability protection for vehicles registered to your business.
Cyber Insurance: This can be essential in helping your company recover after a data breach. This includes costs such as the disruption of your business, revenue loss, equipment damages, legal fees, public relations expenses, forensic analysis and costs associated with legally mandated notifications.
Liability Insurance: Liability insurance covers your legal defense costs and judgments if you are responsible (liable) for damages to someone else and could be sued.
Premises: The location or property, building(s) or land owned by the policyholder for example, that insurance coverage will apply to.
Professional Liability Insurance: Insurance that covers damages that come because of mistakes in your work, such as if you mishandle tax planning for a client, or poorly design a product. This is also known as errors and omissions insurance.
Umbrella Insurance: Insurance that covers losses that are higher than the policy limits on your other insurance plans. Once your other policy has paid to its limit, the umbrella insurance could cover any remaining costs.
Waiver of Subrogation: This prevents your business and your insurance company from seeking a share of any damages paid to a third party responsible for the loss for a paid claim.
Workers Comp Insurance: Insurance that covers your employees in case they get hurt on the job. These policies pay employee medical bills and replace their income when they are disabled from a workplace injury. The rules vary by state.
Industries we specialize in at The Huttenlocher Group:
Automotive Manufacturing Insurance
Tool & Die Insurance
Staffing Agency Insurance
Food and Agriculture Insurance
Freshwater Technology and Services Insurance
Cannabis Facility Insurance
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