Insurance Definitions,
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Business Insurance Terms & Definitions

Insurance Definitions, Dictionary And Glossary

Insurance Definitions, Dictionary And Glossary. This page provides a glossary of insurance terms and definitions that we use in our Small Business Insurance FAQs.

These definitions represent a common use of the commercial insurance definition or term. Some words and phrases can be defined differently by other organizations.

We wanted to provide reference for small business insurance terms to help our readers get a better understanding of the commercial insurance policies they want and need with the Insurance Definitions, Dictionary And Glossary.

Read the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.

Insurance Definitions, Dictionary And Glossary By Policy Type

Following are terms and definitions used, organized by type of commercial policy.

Package Policies Definitions

ARTISAN CONTRACTOR BUSINESSOWNERS POLICY (BOP) is a "homeowners" approach to packaging insurance for businesses. When an amount of insurance on building and/or contents is selected, it automatically includes a broad range of additional coverages for an indivisible package premium. For eligible risks, the policy provides an alternative to the commercial package policy (CPP). This package is designed for small and medium-sized artisan contractor operations and offers the convenience of comprehensive protection for an indivisible premium determined by the amount of property coverage provided.

For smaller operations, a BOP is generally more desirable than a CPP. Some coverages automatically included are debris removal, automatic increase in building insurance, seasonal automatic increase, personal property off premises, business income and extra expense. BOP valuation terms are replacement cost, subject to insurance to value considerations. Building, personal property and business income coverages are written without being subject to a coinsurance clause. Property valuation is replacement cost, as long as at least 80% of the value of the structure or personal property is maintained at the time of loss. Endorsements or floaters are available for tools and other contractors' equipment, as well as installation floaters.

BUSINESSOWNERS POLICY (BOP) is a "homeowners" approach to packaging insurance for businesses. When an amount of insurance on building and/or contents is selected, it automatically includes a broad range of additional coverages for an indivisible package premium. For eligible risks, the policy provides an alternative to the commercial package policy (CPP). The BOP is designed for small to medium-sized apartment and residential condominium associations, office and office condominium associations, mercantile risks, wholesale operations, small artisan and specialty contractors, small fast-food restaurants or those with limited cooking arrangements, convenience stores with gasoline pumps, laundry and dry-cleaning operations. It is also available to a select number of service or processing operations.

For smaller operations, a BOP is generally more desirable than a CPP. Some coverages automatically included are debris removal, automatic increase in building insurance, seasonal automatic increase, personal property off premises, business income and extra expense. The valuation terms are replacement cost, subject to insurance to value considerations. Building, personal property, and business income coverages are written without being subject to a coinsurance clause. Property valuation is replacement cost, as long as at least 80% of the value of the structure or personal property is maintained at the time of loss. Business income is included without a specific limit, subject to a maximum of 12 months actual loss sustained.

COMMERCIAL PACKAGE POLICY (CPP) is not a separate coverage form but rather is a convenient collection of several coverage forms packaged together. The CPP must include at least two of the following coverage parts: boiler and machinery, commercial automobile, commercial property, commercial crime, commercial general liability, farm or inland marine. Any of these coverage parts may be written separately from the package policy for underwriting reasons or because the insured prefers it that way. These optional coverage arrangements are particularly relevant for commercial automobile and general liability coverage.

Insurance companies provide premium discounts in package policies to encourage the insured to combine as many coverages as possible in one policy and in a single company. The discounts vary by the class of business and the line of coverage. The discounts apply only if the CPP has both property and general liability coverages at a particular location.

While it is desirable and sensible from the premium standpoint to include every eligible coverage in the CPP, it is not necessary to do so. Some insureds and carriers prefer to write certain lines of business on a monoline basis and keep only certain lines in the package. This customized coverage approach makes the CPP the most flexible of all commercial lines policies.

Commercial Property Policy Definitions

BUILDING Includes the building or structure itself as well as inside and outside fixtures, permanently installed machinery and equipment, and equipment used to service the building. This includes refrigeration, cleaning, cooking and other equipment.

BUSINESS PERSONAL PROPERTY includes furniture and fixtures, machinery and equipment, stock and other personal property owned by the insured and used in the business. It also includes labor, materials or services furnished or arranged by the insured on personal property of others, use interest of the insured as a tenant in improvements and betterments made to the premises, and leased personal property for which the insured is contractually responsible to provide coverage.

PERSONAL PROPERTY OF OTHERS is that considered to be in the care, custody or control of the insured and situated on the insured's premises.

IMPROVEMENTS AND BETTERMENTS represents the insured's interest in improvements and betterments made to a building occupied but not owned by the insured. Coverage for this property may be written separately on the policy by showing a limit for it on the declarations or by including it in the business personal property limit. Remodeling an existing building and making it an attractive premises or to meet the functional requirements of the operation is expensive and represents a real insurable interest.

Inland Marine Policy Definitions

ACCOUNTS RECEIVABLE COVERAGE protects against loss resulting from the inability of the insured to collect accounts receivable due to the loss, damage or destruction of books or records of accounts. This coverage is written using standard inland marine forms and limited coverage is usually included in property coverage forms.

BAILEE CUSTOMERS COVERAGE is used to insure bailment situations. In a bailment, one person accepts goods from another and promises to return them to that person in the same condition or better. This creates both a contractual obligation and a goodwill obligation. Bailee customers coverage is a nonstandard form offered by various inland marine insurance carriers. Coverage can be for legal liability only or can also include goodwill coverage. Valuation may be on an actual cash value or a replacement cost basis. Coverage can be purchased for the property involved while being worked on or not. Coverage may be for risks of direct physical loss or damage or for designated perils only. Coverage applies at the insured's premises, in transit or at another premises performing services on behalf of the insured.

BUILDERS RISK COVERAGE insures a building or structure during construction, renovation or repair. The insured may be the building owner, a builder/contractor or the purchaser of the building. A policy may cover either a single construction project or multiple jobsites. In general, non-reporting builders risk coverage is written for the full, completed value of the project but loss payment is based on the amount of construction actually completed at the time of loss. The premium charged is based on the full, completed value but is discounted using a mathematical formula. This is because the value at the start of construction is zero and the full completed value is not reached until construction is finished and the building is released for occupancy.

COMMERCIAL ARTICLES FLOATERS cover cameras and musical instruments used by commercial enterprises. Coverage applies wherever the property is located on an all risk basis and does not require scheduling of locations or property. Musical instruments and camera dealers should use the camera and musical instruments dealers form to cover their stocks of merchandise held for sale.

CONTRACTORS' EQUIPMENT COVERAGE provides physical damage insurance on mobile or contractors' equipment located at the insured's premises, at jobsites or in transit. Property covered ranges from employees' tools to scaffolding to cranes and everything in between. If an item of property is used by the contractor to do a job and is not licensed for road use, it probably qualifies as contractors' equipment and should be covered. This is a flexible policy that can be tailored to respond to specific situations. Coverage can be on an all risk or named hazards basis.

DIFFERENCE IN CONDITIONS (DIC) COVERAGE is written to broaden other property coverage already written and in place. It is intended to provide primary coverage against causes of loss normally excluded in standard property forms, such as flood, water damage and earthquake. It is also used to broaden named perils coverage to provide additional perils coverage comparable to risks of direct physical loss. The form does not include a coinsurance clause but does contain a coverage cap and normally utilizes high deductibles. There is no standard coverage form but coverage is offered by both inland marine and property insurance companies. The keys to comparison are the limits, deductibles, exclusions, territory and methods of capping coverage.

ELECTRONIC DATA PROCESSING EQUIPMENT COVERAGE insures against loss or damage to electronic data processing equipment and media owned, leased or used by the insured. Computerized production equipment may also be insured in addition to conventional computer equipment. Coverage may or may not include breakdown and power interruption. This coverage is available through various inland marine markets and is not standardized. Forms should be compared with respect to exclusions, on- and off-premises coverage and transit. The valuation basis is a consideration because most computer systems will not be replaced with systems of like kind and quality due to changes in technology.

EQUIPMENT DEALERS COVERAGE insures the stock of mobile agricultural and construction equipment held for sale by dealers. It is intended for use only by operations that sell this type of equipment but it can be extended to include department and discount stores. The coverage provided is very broad and this can make it much more attractive than a property coverage form.

FILM COVERAGE insures operations that produce motion pictures or videos. The form covers the cost of re-recording exposed film or tape destroyed by a covered peril or cause of loss.

FINE ARTS COVERAGE insures specified works of art, including paintings, etchings, statuary, and stained or etched glass windows, against risks of direct physical loss or damage. Coverage applies on premises, off premises and in transit. An exclusion for breakage is common but coverage for it can often be bought back for a significant premium surcharge. A requirement for professional packing may apply to some objects when they are transported or shipped.

FLOOR PLAN COVERAGE is unique in that it is intended to cover financed stock. The policy can cover the single interest of either the purchaser of the stock or the party financing the stock or it can be a dual interest policy and cover both interests. Coverage is usually on an all risk basis. The basis of premium is usually the actual values at risk at the inception of the policy.

FURRIERS CUSTOMERS COVERAGE provides coverage on furs and garments trimmed with fur. The policy covers property of customers left with the insured for a declared value for which receipts are given to customers. It insures against all risks of direct physical loss or damage, subject to specific exclusions.

FURRIERS CUSTOMERS EXCESS LEGAL LIABILITY COVERAGE protects an establishment insured under a furriers policy to the extent of the liability imposed on it by law for damage to property left in its custody. This protection is written as an endorsement to the basic policy and applies only to the difference between the amount declared in the customers' receipts and the actual cash value. This is because people often declare values on furs for storage for lower amounts than their true value, especially if they have their own insurance on the property.

INSTALLATION COVERAGE is provided by an installation floater that covers personal property installed, fabricated or erected by an insured, usually a contractor. Coverage is for special causes of loss or all risk perils and applies to owned property and property of others. It also covers the insurable interest of that contractor in the property. It can cover a single project within an existing building, such as updating the plumbing system. It can also cover a contractor acting as a subcontractor on a building in the course of construction, such as the one that installs the sprinkler system. The policy can be written on a reporting form basis or on a scheduled job or project basis. It covers until the installation work is accepted by the purchaser or when the insured's interest in the property installed ceases.

INSTALLMENT SALES COVERAGE is designed for individuals or businesses that sell merchandise to a purchaser on an installment sales plan or who offer merchandise for trial periods to their customers. The form covers all property sold by the insured on an installment sales plan, if their accounting records show their variable financial interest in the property, and if the property or merchandise involved is not excluded or limited by the policy. The policy covers all such transactions as of its inception date, whether the transactions are already in force or new, and coverage continues until the final payment on the merchandise is made or the policy expires. Coverage is written on a single interest basis and protects only the financial interest of the insured seller in the merchandise.

MAIL COVERAGE insures valuable items sent through the mail. Securities, currency, checks and similar types of property are covered while in the possession of the United States Postal Service for all direct physical loss or damage, including theft, subject to the policy exclusions. Coverage is on a reporting basis and only banks, bankers, trust companies, insurance companies, security brokers, fiduciary-oriented investment corporations and security transfer agents may purchase the coverage.

MOTOR TRUCK CARGO LEGAL LIABILITY COVERAGE insures the legal liability of common or contract motor carriers for property of others, consisting of cargo, hauled or transported by the carrier. Coverage applies only to the extent of the insured's legal responsibility for the property shipped and for the amount of liability for a loss. The United States Department of Transportation Federal Motor Carrier Safety Regulations provides guidance and direction on the liability of trucking concerns and their responsibility for the property being hauled. The bill of lading or other shipping document also addresses the legal liability of the carrier. Both the regulations and the bill of lading establish the legal framework to determine the liability of the insured for the property being hauled.

PATTERNS AND DIES COVERAGE insures patterns, dies, molds and forms belonging to the insured and similar property of others in the possession of the insured. Coverage is all risk, the property covered must be specifically identified and described and a limit of insurance assigned to it. Coverage is not limited to a stated location but is subject to the territorial limits of the policy.

PHYSICIANS' AND SURGEONS' EQUIPMENT COVERAGE provides property coverage in a manner that follows the way a doctor or dentist works. All equipment, supplies and books normal to the profession are covered without a restriction to premises. Office-related items and other location-oriented items are covered at the described premises. Coverage can be limited to apply to only the medical, surgical and dental equipment and instruments usually carried by the insured.

PROCESSING RISK COVERAGE insures either the owner of the property sent to plants for processing or finishing or a processor who receives material from many sources for treatment in the course of manufacture. Coverage applies on a named perils basis. The policy is adaptable to a wide range of products being worked on by subcontractors. Each risk is individually underwritten based on the type of property being processed or worked on. Coverage availability is limited.

SCHEDULED PROPERTY COVERAGE insures property of the insured and property of others with no limitation as to place. It is a floater form and coverage is on an all risk basis. The property covered must be specifically identified and described and a limit of insurance assigned to it. Coverage applies on premises, off premises and in transit. Scientific instruments, voting machines and religious organization paraphernalia are some examples of property that might be covered on this form. Items scheduled and insured on this form should be removed from the property coverage in order to eliminate duplicate coverage and premium charges.

SIGNS COVERAGE insures neon, fluorescent, automatic, mechanical and electric signs against all risks of direct physical loss or damage. However, coverage does not apply to loss of use, internal explosion or blowout, short circuit, wear and tear, deterioration or damage sustained while being worked on.

THEATRICAL PROPERTY COVERAGE insures all property necessary to put on a play, including the costumes, scenery and similar related property items. Coverage is not location-based but is based on the production. This allows traveling companies to be covered wherever they might be.

TRANSPORTATION COVERAGE protects property of the insured while being shipped. Coverage includes both shipments to the insured and shipments from the insured. Coverage is usually provided by one of three forms. The transportation form covers all shipments made during the policy period using either transportation companies or carriers for hire, owned vehicles, railroads and airlines. The owner's form covers all shipments made using only owned vehicles of the insured. The trip transit form is used for a single shipment by a specific mode of conveyance, on a "one-shot" basis.

VALUABLE PAPERS AND RECORDS COVERAGE applies to the papers of a business. These papers may include the deed to the property, original copyrights, patent rights to key products, patient records, books, construction plans or manuscripts. Few businesses can operate without acquiring quite a few valuable papers. If any of those papers are lost, the operation of the business could be seriously affected. Coverage is written on an all risk basis, including misplacement and mysterious or unexplained disappearance.

Crime Coverages Definitions

COMPUTER FRAUD COVERAGE applies to money, securities and other property fraudulently transferred from the insured premises or banking premises to a location other than the insured premises or the banking premises, other than by a messenger. Coverage is worldwide.

CRIME COVERAGES FOR GOVERNMENTAL ENTITIES is available using the government crime coverage forms. The coverage provided is nearly identical to that provided in the commercial crime coverage forms.

EMPLOYEE THEFT COVERAGE is the insuring agreement that applies to employee theft losses involving money, securities and other property. It covers the unlawful taking of covered insured property by employees. Coverage applies regardless of the number of employees involved in the loss. This is an important point, since the limit of insurance applies to each act, and not to each employee. This is the only coverage that applies to dishonest acts of employees. Coverage is provided using either a standard form or a Surety Association form.

FINANCIAL INSTITUTION BOND #14 is similar to the commercial crime coverage forms but is available only to stockbrokers and investment bankers. Coverage is provided for losses caused by employees, officers and outsiders. The form contains six insuring agreements: fidelity coverage for employee dishonesty, loss on premises, loss in transit, forgery or alteration, loss to securities, and loss due to counterfeit currency.

FINANCIAL INSTITUTION BOND #15 is similar to the commercial crime coverage forms but is available only to finance companies, small loan companies, mortgage banks, title insurance companies, certain holding companies and real estate investment trusts. Coverage is provided for losses caused by employees, officers and outsiders. The form contains six insuring agreements: fidelity coverage for employee dishonesty, loss on premises, loss in transit, forgery or alteration, loss to securities and loss due to counterfeit currency.

FINANCIAL INSTITUTION BOND #23 is similar to the commercial crime coverage forms but is available only to credit unions. Coverage is provided for losses caused by employees and outsiders. The form contains four insuring agreements: fidelity coverage for employee dishonesty, loss on premises, loss in transit, and redemption of United States Savings Bonds.

FINANCIAL INSTITUTION BOND #24 is similar to the commercial crime coverage forms but is available only to banks and savings and loan associations. Coverage is provided for losses caused by employees, bank officers and outsiders. The form contains six insuring agreements: fidelity coverage for employee dishonesty, loss on premises, loss in transit, forgery or alteration, loss to securities, and loss due to counterfeit currency.

FINANCIAL INSTITUTION BOND #25 is similar to the commercial crime coverage forms but is available only to insurance companies. Coverage is provided for losses caused by employees, officers and outsiders. The form contains five insuring agreements: fidelity coverage for employee dishonesty, loss on premises, loss in transit, forgery or alteration, and loss to securities.

FINANCIAL INSTITUTION BOND #28 is an employee dishonesty excess bond used to protect a bank against losses resulting from dishonesty of its employees. Coverage and limits apply on an excess basis over and above the single and aggregate limits in the Financial Institution Bond No. 24 but coverage applies only for employee dishonesty losses. Coverage is available only to national and state chartered commercial banks.

FORGERY OR ALTERATION COVERAGE is the insuring agreement that applies when someone other than an owner or employee forges a signature on a check or other negotiable instrument in order to obtain funds belonging to the insured. Coverage does not apply to forgery or alteration of checks done by the named insured or any employee, manager, director, trustee or representative. Coverage is provided using either a standard form or a Surety Association form.

FUNDS TRANSFER FRAUD COVERAGE is the insuring agreement that provides coverage for loss of funds resulting directly from fraudulent instruction to a financial institution to transfer, pay or deliver funds from the insured's transfer account. The fraudulent instruction must be from someone other than an employee of the insured.

GUESTS' PROPERTY COVERAGE is a two-part insuring agreement. It covers any property belonging to a guest of the insured while the property is in a safe deposit box on the premises, and property belonging to guests of the insured while on the premises and in the insured's possession. Insurance applies to sums the insured becomes legally obligated to pay as damages because of loss or destruction of, or damage to, the property.

INSIDE THE PREMISES-THEFT OF MONEY AND SECURITIES COVERAGE is the insuring agreement that covers theft of money and securities from within the insured's premises or from within a banking premises. It also covers damage to the interior of the premises and to the exterior of the building caused by an attempted or actual theft. Lastly, it covers damage to locked safes, vaults, cash registers, cash boxes and cash drawers inside the premises caused by an attempted or actual theft.

INSIDE THE PREMISES-ROBBERY OR SAFE BURGLARY OF OTHER PROPERTY COVERAGE is the insuring agreement where coverage applies only to robbery of a custodian or to safe burglary. The act must take place within the premises situated inside the building. Money and securities are NOT covered. This is a very limited coverage and should not be used when a special causes of loss property form applies to the property because doing so would duplicate the coverage.

MONEY ORDERS AND COUNTERFEIT PAPER CURRENCY COVERAGE is the insuring agreement that covers currency accepted in good faith in exchange for purchases as well as money orders that are not accepted when presented. The coverage territory is limited to the United States, its territories and possessions, and Canada.

OUTSIDE THE PREMISES COVERAGE is the insuring agreement that covers theft, disappearance and destruction of money and securities when outside the premises and in the custody of a messenger or an armored car company. It covers robbery of a messenger of other property when outside the premises and in the custody of either a messenger or an armored car company.

Surety Coverages Definitions

CONTRACT BID BONDS guarantee to a project owner that the contractor bidding for a contract will fulfill the terms of the bid or forfeit the bond penalty, if their bid is accepted.

CONTRACT BID BOND SERVICE UNDERTAKING provides a construction contractor with bid bond service for a year for a minimal annual fee. This enables the contractor to execute a bid bond without a premium charge. A premium is charged only for the required performance bond when a bid is accepted. This is a convenient procedure greatly appreciated by contractors.

CONTRACT COMPLETION BONDS are given by a project owner to a lender or mortgagee. It guarantees the successful financing to completion of a construction project free of liens. This should not be confused with a performance bond given by the contractor to the owner guaranteeing faithful performance of the building or construction contract.

CONTRACT LABOR AND MATERIAL PAYMENT BONDS guarantee that a contractor will pay all legitimate bills for labor and material in connection with a construction contract. It may be written as a separate bond or as an integral part of a performance bond.

CONTRACT PERFORMANCE BONDS guarantee that a contractor will perform its obligations under contract for the benefit of the owner. It covers all obligations the contractor assumes in the contract, in accordance with the plans and specifications that are a part of the contract, for an agreed sum of money to be paid to the contractor by the owner, whether public or private. It follows in sequence after bid bonds have been posted and the lowest responsible bidder has been awarded the contract.

CONTRACT PERFORMANCE OF SERVICE OR SUPPLY BONDS are the most often requested contract bonds. They guarantee the fulfillment of a contract to furnish specified supplies or materials according to stated terms. These bonds are used for both private and public contracts. Bid and performance bonds are usually required in connection with delivery of such supplies to public entities.

CONTRACT SUBCONTRACT BONDS are required of a subcontractor by the general contractor. It is a guarantee that the subcontractor will faithfully perform the subcontract in accordance with its terms and conditions and will pay bills for labor and materials incurred in the execution of the subcontract work.

COURT BONDS are any bonds required of a litigant in a legal action or court proceeding enabling him or her to pursue a remedy in court. It is one of two forms of "Judicial Bonds."

FIDUCIARY BONDS are the bonds for executors, administrators, guardians, trustees or receivers. This bond is furnished under the direction of a court and guarantees the performance of the terms of a will or a similar document. Banks and trust companies are required to purchase these bonds in the normal course of their business.

LICENSE AND PERMIT BONDS are as numerous as the regulations affecting commercial activities. When a governmental entity requires an individual or business to obtain a permit or a license to perform an action or service, a bond is normally required to guarantee that the action or service will be performed in accordance with the license or permit.

MEDICARE AND MEDICAID PROVIDER SURETY BONDS are required by some providers of Medicare and/or Medicaid services. The Medicare bond limit is determined by the federal government and the Medicaid bond limit is established by state authorities.

MISCELLANEOUS SURETY BONDS are available for many situations where bonds are required that do not fit into other classifications. They are needed to guarantee the promises made by the principal and are often dictated by public authorities.

NOTARY PUBLIC BONDS cover loss to the state that commissioned the bonded notary and loss or damage to third persons resulting from the failure of the principal to faithfully perform the duties of a notary public. Duties of a notary and his or her obligations are specified in statutes of the state in which the notary is appointed. The length of term, the bond requirements and the fee schedule vary considerably by state.

PUBLIC OFFICIALS BONDS are required by law and guarantee the faithful performance of duty by the public official. The state law normally prescribes the form of bond to be used and it should strictly adhere to applicable statutes. If the statutes do not prescribe the form of bond, a common law form may be executed.

Commercial Liability Coverages Definitions

COMMERCIAL GENERAL LIABILITY (CGL) COVERAGE is designed to cover the bodily injury and property damage liability exposures related to operating a commercial venture. Instead of having to select and group the specific hazards to be insured, which may result in potential gaps in an insurance program, a comprehensive coverage approach is used. The basic areas covered by the CGL include the insured's ownership or use of the premises, coverage for defined contractual agreements, coverage for products manufactured, sold or distributed by the insured, completed operations of the insured, personal injury and advertising injury liability of the insured, and medical payments coverage. All coverages are subject to policy definitions, exclusions and limitations.

The basic CGL coverage form can be customized and tailored with a multitude of optional forms and endorsements that broaden, delete or restrict the contract's core coverages to form a contract specifically designed for the individual insured.

Two CGL policy programs are available. The first is the "occurrence-based" policy that provides protection for covered losses where the actual injury occurs during the covered policy period, regardless of when notification of the loss or claim takes place. The key to coverage is the date or period of time of the occurrence of the covered loss or injury.

The second is the "claims-made" policy. In these policies, coverage is triggered by the actual filing date or receipt of the claim, in addition to the date or time period in which the loss or injury occurred. Any covered loss or claim filed within the policy period is handled by that policy, regardless of when the actual loss or injury occurred, subject to the retroactive date. The retroactive date is indicated on the declarations. The retroactive date can be any date. However, for complete protection, it should be the date on which claims-made coverage first began. This is because prior to that date, loss or injury was covered by an occurrence policy. Only covered losses or injuries that occur after the retroactive date are covered by a claims-made policy.

EMPLOYEE BENEFITS LIABILITY COVERAGE addresses the requirements of employers to provide their employees with information about the benefits available to them. This form provides coverage for damages that result from an employer not fulfilling the notification requirements and the employee being denied access to promised benefits.

EMPLOYMENT-RELATED PRACTICES COVERAGE is available for the legal costs to defend claims against sexual harassment, wrongful termination and discrimination, and the actual legal liability for such acts. The coverage is known by various titles through a number of insurers. Employment-related practices liability, management risk protection, employers errors and omissions (E&O), and Americans with Disabilities Act (ADA) insurance are basically one and the same coverage. Most policies offer a range of limits from as low as $25,000 per claim up to $1,000,000 and more. Many policies cover employees as additional insureds or can be endorsed to do so.

LIQUOR LIABILITY COVERAGE protects bars, restaurants, hotels, motels, package liquor stores or other places where liquor is sold, distributed or served. It handles claims involving injury or damage caused by patrons served or provided liquor by the covered establishment. Liquor liability coverage fills the gap created by the exclusion in general liability policies applying to businesses directly involved in the sale, distribution, manufacturing or serving of alcoholic beverages.

OWNERS AND CONTRACTORS PROTECTIVE (OCP) LIABILITY COVERAGE is designed to protect either a property/business owner or a general contractor for the potential liability exposure resulting from the negligent act of a subcontractor or an independent contractor hired to perform work on the insured's behalf. The independent or subcontractor is the actual purchaser of the policy but the protection is for the insured property/business owner or a general contractor for whom the work is being done. Coverage is not comprehensive and is limited to a specific location and project.

PRODUCT RECALL Or PRODUCT WITHDRAWAL COVERAGE addresses the problem of products liability insurance, as written under general liability policies, that excludes loss to the insured from recalling distributed products suspected of being defective. This insurance covers the expenses incurred by the insured to respond to either a mandated or voluntary product recall.

PRODUCT TAMPERING INSURANCE Incidents involving malicious tampering with food, beverage, pharmaceutical and cosmetic products have raised interest in insurance to cover a manufacturer for the cost of recalling the alleged tampered items from the shelves of stores throughout the country or in local areas affected. Product tampering insurance applies if an individual actually tampers with products or threatens to do so. It also covers related costs such as necessary inventory destruction, lost profits, business interruption and product rehabilitation. If a product tampering case occurs, crisis management and loss prevention firms are called in to assist insureds in order to reduce the chances that their companies will be future targets and to minimize damage that can arise. Coverage does not apply to third-party liability or extortion payments. Premiums are based on corporate size and assessment of exposure.

PRODUCTS LIABILITY RETROACTIVE COVERAGE converts existing "claims-made" products liability policies to an "occurrence" form without creating any uninsured time periods. Under most programs, policies may be tailored to provide coverage for a specified period of time retroactively, such as 12, 24 or 36 months; complete "occurrence" coverage back to the original "claims-made" effective date; or an ongoing "occurrence" form including coverage for all prior acts. Other methods of easing the transition back to "occurrence" coverage involve policies including the extension of the discovery period of the nonrenewed "claims-made" form for a specified number of years, if not for an indefinite period.

RAILROAD PROTECTIVE LIABILITY is a limited coverage liability policy that buys back coverage for construction and demolition projects at or near railroad properties. The commercial general liability policy excludes construction or demolition projects that are at or near railroad properties, including railroad tracks, beds, trestles, tunnels and the like. The insured is either the railroad or the property/business owner. The policy is purchased by the contractor performing the work on behalf of the insured.

SPECIAL EVENTS LIABILITY COVERAGE is available for festivals and similar events. This coverage is available from specialty insurance markets when all-inclusive general liability insurance does not apply.

Professional Liability Coverages Definitions

BEAUTICIANS AND BARBERS PROFESSIONAL LIABILITY INSURANCE covers damages awarded to a customer due to negligent professional services provided by a beautician or barber. Operations that employ barbers and beauticians such as hotels and spas should consider this coverage.

ERRORS AND OMISSIONS INSURANCE-MISCELLANEOUS is coverage tailored for various firms and individuals who provide advice and guidance for clients whose operations depend on such counsel. An example is a management consultant.

FORENSIC LIABILITY is a professional liability coverage that complements lawyers professional liability insurance. Eligible risks include forensic experts, litigation consultants and legal support specialists. Expert witnesses also fall into the forensic program. The policy covers errors, omissions and negligent acts in the performance of professional duties and services for others. The coverage excludes bodily injury and property damage liability. Limits up to $1,000,000 are available.

FUNERAL DIRECTORS OR MORTICIANS PROFESSIONAL LIABILITY INSURANCE protects a mortuary, its owners, funeral directors and employees against malpractice claims arising from the conduct of services usual and customary to the profession of a mortician. The premium charge is based on the volume of professional services.

HOSPITAL PROFESSIONAL LIABILITY INSURANCE protects an insured hospital against claims for injury arising out of malpractice, error or mistake on the part of hospital personnel. Similar insurance may be written for nursing homes, sanitariums and similar institutions.

INSURANCE AGENTS AND BROKERS ERRORS AND OMISSIONS INSURANCE coverage represents concrete proof that insurance producers are members of a full-fledged profession. The policy protects an insurance agency or brokerage firm against claims for negligent acts, errors or omissions in the conduct of its business. A growing number of companies writes this insurance and offers it to qualified individuals or to associations under a master policy. Premium for an agency depends on the limit of liability and number of persons involved.

LAWYERS PROFESSIONAL LIABILITY covers direct monetary loss and expense to an insured lawyer or law firm arising from claims for alleged neglect, error or omission in the performance of professional services in a legal capacity. Coverage applies to claims for actions traceable to any person for whose acts the insured is legally liable in, addition to those of the insured.

MISCELLANEOUS MEDICAL PROFESSIONAL LIABILITY INSURANCE covers claims alleging malpractice committed by the following classes of insureds: blood banks, medical or x-ray laboratories, nurses, opticians, optometrists, employed professional persons and technicians such as dental hygienists, medical laboratory technicians, opticians, pharmacists, physiotherapists and x-ray technicians.

MORTGAGE BANKERS AND SERVICING AGENTS ERRORS AND OMISSIONS protects the insured against loss from claims for any alleged act, error or omission committed in the originating, financing, closing, selling or servicing of mortgage loans on real estate, or the rendering of advice in connection with such activities.

PHYSICIANS, SURGEONS AND DENTISTS PROFESSIONAL LIABILITY protects insured physicians, surgeons or dentists against claims for personal injury arising from alleged malpractice, error or mistake in rendering professional services. The insurance may be written for individuals and partnerships. Optional coverage against claims arising from x-ray therapy is available.

POLICE PROFESSIONAL LIABILITY INSURANCE provides broad personal injury coverage and bodily injury liability insurance for all paid full- and part-time law enforcement officers as well as the law enforcement agency itself.

PRINTERS ERRORS AND OMISSIONS protects a printer for errors made in the printing process but coverage does not apply to publishing activities. Examples of common errors include incorrect ink type, wrong paper weight and missed dates. Coverage is available on a businessowners policy as an endorsement. Larger concerns must purchase the form from specialty carriers.

REGISTERED REPRESENTATIVE ERRORS AND OMISSIONS INSURANCE protects registered and licensed sellers of mutual funds and/or variable annuities with respect to legal liability arising from any negligent act, error or omission by the insured or any person for whose acts the insured is responsible. Coverage is limited to acts related to the sale of mutual funds or variable annuities.

SAFETY AND ENVIRONMENTAL CONSULTANTS ERRORS AND OMISSIONS covers professional liability, errors and omissions arising from engineering and technical services, including those associated with asbestos and other pollution problems. A principal risk involved is advising that a given area or operation meets Environmental Protection Agency (EPA) standards when EPA later rules that the area or operation, in fact, does not.

TITLE ABSTRACTORS PROFESSIONAL LIABILITY OR ERRORS AND OMISSIONS covers claims arising from alleged negligent acts, errors or omissions of the insured, of the predecessors in business or of any person formerly, presently or to be employed by the insured in the performance of professional services to others in the insured's professional capacity as a title abstractor.

TRUST DEPARTMENT ERRORS AND OMISSIONS Banks exercise great care in the administration of estates or trusts or managing real or personal property within their trust departments. Discretion is and must be used in giving financial, economic or investment advice and in rendering investment, advisory and managing services for clients. Errors and omissions insurance for trust departments that protects them against claims by clients alleging breach of duty in discharging these responsibilities is a wise and prudent investment on their part. High limits and defense protection are important features of the coverage.

Commercial Auto Coverages Definitions

AUTO MEDICAL PAYMENTS reimburses passengers and operators of vehicles for their medical and funeral expenses arising out of accidents occurring while traveling in an insured vehicle or while entering or exiting from it.

BOBTAIL OR DEADHEADING LIABILITY COVERAGE is also infrequently referred to as truckers insurance for non-trucking use and provides protection for independent truckers who normally operate their equipment under lease with large trucking companies. They are protected by the large firm's insurance while actually hauling for them but need bobtail insurance for exposures not related to carrying property in a business, hauling someone else's trailers or operating under a lease arrangement, sometimes referred to as "in between" driving. This protection may be provided for an independent trucker by an endorsement to a business auto policy. (Refer to PF&M Section 223.6-1)

BUSINESS AUTO COVERAGE FORM provides select liability and physical damage coverages without the need for numerous additional forms and endorsements. Liability coverage is available for owned autos only, all autos owned, leased or hired by the insured or all autos, including the exposure of autos owned by employees or partners and allegedly used on behalf of the insured. The third option provides the broadest protection.

Optional physical damage coverages available include collision, comprehensive, coverage that applies to loss from any cause except collision or overturn, subject to a few exclusions, and specified causes of loss coverage, a less expensive alternative to comprehensive coverage paying for loss caused by named perils.

COLLISION COVERAGE protects the owner against loss from collision or upset of the motor vehicles used in the business. When a motor vehicle is sold under a finance contract or agreement, the loss payee (lender) usually requires the original copy of the policy that provides collision and comprehensive coverage.

COMPREHENSIVE COVERAGE protects the owner's business autos and other motor vehicles against loss by fire, theft or other physical damage hazards, including glass breakage.

DEALERS' AUTOS AND AUTOS HELD FOR SALE BY NON-DEALERS OR TRAILER DEALERS (PHYSICAL DAMAGE COVERAGE) is the physical damage part of the garage coverage form. It insures the interest of a dealer in autos held by the dealer for sale or used in the business as an automobile dealer. It may be written to cover comprehensive, collision or specified causes of loss.

GARAGE COVERAGE FORM provides liability, garagekeepers and automobile physical damage coverages, as selected, for garage operations and automobiles for automobile and trailer dealers, for both franchised and nonfranchised operations. Liability coverage includes garage operations in a manner similar to a general liability policy, and the use of covered autos, in a manner similar to a business auto policy.

Garagekeepers coverage is for the benefit of the customer. Coverage can be purchased for collision and comprehensive or specified perils physical damage to customers' vehicles. Coverage can be on a legal liability basis or a direct coverage basis. The direct coverage basis can be either excess over the customer's other coverage or primary. Physical damage coverage applies to the named insured's owned automobiles, not customers' cars, and applies to cars held for sale and those used in the business.

GARAGEKEEPERS COVERAGE covers customers' automobiles in the insured's custody, either to the extent of the latter's liability or on a direct coverage basis, and on either a primary or excess basis. An endorsement must be used when the insured is not eligible for the garage coverage form. (Refer to PF&M Section 220.6-4)

HIRED CARS rented or hired by the business for the operator can be insured to cover the liability exposure for their operation. (Refer to PF&M Section 220.4-3)

INTERSTATE COMMERCE ENDORSEMENTS apply to businesses subject to interstate commerce regulation, such as truckers and motor carriers. They must file a certificate with the Interstate Commerce Commission (ICC) acknowledging that the carrier is insured for its legal and statutory obligations with an acceptable insurance company. The policy must carry an endorsement making the insurance company absolutely liable for all claims for which the insured carrier is liable, even though the nature of the injury or liability is beyond the terms of the policy contract. The effect is that the policy guarantees the carrier's financial solvency and ability to pay.

INTRASTATE SUPERVISION applies to carriers that operate in only a single state and who are supervised by a bureau or commission that makes certain that state requirements are complied with. Requirements as to the minimum limits and the amount of insurance that must be carried vary widely from state to state.

LEASING OR RENTAL CONCERNS-CONTINGENT COVERAGE provides bodily injury and property damage liability and physical damage protection for an automobile-leasing agency when the lessee does not maintain the required insurance.

LEASING OR RENTAL CONCERNS-CONVERSION, EMBEZZLEMENT, OR SECRETION COVERAGE changes the physical damage coverage. It excludes losses involving theft, conversion, embezzlement or secretion by any party in possession of a covered auto under a bailment, conditional sale, purchase agreement or other encumbrance. It includes an exception for any auto specifically scheduled on the form and for which an additional premium is paid.

MOTOR CARRIER COVERAGE FORM is similar to the trucking coverage form but was developed after deregulation of the trucking industry and, as a result, is more in tune with current methods of transporting goods. Instead of using trucking regulatory language, this form refers to contracts and other written agreements. Any motor carrier providing transportation of goods is eligible to use this form. If a motor carrier does not have a need for the unique "who is an insured" portion of the trailer interchange section, the business auto policy may still be a solid coverage option.

NONOWNERSHIP AUTOMOBILE COVERAGE protects the employer to the extent of liability imposed by law and within policy limits against claims for accidents due to employees, partners or other agents operating their own automobiles in the course of the insured's business.

PUBLIC AND CONTRACT CARRIERS Interstate Commerce Commission (ICC) cargo insurance regulations apply to all interstate operators of trucks used as common carriers. They do not apply to contract carriers that haul exclusively for one or more firms and that do not accept business from other sources. When a given operator qualifies under both classifications, it is usually recommended that all insurance be placed through and with one insurance agent.

TRUCKERS COVERAGE FORM is a modified version of a business auto policy. It provides the needed liability and physical damage coverages for risks falling under the classifications manual definition of a trucker but it excludes owner-operators. Owner-operators are normally covered under the policies of the trucking firms they haul for and only need separate coverage when deadheading. In this situation, the business auto coverage with the bobtail/deadhead endorsement should be purchased. Federal and state supervisory agencies establish minimum automobile liability insurance requirements and filings must be made to confirm the insured's compliance. While the regulatory agencies set minimum limits, it is recommended that higher limits be carried. Vehicles are probably the biggest investment made by these businesses.

The coverage form provides liability protection for bodily injury or property damage arising from the named insured's ownership, maintenance or use of a covered auto. This coverage extends to the owner of a trailer connected to a covered auto/power unit. The owner of a covered tractor unit that is hired or borrowed by the named insured is also included as an insured during the time the unit is used exclusively in the named insured's trucking business. It can also provide trailer interchange coverage which follows the written agreement between truckers that requires the named insured trucker to reimburse the other trucker for damage to the other's owned trailer while in the named insured's possession. Comprehensive, specified causes of loss and collision coverages are options within the coverage form. Physical damage coverage applies to covered autos, except a trailer in the possession of anyone else under a trailer interchange agreement. Coverage applies to both the auto and its equipment.

UNINSURED/UNDERINSURED MOTORISTS COVERAGE provides coverage that pays the insured, within coverage limits, for damages caused by drivers of uninsured or underinsured automobiles when such drivers are legally liable for the injury to the insured. Each state establishes the minimum limits of liability for this coverage and also whether the coverage is for bodily injury only or also extends to property damage. Limits higher than state minimums are usually available and may be provided.

VENDORS SINGLE INTEREST COVERAGE protects the lender against the inability to collect the balance due because of physical loss or damage to vehicles that it holds as collateral for loans under any mortgage, security agreement, conditional bill of sale or other instrument. This eases the problem of being sure that coverage is maintained by borrowers.

Exess And Umbrella Coverages Definitions

BUMBERSHOOT LIABILITY COVERAGE is designed for businesses whose principal exposure is ocean marine and involves the operation of vessels and use of docks. This is a specialized form of umbrella liability insurance. Bumbershoot coverage includes protection and indemnity, general average, collision and salvage charges, sue and labor, all other legal and contractual liability (including employers liability under admiralty laws or the longshore act), automobile liability and coverage for other hazards associated with general liability insurance.

EXCESS LIABILITY COVERAGE provides insurance limits in excess of underlying general liability, automobile liability, employers liability and/or other scheduled liability policies. This policy has no unique forms and is strictly a following form policy. The coverage available in the underlying policies is also available in the excess policy and exclusions in the underlying policies are also exclusions in the excess policy.

FARM UMBRELLA LIABILITY COVERAGE is designed to coordinate and work in conjunction with an ISO Farm Liability Policy. It also contains elements of a true umbrella. The most important feature of this policy is that it follows the provisions of the underlying coverages. However, it also provides limited excess coverage over a self-insured retention and offers some insurance protection not found in the primary policies.

RETROACTIVE EXCESS LIABILITY COVERAGE addresses catastrophe situations involving multiple claims and the need for exceptionally high limits with the existence of lengthy limitation periods in which to file suits. High limits may be back-dated to track with primary insurance.

UMBRELLA COVERAGE provides liability coverage that supplements the limits of an insured's general liability, automobile liability and employers liability policies. Umbrellas also protect insureds from exclusions and gaps in their primary liability insurance. Covered causes of loss not normally included in primary policies are subject to a self-insured retention (SIR). The insured is responsible for paying any SIR that applies. SIR amounts of $10,000 or $25,000 are common. The umbrella policy coverage is triggered when the limits of the underlying insurance are exhausted or when a claim not covered by an underlying policy occurs. Any such loss that qualifies for coverage under the umbrella policy is subject to the insured first paying any applicable SIR.

Aviation Coverages Definitions

AIR CARGO COVERAGE is similar to motor truck legal liability coverage and covers the carrier for the liability arising from the air waybill, which is similar to a bill of lading. A carrier may obtain a shipper's interest policy that covers a situation where insurance is secured by the shipper from the air carrier. The shipper only needs to show that the loss occurred in transit. It does not have to establish that the airline was legally liable.

AIRCRAFT LIABILITY COVERAGE insures against loss or damage to operators by reason of liability for bodily injury or property damage to members of the public, other than passengers, from operation of an aircraft.

AIRCRAFT PASSENGER LIABILITY may be added to insure the operator's liability for bodily injury to passengers riding in the aircraft. This is part of an aircraft liability policy and is one of the limits of liability.

AIRCRAFT PHYSICAL DAMAGE (HULL) COVERAGE insures the aircraft against various hazards as named in the policy. These include fire, theft, crash, ground damage and all risk, either with or without deductible provisions. Insuring practices regarding individual aircraft vary widely, based on the type of aircraft, its condition and use.

AVIATION GENERAL LIABILITY COVERAGE applies to the liability exposure of various commercial aviation operations. This includes, but is not limited to, airports, fixed-base operators, aircraft service operations, aircraft manufacturers and flight schools.

CIVIL AIR PATROL COVERAGE is an optional coverage on an aircraft policy that protects an insured against legal liability for certain activities connected with membership in the Civil Air Patrol. Activities include piloting emergency transport, search and rescue and disaster relief missions.

HANGARKEEPERS LIABILITY COVERAGE insures the insured hangar operator for legal obligations to pay damages due to loss to an aircraft that occurs when the aircraft is in the care, custody or control of the insured for safekeeping, storage, service or repair. Coverage extends to liability claims involving an aircraft's loss of use.

Ocean Marine Coverages Definitions

OCEAN MARINE CARGO COVERAGE is written to cover merchandise of every description against only perils of the sea or more often against most forms of loss to which the property may be subject. The policy is almost always on an open basis, where all shipments are automatically covered and reported to the insurer as they are made. Insurance is usually extended to cover from the original point of shipment until arrival at the final destination and may apply to both imports and exports.

OCEAN CARGO WAR RISK COVERAGE insures the risks of war otherwise excluded under an ocean marine cargo policy. This insurance is available as a running mate to the open policy and applies to the same shipments. Rates are quoted when coverage is requested and vary according to the risk.

OCEAN MARINE HULL COVERAGE indemnifies the owners of an ocean-going commercial vessel for loss due to perils of the sea, barratry of the master, pirates and similar hazards. Coverage also applies for fire and other named perils that can occur on land or sea. The basic hull form covers the legal liability of the insured to others by reason of collision damage to other vessels. However, protection and indemnity (liability) insurance should also be written as a companion coverage.

PROTECTION AND INDEMNITY COVERAGE provides bodily injury and property damage liability protection for accidents arising from the ownership and operation of a vessel. It is written in conjunction with hull coverage. It includes liability coverage for loss of life or personal injury to guests, to swimmers and to the general public and to employees, including a hired captain and crew. However, it does not protect the insured against claims arising under the Longshore and Harbor Workers' Compensation Act.

SHIP REPAIRERS LEGAL LIABILITY COVERAGE is comparable to garagekeepers legal liability insurance for parties having custody of customers' automobiles. This "wet marine" form protects shipyards, marinas and others who service boats and yachts to the extent of their legal liability for such property in their custody. Specified causes of loss are covered and the premium charged is based on the number of hazards insured against.

WHARFINGERS LIABILITY COVERAGE insures the liabilities imposed on the insured by law for accidental loss or damage to vessels and interests on board while in the custody of the insured at landing and mooring facilities.

YACHT COVERAGE insures yachts, sailboats and motor boats on a named perils or all risk basis within the authorized navigational limits stated in the policy. The policy also covers the legal liability of the insured to others by reason of collision damage to other vessels. The insured has the option of adding protection and indemnity coverage and Longshore and Harbor Workers' Compensation Act coverage to the basic hull coverage.

Specialty Coverages Definitions

AIDS/HIV RISK COVERAGE Because of serious concerns by health care providers that contact with AIDS/HIV-infected patients could infect them, several insurers introduced special extra expense coverage for health care professionals. This coverage provides disability benefits if the professional subsequently acquires the virus and tests positive for AIDS/HIV. The coverage is part of the health care professional's liability policy. It provides a lump sum or monthly expense payment. Benefits are as much as $150,000 or more.

AMERICAN EXPATRIATE COVERAGE is insurance developed to cover U.S. workers on foreign assignments. It covers scheduled and unscheduled personal property and comprehensive personal liability for American expatriates on a blanket basis. The policy is marketed to corporations that have multiple expatriate exposures. The master policy is issued to the corporation and certificates issued to individual expatriate employees. The employer purchases a base layer of property and liability coverage for every expatriate. The employees can then increase the base to fit their needs. Each plan includes comprehensive personal liability for a $100,000 limit. Unscheduled personal property coverage is available for optional limits of $10,000, $25,000 or $50,000. Employees can select additional unscheduled personal property, scheduled all risk property for valuable items, commercial warehouse coverage in the U.S., coverage for air and sea shipments, and additional personal liability coverage for limits of $300,000 or $500,000.

BUSINESS LEGAL EXPENSE COVERAGE insures the gap in unforeseen business-related legal expenses not covered by liability policies.

COLLATERAL PROTECTION COVERAGE provides a lending institution with coverage for physical damage on collateral held by the lender. For example, if a motor vehicle, motorcycle or camper is not insured by the borrower, the lender's interest is protected. The cost of repossession expense is also covered if an insured loss occurs at the time of repossession.

COMMERCIAL CREDIT COVERAGE guarantees the insured a specified amount against loss due to the insolvency of debtors, or a filing of past-due accounts within a specified period of time, usually three months. It is usually written on a collection basis, where the accounts of insolvent debtors are placed with the insurance company for attention and collection. This coverage is not available to retail businesses.

COMMUNITY ANTENNA TELEVISION LIABILITY COVERAGE protects cable telecast systems against suits alleging libel and slander, invasion of privacy, infringement of copyright and other causes of loss similar to those covered by comparable insurance written for broadcasters using the air. It includes coverage for legal expenses.

CONSUMER CREDIT COMPLIANCE COVERAGE pays judgments, defense costs and plaintiff's attorney fees associated with actions brought against an insured bank or savings and loan institution for alleged noncompliance with federal consumer credit regulations. These include the Truth in Lending Act, Fair Credit Billing Act, Equal Credit Opportunity Act and Electronic Fund Transfer Act. The regulations cover a wide variety of loans.

DIRECTORS AND OFFICERS LIABILITY COVERAGE insures corporate directors and officers against claims, usually brought by stockholders, alleging loss due to mismanagement. More individuals owning stock and more stringent standards imposed by the courts indicate a growing risk. An outside directorship liability policy is available as supplementary protection to assure sufficient limits for the exposure created when a company's director, officer or employee serves in an outside director position at its request.

EDUCATORS LEGAL LIABILITY COVERAGE protects against damages from such wrongful acts as negligence, errors or omissions, misstatements or breach of duty committed by an institution's board, directors, officers, trustees, faculty, employees, student teachers or committees. The acts must occur while educators are acting in the scope of their duties at the named insured educational institution. Unless otherwise excluded or limited by definition, coverage applies to, but is not limited to, acts such as discrimination, failure to educate, libel, slander, wrongful termination, denial of tenure and breach of contract. These policies are written on a claims-made basis and not on an occurrence basis.

ENVIRONMENTAL IMPAIRMENT LIABILITY COVERAGE insures the pollution exposure associated with the insured's property and operations, including costs of cleanup and remedial or corrective action due to a third-party demand or a government order. The pollution exclusion in general liability insurance effectively eliminates coverage for damages for bodily injury, property damage and cleanup costs arising from most types of pollution events. Because of this, customized protection for the pollution exposure of numerous insureds in this category is essential.

EXPORT CREDIT INSURANCE COVERAGE makes it possible to sell products abroad with a minimum of financial risk. The policy indemnifies the insured for financial loss arising from both extension of credit to buyers and political risks or from political risks alone. This insurance makes it possible to develop trade where the insured would not otherwise risk doing business.

FIDUCIARIES ERRORS AND OMISSIONS (PENSION, WELFARE AND EMPLOYEE BENEFIT FUNDS) COVERAGE protects trustees and fiduciaries of pension, welfare and employee benefits plans from personal liability under the Pension Reform Act of 1974. Certain provisions of the act established new standards for prudent action by fiduciaries. This permits the purchase of insurance out of the assets of the plan or trust to protect the plan and its fiduciaries, as long as the insurer permits recourse against the individual trustee. Some underwriters have made recourse policies available. Available limits of liability range from $250,000 to over $1,000,000 on an annual aggregate basis. Most forms require a minimum deductible of $1,000.

IDENTITY THEFT INSURANCE COVERAGE permits a policyholder to offer reimbursement of financial losses and legal assistance to customers who incurred identity theft while using services of the policyholder. It is primarily designed for credit card companies and other financial institutions that use a customer's credit card, bank and brokerage account numbers for online transactions. It is also available for Internet service providers, including companies that provide Internet access via television or wireless devices, credit information service providers that report credit irregularities resulting from identity theft incidents, and associations offering personal insurance under member service programs. Other similar enterprises may also be eligible for this coverage.

INTERNATIONAL INSURANCE COVERAGE Property and casualty insurance for buildings, equipment and operations of manufacturing companies in the United States does not usually extend to plants, distribution centers and operations in foreign countries. In addition, automobile and general liability exposures must be covered for operations or employees of the insured away from the United States.

INTERNET (CYBERSPACE) LIABILITY COVERAGE Many insurance companies are developing products to provide errors and omissions and liability coverage for companies operating in cyberspace. The various forms include coverage for allegations of patent infringement, virus introduction, violation of confidentiality and more. There is no standard form, standard name or consistency in coverage grants. In spite of this, if an insured has an active Web site presence, the exposure is real and the coverage should at least be considered.

LEAD PAINT CONTAMINATION COVERAGE Owners and property managers have difficulty defending themselves from lead contamination claims unless they can prove the absence of lead in paint or water pipes. This coverage pays indemnity and defense costs and can be written on a stand-alone basis or can plug the gap in traditional liability policies containing lead paint or pollution exclusions. Property managers, owners, landlords and anyone controlling the property can buy coverage. Limits begin at $50,000 and can go as high as $250,000 per claim and annual aggregate.

MEDIA/COMMUNICATIONS LIABILITY COVERAGE usually protects against allegations involving defamation, disparagement of an individual's reputation, product disparagement, invasion or infringement of the right of privacy, infliction of emotional distress, plagiarism, piracy, copyright infringement, infringement of title, name or mark and unfair competition with respect to other covered communication perils.

MEDICAL PERSONNEL SERVICE AGENCY LIABILITY COVERAGE provides commercial general and professional liability insurance for nurses' registries, home health aid services and visiting nurse associations. Physiotherapists, dental assistants, pharmacists, LPNs and RNs are also eligible and this coverage is excess over specific policies they carry. The policy also covers general employees, partners, officers and directors of the involved agency.

NUCLEAR ENERGY PROPERTY COVERAGE is underwritten by a number of insurance companies forming coverage "pools." This coverage provides risks of direct physical loss insurance on property at installations where potential loss by nuclear incident, including radioactive contamination, is a major primary hazard. Conventional insurance facilities are inadequate for the types of risks involved. These include nuclear reactor power plants, nuclear reactor installations for testing, education, research, demonstration and experimentation, plants making reactor fuel elements, and nuclear fuel in transit.

NUCLEAR ENERGY LIABILITY COVERAGE is underwritten by a number of insurance companies forming coverage "pools." This special protection covers claims for the catastrophic effects of nuclear incidents excluded in standard general liability policies. This is a necessary additional coverage that should be written in conjunction with a general liability policy for plants employing nuclear reactor installations, makers of reactor fuel elements, and transporters of nuclear fuel.

PATENT INFRINGEMENT LIABILITY COVERAGE applies to lawsuits claiming patent infringement brought against the insured, arising from the manufacture, use or distribution of an "infringing" covered product by the insured. Coverage applies in the United States and is for claim expenses and damages, including lost profits, royalties and prejudgment interest.

POLLUTION LIABILITY COVERAGE The commercial general liability policy attempts to exclude virtually all types of pollution except for that caused by hostile fire. The CGL can be endorsed to buy back some or all of the excluded pollution coverage, or a separate pollution coverage form can be purchased to provide insurance protection for varying degrees of pollution coverage. Several versions are available to limit coverage to specified locations, projects or to provide broad coverage.

RECREATIONAL TRAIL LIABILITY COVERAGE protects owners and operators of trail areas used by owners of recreational vehicles for a fee. Various states have enacted laws prohibiting the operation of snowmobiles, minibikes and trail bikes on public thoroughfares.

RISK RETENTION GROUP LIABILITY COVERAGE Excess and surplus lines carriers and reinsurers offer facilities for excess liability programs over coverage provided by risk retention groups. The formation of risk retention groups and liability insurance purchasing groups is authorized under the Federal Liability Risk Retention Act.

SECURITY EXCHANGE COMMISSION LIABILITY COVERAGE protects securities underwriters or issuers of stocks sold in secondary offerings of shares from third-party claims arising from liability imposed under the Securities Act of 1933, the Securities Exchange Act of 1934, any amendments to these acts or the common or statutory law of any state or of the United States. Coverage may be written under a blanket form covering a security investment firm for all securities underwritten during the year or as a specific policy covering only one such underwriting.

SOLAR ENERGY SYSTEM COVERAGE is available to businesses using solar-generated power for either a primary or supplementary heating or cooling system. It supplements other insurance by covering system components for glass breakage, water damage to the system, mechanical breakdown, flood and earthquake.

TAX LIABILITY COVERAGE is appealing to large companies with complex tax liability exposures. Coverage applies to the total entity and to the decision makers who know well the risks they face because of highly publicized corporate problems and federal attention to strict compliance with the tax law. This "claims-made" policy is written for a relatively short term and eases the concerns of executives who, in light of tax law provisions, must decide whether or not to endorse various business transactions.

TENDER OFFER DEFENSE EXPENSES COVERAGE insures the expenses of resistance by management and directors to a corporate takeover by companies making offers directly to shareholders.

TRANSPORTATION BROKERS CONTINGENT CARGO COVERAGE protects a transportation broker in case the cargo insurance of the carrier to which cargo is entrusted is canceled, not paid, denied or if the limits are inadequate.

UNDERGROUND STORAGE TANK (UST) LIABILITY COVERAGE The United States Environmental Protection Agency (EPA) requires most property owners or business operators having an underground storage tank containing a petroleum product to show proof of financial responsibility in case the contents of that underground storage tank cause any bodily injury or property damage, including corrective action costs, to a third party. These underground storage tanks include those designed to hold heating fuels as well as those used for fueling the insured's vehicles.

WEATHER COVERAGE Weather insurance basically protects the insured sponsor of an outside event or a manufacturer of a product dependent on or subject to weather activity. It covers most financial losses, such as reduced revenue, increased expenses or inventory loss, as well as increased product promotion expense. It responds to the need for financial protection of legitimate activities planned in advance but which are vulnerable to failure because of weather events beyond the insured's control.

WRAP-UP PROJECT COVERAGE In cases of extremely large construction projects, the interests of the owner, the general contractor, the construction manager, architects, engineers, subcontractors and sub-subcontractors are combined for insurance purposes. A wrap-up insurance program is required of and controlled by the general contractor. The agents and brokers of beneficiary contractors serve their insureds by modifying their general liability and workers compensation insurance to exclude coverage for the designated project. With large projects, it is important to pay attention to the adequacy of insurance limits.

Crop And Livestock Coverages Definitions

BLOODSTOCK INSURANCE is mortality insurance for horses, usually applying to valuable racing horses such as thoroughbreds, standardbreds or quarterhorses, as well as to prized show horses such as Arabians, Palominos and Tennessee Walking Horses. This coverage is available to cover both stallions and brood mares. Rates vary, depending on factors such as the horse's age, use, value, sex and other considerations that may affect writing the coverage. All insurers require certification by a veterinarian that the animal is in sound health and is free of illness, disability, etc. The market for this coverage is very limited and includes only a few underwriters generally thought of as specialists in the field of equine insurance.

CROP HAIL COVERAGE indemnifies owners of growing crops, or tenant farmers with an interest in such crops, for loss or damage to them by hail, including wind damage when accompanied by hail. Insurance is generally written beginning in the late spring or early summer and ends after the crop is harvested. This coverage is written only by application to the insurance company. Rates vary according to regional experience and the nature of the crop.

LIVESTOCK COVERAGE FORM insures livestock against loss due to death or the necessary destruction of cattle, sheep, swine, goats, horses, mules and donkeys as a result of any of the listed basic causes of loss. One of these specified, basic causes of loss is fire.

LIVESTOCK MORTALITY COVERAGE is "life insurance" for livestock animals, chiefly farm livestock such as cattle, pigs and goats. It indemnifies the insured for loss due to their death from natural causes, fire and lightning, accident, acts of God, acts of men other than the owner or employees and necessary destruction for humane purposes. Livestock mortality, as opposed to "bloodstock" insurance, is mainly written on registered cattle and herds, as well as other farm livestock and zoo animals.

MULTIPLE PERIL CROP INSURANCE is comparable to all risk coverage available from the Federal Crop Insurance Corporation, which is now available through independent insurance agents. It covers any unavoidable cause of loss due to adverse weather conditions, including damage caused by wildlife, insect infestation, fire and other significant causes of loss. It is written by members of the Crop Hail Insurance Actuarial Association (CHIAA), either as a self-contained policy or by endorsement to a crop hail policy. It is available in a growing number of states for a number of different crops.

Insurance Definitions, Dictionary And Glossary - The Bottom Line

We hope that the Insurance Definitions, Dictionary And Glossary helps you to better understand the many commercial insurance policies available for your business. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring businesses like yours.

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