Insurance Terms


A sudden, unintended, unforeseen and unexpected event.

Aggregate Limit of Indemnity

The maximum amount an insurer will pay for all accumulated claims arising within a specified period of insurance.

All Risk Insurance

The name given to a policy which covers against the loss caused by all perils except those that are specifically excluded by the terms of the policy.


A contract for temporary insurance issued either in writing or orally pending issuance of a policy of insurance.

Blanket Coverage

Coverage for liability and property that extends to more than one class of property, location, or employee.

Bodily Injury Liability

Insurance protection against loss arising out of the liability imposed upon the insured by law for damages because of bodily injury, sickness or disease sustained by any person or persons other than employees.

Builders Risk Insurance

Insurance designed to cover buildings in the course of construction. Also known as course of construction insurance.

Business Auto

Coverage for vehicles used primarily for business purposes, or owned, leased or titled to a business. Also known as a fleet policy or commercial auto policy.

Business Interruption

Loss of income due to property damage to a business facility.

Business Owner’s Policy

Business insurance typically combining property, liability, and business interruption coverage.

Calendar Year Deductible

In health insurance, the amount that must be paid by the insured policyholder in one calendar year before the insurer becomes responsible for additional costs.

CG20 10 11 85

This endorsement is used to cover completed operations (often referred to as “your work”) previously performed for that specific client. This includes work completed previous to the current policy’s coverage. Many clients will request the ‘11/85’ even if you have never worked for them, often because someone else has incorrectly told them that they need it.
*Note: This endorsement is mainly used for commercial jobs or heavily commercial contractors. There are many (equivalent or substitute) versions of this endorsement that exist, but the only real variance is the way the wording itself is drafted. This endorsement is rarely –if ever- used for residential work.


A demand for payment under an insurance contract or bond. The estimated or actual amount of a loss incurred and covered under a policy agreement.

Commercial General Liability

Coverage against third-party claims for injury, bodily injury, and property damage.

Convertible Term Insurance Policy

A life insurance policy which may be converted from term to permanent without a medical assessment, and renewed regardless of the health of the insured subject.


Protection under an insurance policy. In property insurance, coverage lists perils insured against properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits.


The amount of a loss paid by the policyholder.

Effective Date

The date that coverage starts under an insurance contract.


This is a restriction in your business liability insurance limiting and/or excluding coverage for certain potential catastrophic events, people, property or locations.

Grace Period

This is a period of time that insurance coverage continues beyond the actual expiration date of a policy that you intend to renew. A policy will lapse if the premium is not paid by the end of this period.

Gross Premium

Total amount paid by insured.


A specific situation that introduces or increases the probability of the occurrence of a loss arising from a peril, or that may influence the extent of a loss.

Insurance Broker

A person who sells, solicits, or negotiates insurance for a client.

Liability Insurance

Provides protection from lawsuits of others.

Liability Limits

The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy. The majority of policies covering liability for bodily injury have two limits: a limit of liability to any one person; and another limit, usually higher, for any single accident where more than one person is involved.


Physical damage to a person or property, including loss of income or loss of use.

Loss Payee

The party named in a loss payable clause, to which insurance proceeds are to be paid in the event of damage to property in which the loss payee has an insurable interest.

For example, some contracts that the state enters into require that the state name a vehicle or equipment owner as loss payee. This means that if the state damages or destroys the rented or leased equipment, the owner, not the state will get the money to repair the property.

Minimum Premium

The minimum amount an issuer will accept to issue a policy even if the gross premium is a lesser amount.

Named Insured

The individual defined in the policy contract as the insured.

Named Peril

Coverage for losses explicitly defined in the policy contract.

Non-contributory Wording

This is a specific clause included in certain endorsements. It is normally used in conjunction with Primary Wording (together known as Primary & Non-contributory Wording) and when combined say: Should a claim arise due to work done by your company on behalf of another company or for an owner, their insurance will not pay out to help cover the claim, even after your insurance has paid to its limits (Any remaining or additional judgment against you must be paid out-of-pocket).


An accident or incident, including injurious exposure to conditions, neither expected or intended which results in bodily injury or property damage during the policy period.

Ongoing Operations

This endorsement is used to cover work that is in progress during the policy’s effective dates or is planned to begin during the policy period. The coverage provided under this endorsement ceases at the policy’s expiration. Does not include completed operations (“your work”). In fact, completed operations are often specifically excluded from this endorsement’s coverage.
*Note: Can be used in conjunction with 11/85 equivalent to cover ongoing and completed operations.

Package Policy

Two or more separate policies combined into one single contract. Also known as “bundling.”


The cause of personal injury or property damage, the cause of loss.


A written contract. Legally bound insurance agreement.

Policy Limit

The policy limit is the dollar amount of coverage shown in the contract.

Primary Wording

This is a specific clause included in certain endorsements. It basically says: Should a claim arise due to work done by your company on behalf of another company (such as subcontractor work for a general contractor or work done for a property owner), your insurance will pay (up to its limits) before their insurance will begin to pay for any claims or damages.

Proof of Loss

A written document which must be filled by an insured when a loss occurs under a property insurance policy.


The restoration of a lapsed or cancelled policy.


An amendment to an insurance policy agreement.


The probability of an insured loss occurring.


Policy section stating the main details of the insured, their business activities, the application of any special terms or restrictions plus other details specific to the particular insurance and premium.


The insurance company’s right to pursue legal action in the policyholder’s name against the party considered legally liable for the loss or damage.

Third Party

The person other than the insured who has incurred losses or is entitled to receive payments.

Waiver of Subrogation

This is an additional endorsement used to exclude your client specifically from any possible recovery action for payments made by your insurance company.

Example: Particularly if you are a sub contractor and a general has asked you to name them as additional insured with primary wording and waiver of subrogation. When you list someone as an additional insured, that endorsement provides coverage for that entity or individual under your policy if they are sued because of your negligence. In addition they will be notified of any cancellation of your policy. In most cases the general will ask you to add primary wording and waiver of subrogation. Primary wording makes your insurance the primary insurance for the general themselves. Waiver of subrogation means that your insurance company cannot subrogate back against the general for their negligence.

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