Operating a business can be a complicated process but investing in the right insurance policy to protect your business doesn’t have to be. With so much information available at your fingertips, there’s no need to walk into your insurance agent’s office scratching your head. With just a bit of research, you can master the basic insurance terminology and feel confident that you’re properly protecting your business, employees, and other related assets. If you’re looking to learn more about business insurance terms and definitions, you’re already a step ahead of many of your peers. Keep reading to learn more about common insurance terms that will help you to better understand your business policy.
Business Insurance Terms Glossary: Important Insurance Terms to Know
General liability insurance covers damages related to bodily injury and property damage to a third party. This means that if a client slips and falls in your building, their medical expenses will most likely be covered by your insurance policy. Similarly, if their luxury vehicle was damaged by one of your employees, the cost to repair the vehicle should also be covered under general liability insurance. This essential business insurance should also cover:
- Product Liability — or injuries from products that your business sells.
- Advertising Injury — or allegations of intellectual property infringement. For example, using the same logo, trademark, or business name of another company.
- Personal Injury — or allegations of libel or slander committed by your company.
- Tenant’s Legal Liability — or damages to the building that you rent for your business operations.
Professional liability insurance works to protect your business in the event that any of the professional services that you offer are completed incorrectly, This coverage is often referred to as “errors and omissions” insurance and can include instances of libel and slander, negligence, and copyright or trademark infringement. In a covered event, this important business insurance should cover the cost of legal fees and any settlements that may be reached, even if you feel your business did nothing wrong.
Claims Made vs. Occurrence Form
Did you know that there are two basic forms of business insurance coverage that you can choose from? Business owners can select either a claims-made form or occurrence form. While both are very similar, the major difference between the two is how the coverage is activated. A claims-made policy covers incidents that are reported during your active policy period or extended reporting period and those that occur after the policies retroactive start date. To be determined as a qualifying event, all incidents must meet both criteria.
An occurrence from policy covers incidents that take place during a specific coverage period, regardless of when the incident is actually reported. For example, you purchase your business insurance policy on an occurrence basis and your coverage is effective from February 1, 2019 to January 31, 2020. However, you end up filing a property damage claim in March 2020 for an accident that took place under the policy in January 2020, the claim will most likely be covered because it occurred within the coverage period.
Admitted vs. Non-Admitted Insurance Carriers
Admitted insurance providers have been approved by your states’ insurance department, meaning:
- They must comply with all state regulations regarding insurance, and their services are being overseen by the National Association of Insurance Commissioners.
- If the insurance provider fails financially, the state will then step in to complete payments on all covered claims.
Non-admitted insurance carriers are not approved by the stats’ insurance department, meaning:
- The insurance provider may not comply with all state regulations.
- If the insurance provider fails financially, policyholders have no guarantee that all claims will be paid, even if the claim is still active.
- If you feel that your claim was handled improperly, you will not be able to appeal to the state insurance department.
When purchasing a policy from an admitted insurance provider, business owners can avoid paying additional fees and taxes, will have a guarantee that their claims are covered even if the insurer becomes insolvent, and the option to appeal a mishandled claim. However, it may be beneficial to work with a non-admitted provider if your business faces a set of risks that are not covered by the standard insurance market. For example, if you work in a hurricane zone and need comprehensive coverage.
Want more information on basic insurance terminology? Read more on Marine Agency’s Insurance Glossary Terms: Part 2.
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Have additional questions about other important insurance terms? Give us a call at 1.800.763.4775 or contact our knowledgeable agents online today for more insurance terms explained.