Just about every industry has a distinct vocabulary that may be foreign to others. From doctors to lawyers to banks to architects, almost every field has a set of terms that are characteristic to that field.
The insurance industry has jargon that is unique to it as well, but every business needs to have some familiarity with insurance terminology. Business insurance can be complicated, but it is essential for every business owner or operator to know at least the following business insurance lingo.
Common Business Insurance Terms
Specific language is routinely used when talking about the basics of business insurance. Some of these terms include:
- Deductible – The amount you have to pay out of pocket before the insurance pays toward the claim. The higher the cost of the deductible, the lower the premium, which is the amount that you pay for your policy.
- Claim – This is a formal request to an insurance company for compensation of a covered incident.
- Endorsement – Also known as a rider, an endorsement is an attachment to a policy that modifies its terms and conditions.
- Certificate of Insurance – This is proof of your insurance policy, which shows the limits and deductibles, the effective dates of the plan, and your insurance company provider.
- Quote – An estimate of the cost of a premium.
- Primary Policy – The first policy to respond to a claim.
Common Types of Business Insurance
Different businesses may need different types of business insurance. Here are some of the most common types:
- General Liability Insurance – This insurance protects businesses against most lawsuits for bodily injury or property damage.
- Errors and Omissions Insurance – Also called professional liability insurance, errors and omissions insurance covers you if a client believes your professional service was conducted incorrectly. This type of coverage should include your legal fees if a lawsuit is filed, yet you are not found responsible for any wrongdoing. It will be customized to the unique needs of your business.
- Commercial Property Insurance – This insurance covers commercial property assets, such as damage to buildings and contents, and is a necessity whether you own or lease your business space. Coverage includes signage, equipment, furniture, and inventory. This type of insurance usually covers theft or disasters such as fire or a storm.
- Home-Based Business Insurance – If you are running your business out of your home, you may need separate coverage to protect your equipment or inventory.
- Worker’s Compensation Insurance – This is insurance that will cover an employee’s medical treatment if an employee is injured or dies because of a work-related accident. Even if your employees have jobs that are not high risk, there is a chance of someone filing a claim for a slip and fall accident or the development of a medical condition such as carpal tunnel syndrome.
- Vehicle Insurance – This is insurance to cover company vehicles, and it includes coverage to protect the business against liability if the company vehicle is involved in a collision.
- Umbrella Insurance – This insurance offers additional coverage beyond the basic policy. It provides an added layer of coverage for business assets to protect an owner from having to pay if a claim arose.
- Business Interruption Insurance – Insurance that covers lost earnings after a disaster or other uncontrollable event.
- Business Owner’s Policy – A policy in which several types of business insurance are grouped together, such as liability insurance, property insurance, and business interruption insurance.
Protecting Your Business
Whether you are the owner of a large or small business, it's essential to protect you and your employees with the right insurance coverage, and understanding the business insurance jargon is a critical step to making sure you have adequate coverage. Without the proper coverage, a single lawsuit or natural disaster could wipe out your company.
If you feel you still need help understanding what business insurance is right for you, feel free to contact one of our independent agents.