Know the Jargon: 10 Key Business Insurance Terms
Operating a small business without sufficient insurance coverage can leave you vulnerable to unnecessary loss. Lawsuits, accidents, and natural disasters are only a few of the risks that you can (and should!) guard yourself and your company against.
When shopping for insurance, though, you probably don't have time to sift through all the jargon insurance companies use, especially if you need coverage immediately. Use this page as you read through quotes or policies to make sure you're clear on what your provider is offering.
An additional insured is another person who is added to a current insurance policy. One example parents might be familiar with is adding a teenage driver to an auto insurance policy.
Certificate of Liability Insurance
A Certificate of Liability Insurance is the official document that states the dates that your insurance policy is active. It can be used to prove you have insurance coverage if a client requires proof of such coverage. Insureon's online application process makes it possible to receive a Certificate of Liability Insurance within hours of submitting your application.
Anyone who makes a claim on your insurance policy. This insurance industry term may refer to you or a third party when requesting payment from an insurance company. The type of claimant varies depending on how broad your insurance coverage is.
A deductible is the amount you (or your business) must pay for damage before coverage takes effect and you receive payments from the insurance company. Often, premiums and deductibles have an inverse relationship: policies with lower premiums tend to have higher deductibles (e.g., you pay less each month for coverage but you have to pay more out of pocket before coverage kicks in if you make a claim), and policies with higher premiums tend to have lower deductibles. Some insurance policies may not have any deductible, paying benefits without requiring you to pay a single dime.
One of the most commonly misinterpreted terms in the insurance industry is exposure. Exposure is usually a dollar amount that measures your vulnerability to losses. A good example would be a business located along the coast that has a high natural disaster exposure. Every so often, insurance policies may use wording that explains exposure in units instead of dollars.
General Liability Insurance
This kind of insurance is very common in the insurance industry. General Liability policies may cover accidents that occur on the premises of your business or as a result of your products (or services).
The actual contract of insurance coverage. These written contracts contain all of the different sections and related attachments. Remember that the wording of your insurance policy is extremely important because it explains all of the nuts and bolts of your insurance contract.
The price of insurance coverage, often paid on a monthly or yearly basis. Premiums vary based upon how much risk you have and how long your coverage will last.
Quotes are estimates of a premium. Insurance companies take a lot of factors into account before issuing a quote to you. These may be the nature of your business, how many employees you have, and other factors that may affect your business, such as the risk of flooding or the types of equipment you use. Quotes allow you to comparison shop for the best bargain.
The reaffirmation of insurance coverage beyond a policy's initial end date. Some policies have automatic renewals, but others require you to re-apply for coverage, so always remember to double check renewal details.
Knowledge = Power!
Insurance industry jargon can be intimidating at first glance, but the most transparent and reliable insurance companies in the business can guide small business owners through the mumbo-jumbo. Insureon has the expertise to help you and your business cut through the confusion and make an informed decision that will protect your business from the risks it faces.