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Glossary Of Terms

This glossary provides only a simplified description of coverages and is not a statement of contract. Coverage may not apply in all states. For complete details of coverages, conditions, limits and losses not covered, be sure to read the policy, including allĀ  forms, endorsements, and exclusions.

Additional insured
One who qualifies as "insured" under the terms of a policy even though not named as insured. Officers of a corporation may be included as insureds under the terms of a policy written in the name of the corporation.

Admitted company
An insurance company that is licensed (admitted) to conduct business within a given state.

Aggregate limit
The maximum amount an insurer will pay under a policy in any one policy period.

Automobile liability insurance
Insurance in which the insurer agrees to pay all sums for which the insured is legally obligated because of bodily injury or property damage arising from the ownership, maintenance, or use of an auto.

Bodily Injury
In Commercial General Liability insurance, refers to injuries to a person, as well as sickness, disease and death.

Certificate of insurance
A written description of insurance in effect as of the date and time of the certificate. The certificate does not ordinarily confer any rights on the holder, i.e., the issuing insurer does not promise to inform the holder of change in or cancellation of coverage.

Commercial General Liability (CGL)
The CGL policy is an ISO form, widely used to provide commercial enterprises with premises and operations liability coverage, products and completed operations insurance and personal injury coverage. Premises medical payments coverage is often included as well.

Contractual liability
Liability that does not arise by the way of negligence but by assumption under contract. For example, in certain leases, a tenant may assume a landlord's liability to others unsafe conditions on the premises. Some such assumptions are covered automatically under the Commercial General Liability form.

Deductible
The part of the loss that is to be borne by the insured; it comes off the top of any payment from the insurer.

Earned premium
The amount of policy premium that has been earned at any point in time from inception of term to the end. A disproportionate amount will have been "earned" during the early days of contract that is subject to short rate cancellation.

Excess insurance
Coverage that applies on top of underlying insurance that is primary, i.e., that pays until its coverage limit is exhausted at which point that excess coverage takes over.

Exclusion
Anything specifically stated in an insurance policy as not covered by the policy.

Fire legal liability
Public liability policies routinely exclude coverage for damage to property in an insured's care, custody, or control. This leaves a big gap in a tenant's coverage, a gap partially filled by an exception in the commercial general liability policy that restores limited coverage for fire damage to the landlord's building. Perhaps the best benefit of the exception is to call attention to the exposure so arrangement can be made for broader coverage at appropriate limits.

First named insured
An insurance policy may have more than one party named as insured. In such cases, the first named insured attends to policy "housekeeping," i.e., pays premium, initiates (or receive notice of) cancellation, or calls for interim changes in the contract. This is spelled out in commercial policies in the "common policy conditions."

Hired auto
A nonowned auto that may be borrowed as well as rented or leased by the insured. Personal auto policy insureds are covered automatically for hired autos, but business auto policy insureds may not be.

Hold harmless agreement
A contractual assumption by one party of the liability exposure of another. Lease agreements, for example, commonly require the tenant to hold the landlord harmless for bodily injury to property damage experienced by others on the premises.

Inland marine insurance
Property insurance signaling broad coverage of properties exposed to the transportation peril and those subject to being used or kept at a location other than the insured's customary premises. Eligible property is identified in the so-called "Nationwide Definition of Marine Insurance."

Limits of Insurance
The greatest amount of insurance a policy will provide; the amount beyond which the insurer is no longer required to pay.

Minimum premium
An insurer's lowest charge for an insurance policy.

Misrepresentation
Generally, misstatement of facts made on an application for insurance. May also be misstatement of coverage made by an agent to an insured.

Named insured
The individual or organization named in the declaration of an insurance policy as the insured, as opposed to someone who may have an interest in the coverage, but is not named in the policy.

Nonowned auto
This term signifies an auto that is neither owned, hired, nor borrowed by the insured under a commercial auto policy. Employees' cars used in company business are commonly classified this way. The employer's auto liability cover for use of nonowned autos is covered by entry of symbol 1 ("any auto") or symbol 9 ("nonowned autos") on the declaration page.

Occurrence
In general, an event that triggers coverage under any policy. Specifically, an event that triggers coverage under an occurrence-based liability policy. Such a policy covers injury or damage that occurs during the policy period even if claim is brought months or even years after the policy has expired.

Products and completed operations liability
The liability exposure of the manufacturer whose malfunctioning products may cause injury or property damage or of the contractors whose failed structures or projects may do the same. Coverage of the exposure is a feature of the commercial general liability policy. The insurance does not in any way constitute a guarantee of either the insured's product or work. Contrast with "premises and operations liability.."

Professional liability
A form of errors and omissions insurance, (sometimes called "malpractice" coverage of errors alleged against those in the healing and legal professions). Arbitrarily it seems, "error and omissions" is the term applied most often to insurance covering liability for mistakes in matters affecting property, i.e., coverage for "Insurance Agents E&O," "Architects E&O while "professional liability" is used in reference to coverages such as "Druggists Professional Liability," Physicians and Surgeons Professional Liability," and "Lawyers Professional Liability."

Property Damage
In the Commercial General Liability coverage forms, refers to physical damage to tangible property and to loss of use tangible property, whether or not physically damaged.

Umbrella liability
A liability contract with high limits covering over top of primary liability coverages and, subject to deductible, covering exposures otherwise uninsured.

Waiver of subrogation
An insurer has the right of subrogation; however, it may waive that right through this method.

Workers Compensation and Employers Liability Insurance
A type of liability insurance not included in the Commercial General Liability coverage part. Workers Compensation makes benefits payable for injuries to, disability or death of an employee without regard to liability. Employers Liability covers the common-law liability of an employer for injuries to an employee. Because these coverages are related specifically to employer-employee relationships, they are not characterized as general liability.