Insurance Terms

This glossary provides insurance terms definition and explanation commonly used in insurance business world.

Our insurance terms glossary is divided alphabetically by insurance terms in a quick reference guide to assist understanding the language commonly used by insurance companies. Policy documents contain a number of insurance terms because they typically define the limitations of risk and liability on the insured and any exclusions of coverage.

Select the first letter of the word or term to locate a definition and brief description. For example, to get help with the terms "Automobile Liability Insurance", select either the letter A from the menu tabs below:


The act or process of diminishing the presence of a pollutant (e.g., asbestos or lead) in either degree or intensity.


In common usage: an unforeseen and unplanned event or circumstances; or an unfortunate event resulting especially from carelessness or ignorance (Webster's Dictionary).

In insurance, 'Accident' a term that is included within the insuring agreement of many types of liability insurance. In a few cases, the word "accident" is a defined term within the policy. In most cases, however, common law becomes the determinant of what is, or is not, an accident for purposes of triggering coverage.

Account Current

Account current refers to the financial report issued to an insurance agent by the insurance company. It contains the transactions made in a certain period of time. These transactions involve the premium payments, commissions, approved policies, and cancelled policies.

Actual Cash Value (ACV)

In property and auto physical damage insurance, one of several possible methods of establishing the value of insured property to determine the amount the insurer will pay in the event of loss. Actual cash value (ACV) is the amount equal to the replacement cost minus depreciation of a damaged or stolen property at the time of the loss. The actual value for which the property could be sold, which is always less than what it would cost to replace it.

For example, a man purchased a television set for $3,000 five years ago and it was destroyed in a hurricane. His insurance company says that all televisions have a useful life of 10 years. A similar television today costs $3,500. The destroyed television had 50 percent (5 years) of its life remaining. The actual cash value equals $2,500 (replacement cost) times 50 percent (useful life remaining) or $1,750.


Actuarial refers to anything relating to actuaries or data, statistics, and figures calculated for the purposes of assessing risk and determining premium rates. It may be used to qualify tables, reports, exams, charts, adjustments, and so on.


An actuary is a professional statistician who calculates the risks associated with insurance coverage and the likelihood that claims will be filed or that benefits will have to be paid out. Using relevant statistical data, actuaries also compute dividends and decide premium rates.


Actual cash value (ACV) is one way that insurance companies measure the worth of assets for an insurance claim. They consider a fair market price of what the asset could have been sold for on the day it was lost, stolen, or destroyed. This typically comes out to a lower amount than the policyholder originally paid for the asset because assets lose value over time due to depreciation and wear and tear.


An addendum is an addition to an insurance contract that either adds or removes coverage for a particular circumstance. It is included if either the insurer or the policyholder feels the need to adjust coverage. Once added, it too becomes legally binding, along with the original contract.

Additional Insured

A person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured. A named insured's impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., wanting to protect church members performing services for the insured church) or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of property leased by the named insured). In liability insurance, additional insured status is commonly used in conjunction with an indemnity agreement between the named insured (the indemnitor) and the party requesting additional insured status (the indemnitee). Having the rights of an insured under its indemnitor's commercial general liability (CGL) policy is viewed by most indemnitees as a way of backing up the promise of indemnification. If the indemnity agreement proves unenforceable for some reason, the indemnitee may still be able to obtain coverage for its liability by making a claim directly as an additional insured under the indemnitor's CGL policy. In property insurance, additional insured status is most often used in conjunction with a premises lease agreement between the named insured as the lessee and the owner of the leased building, in which the insured tenant is required to purchase insurance on the leased building and name the building owner as an additional insured on the insurance policy with respect to the leased building

dditional Named Insured

(1) A person or organization, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations. (2) A person or organization added to a policy after the policy is written with the status of named insured. This entity would have the same rights and responsibilities as an entity named as an insured in the policy declarations (other than those rights and responsibilities reserved to the first named insured). In this sense, the term can be contrasted with additional insured, a person or organization added to a policy as an insured but not as a named insured. The term has not acquired a uniformly agreed upon meaning within the insurance industry, and use of the term in the two different senses defined above often produces confusion in requests for additional insured status between contracting parties.


Backdating is the practice of assigning a date to a document that is earlier than the date the document was originally created or signed and finalized.


A legal agreement issued by either an agent or an insurer to provide temporary evidence of insurance until a policy can be issued. Binders should contain definite time limits, should be in writing, and should clearly designate the insurer with which the risk is bound. They should also indicate the amount of insurance, the type of policy, and (in the case of property insurance) the perils insured against.

Bodily Injury Coverage

Third-party insurance policy that pays damages arising from bodily injuries caused to others by the policyholder's action(s). It typically covers the expenses such as for ambulance service, doctors' fees, hospital charges, physical rehabilitation of the injured, and legal costs of the policy holder. It may also cover injured person's loss of income or earning capacity.

Bodily Injury Liability Insurance

Bodily injury liability insurance provides coverage for losses that result from the policyholder being responsible for an accident that caused bodily injury to another.

Boiler and Machinery Insurance

Boiler and machinery (BM) insurance is a policy that covers the damages resulting from the breakdown of equipment. It may cover the cost of repairing or replacing damaged equipment, property loss, lost business income, temporary replacement costs, other expenses aimed to mitigating operations slowdown, spoiled products or materials, and expenses for business recovery

Business Interruption Loss

Loss that results when a breach or malfunction of a business's computer systems causes a loss of income to the firm.

Broker of Record

A broker of record is an insurance agent a policyholder designates to represent, oversee, and manage their insurance policy. This individual deals with the insurance provider on the client's behalf and may receive all communications, notices, and quotes for the client. In addition, they may suggest adjustments to existing policie.

Commercial General Liability (CGL) Policy

A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability. The CGL policy was introduced in 1986 and replaced the "comprehensive" general liability policy.

Cloud Computing

A method of delivering information technology services (i.e., hardware and software) in which resources are hosted and retrieved from the Internet through Web-based tools and applications rather than a direct connection to a local server. The cloud computing structure allows access to information as long as an electronic device has access to the Web. The word "cloud" is used as an analogy for the "Internet" because many network diagrams use the image of a cloud to represent the Internet.

Claims-Made Policy

A policy providing coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place. (The one exception is when a retroactive date is applicable to a claims-made policy. In such instances, the wrongful act that gave rise to the claim must have taken place on or after the retroactive date.) Most professional, errors and omissions (E&O), directors and officers (D&O), and employment practices liability insurance (EPLI) is written as claims-made policies.

Claims-Made and Reported Policy

A type of claims-made policy in which a claim must be both made against the insured and reported to the insurer during the policy period for coverage to apply. Claims-made and reported policies are unfavorable from the insured's standpoint because it is sometimes difficult to report a claim to an insurer during a policy period if the claim is made late in that policy period. However, more liberal versions of claims-made and reported policies provide post-policy "windows", which allow insureds to report claims to the insurer within 30 to 60 days following policy expiration.

Coinsurance Hammer Clause

An alternative to the standard hammer clause found within professional, directors and officers (D&O), and errors and omissions (E&O) policy forms. Such a provision provides for a sharing of defense and indemnity costs (between the insured and the insurer) incurred after the insured refuses to consent to a settlement proposed by an insurer. The most common sharing percentage is 50/50, but it can sometimes go higher (e.g., 70 insurer/30 insured). The effect of such clauses is to reduce the amount of indemnity and defense costs that an insured could potentially incur if it refuses to consent to a settlement amount recommended by an insurer.

Computer Fraud

In a computer fraud situation, after gaining access to a company's network, the criminal uses such access to obtain valuable data or information.

Computer Network

A term that includes not only servers and web applications regularly accessed by desktop, mobile phone, and laptop users, but also credit card processors, mobile apps, and other devices connected to the Internet in some capacity.

Computer Virus

A hidden, self-replicating software program, usually containing malicious logic, that propagates by inserting copies of itself into and becoming part of another host program. It is designed to infect and gain control over vulnerable systems without the user's knowledge or consent and is activated when a user runs or opens its host program. Computer viruses can cause frequent computer crashes or pop-up messages, corrupt or delete data on a computer, reformat the hard drive, use an e-mail program to spread the virus to other computers, or flood a network with traffic, ultimately making it impossible to perform any Internet activity.

Computer Warm

A self-replicating, self-propagating, self-contained program that uses network mechanisms to spread itself. Unlike computer viruses, worms do not require human involvement to propagate. Worms can do damage by reproduction, consuming internal disk and memory resources within a single computer, exhausting network bandwidth, deleting files, or making it impossible to send documents via e-mail.


A corporation is an "artificial person" created under the laws of a given state. This means that a corporation has an identity and existence distinct and independent from that of its individual owners.

Corporations have the power to (1) act; (2) contract; (3) sue/be sued; and (4) own, manage, and buy/sell property.

The profits (and losses) of the corporation are distributed according to the ownership interest (i.e., the percentage of total shares) owned by each shareholder.

Coverage Trigger

The event that must occur before a particular liability policy applies to a given loss. Under an occurrence policy, the occurrence of injury or damage is the trigger; liability will be covered under that policy if the injury or damage occurred during the policy period. Under a claims-made policy, the making of a claim triggers coverage. Coverage triggers serve to determine which liability policy in a series of policies covers a particular loss.

Credit Monitoring

Service that detects situations where a "bad actor" attempts to open new or use existing credit lines

Cyber and Privacy Insurance

A type of insurance designed to cover consumers of technology services or products. More specifically, the policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network.

Most notably, but not exclusively, cyber and privacy policies cover a business's liability for a data breach in which the firm's customers' personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm's electronic network. The policies cover a variety of expenses associated with data breaches, including notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.

In addition, the policies cover liability arising from website media content, as well as property exposures from (1) business interruption, (2) data loss/destruction, (3) computer fraud, (4) funds transfer loss, and (5) cyber extortion

Cyber and privacy insurance is often confused with technology errors and omissions (E&O) insurance. In contrast to cyber and privacy insurance, technology E&O coverage is intended to protect providers of technology products and services, such as computer software and hardware manufacturers, website designers, and firms that store corporate data on an off-site basis. Nevertheless, technology E&O insurance policies do contain a number of the same insuring agreements as cyber and privacy policies.

Cyber Extortion

A type of online crime in which a criminal threatens to damage or shut down a company's website, e-mail server, or computer system or threatens to expose electronic data or information belonging to the company unless the company pays the criminal a specific ransom amount.

Cyber Extortion Coverage

An insuring agreement contained within some policies written to cover claims associated with data breaches. Such policies are most often termed "cyber and privacy insurance", "information security and privacy insurance", and "cyber security insurance".

Data Asset Coverage

An insuring agreement in a cyber and privacy policy that covers the cost of restoring and recovering the data lost from the "failure of an insured's computer security", meaning situations where a computer system is breached by a hacker.

Defense Within Limits

A liability policy provision according to which amounts paid by the insurer to defend the insured against a claim or suit reduce the policy's applicable limit of insurance. General liability policies are ordinarily not subject to such a provision, although the standard commercial general liability (CGL) policy provides for defense of the named insured's indemnitee "within limits" when the named insured has a contractual obligation to provide such a defense. Defense within limits is more common in professional liability policies.

Denial of Service Attack (DoS)

A deliberately planned attack on a computer system or network that causes a loss of use of the computer system or network to legitimate users. Examples of denial of service attacks include flooding network connections to prevent legitimate network traffic, denying communication between systems, preventing a particular individual from accessing an Internet-based service, and disrupting service to a specific system or individual.

Dependent Business Interruption Loss

Dependent business interruption loss, as defined by those insurers whom offer this coverage within their cyber and privacy forms, typically results from the failure of service providers' computer systems (rather than the insured's systems). This failure, in turn, leads to an interruption in the insured's business and a subsequent loss of revenue.


Unfair or illegal treatment of or denial of rights to persons on the basis of certain arbitrarily chosen attributes or characteristics, including race, gender, religion, creed, age, medical condition, pregnancy, sexual orientation/preference, physical appearance, marital status, physical or mental disability, or national origin.

Duty To Defend

A term used to describe an insurer's obligation to provide an insured with defense to claims made under a liability insurance policy. As a general rule, an insured need only establish that there is potential for coverage under a policy to give rise to the insurer's duty to defend. Therefore, the duty to defend may exist even where coverage is in doubt and ultimately does not apply. Implicit in this rule is the principle that an insurer's duty to defend an insured is broader than its duty to indemnify. Moreover, an insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insured's favor.

Employee Benefits Liability

Liability of an employer for an error or omission in the administration of an employee benefit program, such as failure to advise employees of benefit programs. Coverage of this exposure is usually provided by endorsement to the general liability policy but may also be provided by a fiduciary liability policy.

Employee Benefits Liability Insurance

Policies that cover claims involving nondiscretionary, administrative errors pertaining to pension and benefit plans (e.g., failing to name an intended beneficiary on a life insurance policy, failure to enroll an employee in a company 401(k) plan).

Extended Reporting Period (ERP)

A designated time period after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period. This policy endorsement is also known as tail coverage.

Employee Retirement Income Security Act (ERISA)

Federal law that established rules and regulations to govern employer-provided pensions and other employee benefits provided to US employees.

Extra Expense Coverage

Insurance that pays for additional costs in excess of normal operating expenses that an organization incurs to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss.


As defined by the Employee Retirement Income Security Act (ERISA), an individual or corporation that (1) exercises any discretionary authority or discretionary control in managing a pension or benefit plan or exercises any authority or control in managing or disposing of its assets; (2) renders investment advice for a fee or other compensation, with respect to any monies or other property belonging to the plan; or (3) has any discretionary authority or responsibility in administering the plan. ERISA, which was passed in 1974, not only formalized the law associated with the administration of employee pension and benefit plans; it also broadened the scope of such liability so that it became a "personal" rather than simply a "corporate" liability. The effect of this change was that soon after ERISA's enactment, insurance companies began offering fiduciary liability insurance policies, which were specifically designed to cover this newly legislated exposure.

Fiduciary Liability

The responsibility on trustees, employers, fiduciaries, professional administrators, and the plan itself with respect to errors and omissions (E&O) in the administration of employee benefit programs as imposed by the Employee Retirement Income Security Act (ERISA).

First Dollar Coverage

A coverage feature of some liability policies in which retentions do not apply to defense costs, even if no indemnity payments are made in conjunction with a claim. For example, if an insurer were to expend $10,000 on defense of a claim and nothing for indemnity, the insured would not be required to pay any out-of-pocket costs for defense.

Full Prior Acts Coverage

A type of claims-made liability policy that does not contain a retroactive date and therefore covers claims arising from acts that took place at any time prior to the inception date of the policy-regardless of how far in the past. For example, assume that an insured has a claims-made policy that includes a January 1, 2000, retroactive date and a January 1, 2016-17, term. If a claim is made against the insured on July 1, 2016, and the claim arose from a wrongful act that took place on January 1, 1998, there would be no coverage under the policy. This is because the wrongful act took place prior to the January 1, 2000, retroactive date. Now assume that another insured has a policy written with the same January 1, 2016-17, policy term, but the policy contains no retroactive date. If a claim were made against the insured on July 1, 2016, from a wrongful act that took place on January 1, 1998, coverage would apply because the absence of a retroactive date means that regardless of how far in the past a wrongful act giving rise to a claim took place, the claim will be covered (as long as it is made against the insured during the policy period). Full prior acts coverage is most likely to be granted when an applicant already has coverage in place at the time it submits an application. On the other hand, underwriters generally do not provide full prior acts coverage to insureds that have not previously purchased liability insurance. This is because underwriters sometimes believe that an applicant's desire to buy coverage at this juncture may be motivated by the applicant's intention to report a claim under the new policy.

General Data Protection Regulation (GDPR)

A regulation aimed at improving security for all companies processing personal data for subjects in the European Union regardless of the company's location. GDPR states that organizations can be fined "up to 4% of annual global turnover or €20 million (whichever is greater)" for the most serious violations.

Hammer Clause

A provision (also known as the "consent to settlement clause" and "blackmail settlement clause") found in professional liability insurance policies that requires an insurer to seek an insured's approval prior to settling a claim for a specific amount. However, if the insured does not approve the recommended figure, the consent to settlement clause states that the insurer will not be liable for any additional monies required to settle the claim or for the defense costs that accrue from the point after the insurer makes the settlement recommendation.

Health Insurance Portability and Accountability Act (HIPAA)

A federal law that affords rights and protections for participants and beneficiaries in group health plans. HIPAA includes (1) protections for coverage under group health plans that would otherwise limit or exclude coverage for preexisting conditions, (2) prohibitions of discrimination against employees and dependents based on their health status, and (3) allowance of a special opportunity for employees to enroll in a new plan, under certain circumstances, known as "open enrollment".

Hired And Non-Owned Auto Liability

Hired and Non-Owned Auto Liability helps protect your business from any auto liability you or your employees may face. Any time an employee is conducting business and activates with a vehicle, your business can be held responsible for any accidents, bodily injury, or property damage that may occur.

How Does Hired And Non-Owned Auto Liability Work? Hired and Non-Owned Auto Liability is usually part of a general liability policy. However, depending on the type of policy you purchase, it may or may not be included. If your policy does not have this coverage, you are usually able to add the coverage for an extra cost. This coverage applies to vehicles that are rented or hired during the normal operation of a particular business.

What Does It Cover? Hired and Non-Owned Auto Liability covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees).

This coverage does not cover the physical damage to the vehicle itself-this part is important to understand. There is only coverage for a liability situation, meaning that any damage to someone else&apos's car or property is covered. Again, there is no physical damage coverage with Hired and Non-Owned Auto Liability.

If something does happen, coverage kicks in once found legally liable. The personal auto insurance policy will provide primary insurance to both employee and company if the employee is using their own vehicle on company business. If coverage limits are met on the personal auto policy, the liability can then fall on the business. If you don't have Hired and Non-Owned Auto Liability coverage to help provide benefits, you will be stuck paying out of pocket.

If coverage is going to cover an incident, it will provide defense costs, property damage costs, and medical payment if someone is injured up to the stated limit.

Who Needs Hired and Non-Owned Auto Liability? If you run errands for your business or need to rent a car for work travel, you will want this liability coverage if something happens.

Examples where Hired and Non-Owned Auto Liability can help cover your business include:

  • Employee is sent to pick up lunch
  • Rental car for business trip
  • Hire a limo service to pick up important clients.
  • Employee picking up office supplies
  • Employee goes to a post office
  • Employee runs to the bank
Information-Only Website

An Internet website that provides general information about the applicant's products/services.

Internet of Things (IoT)

Collectively refers to the everyday devices that are connected in some way to the Internet. Many of these devices are referred to as "smart" devices-smartphones, smart homes (e.g., Internet-capable thermostats, appliances, and so on), smart televisions, and many more devices. Through Bluetooth, Wi-Fi, and other means of wireless communication, users of smart devices are able to control them and often times connect them functionally with other smart devices. Connections to the Internet allow these devices to track usage habits, provide helpful recommendations (e.g., a refrigerator that sends an alert to a home owner's smartphone when a visit to the grocery store is needed), and generally offer users a more interactive and feature-rich experience.

Joint and Several Liability

Joint and several liability is a legal term for a responsibility that is shared by two or more parties to a lawsuit. A wronged party may sue any or all of them, and collect the total damages awarded by a court from any or all of the

Key Person Insurance

Anytime a business suffers a loss due to death or disability of an owner, partner, or key person in the company, it can be a difficult time for everyone. When that person is instrumental to the operation and sales of the business, it can have a detrimental effect on your business, revenue and ability to stay open.

There are many costs to a business when they deal with a loss of a key person. With the right insurance and planning, you can save time and money keeping your business on track.

Businesses that rely on a few talented employees for success should consider key person insurance. It can help protect any business and its shareholders or partners. It's especially important for small- to medium-sized businesses, as the loss of a main person's production can have a negative financial effect on the whole business more than a much larger company.

What Is Key Person Insurance? Key person insurance is a life or disability insurance policy taken out by the business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business. It is commonly needed with buy/sell agreements, debt protection and revenue protection.

How Key Person Insurance Can Help Your Business? This insurance protects a business form loss related to the extended period when a key person is unable to work to provide temporary personnel and, if necessary, to finance the recruitment and training of a replacement.

This is also insurance to protect profits, offsetting the lost income from lost sales, losses resulting from the delay or cancellation of any business project that the key person was involved in, loss of opportunity to expand, or loss of specialized skills or knowledge. It protects shareholders or partnership interests.

Typically, this is insurance to enable shareholders or partnerships interest to be purchased by existing shareholders or partners. It is insurance for anyone involved in guaranteeing business loans or banking facilities. The value of insurance coverage is arranged to equal the value of the guarantee.

Who Does Key Person Insurance Cover?Anyone can be covered. Any person who works for your business who, if removed, would cause a financial strain on the business can be insured. Usually, it covers owners, founders, and one or two key employees.

What are the advantages of having a Key Person Insurance?

  • Upon the death of a key person, the company is paid money to cope with the loss;
  • It can help improve retention of important, talented employees;
  • Taking out a key person policy on your top employees affirms their value to your business, strengthening the relationship;
  • Coverage is a business asset that enhances your company's creditworthiness for commercial borrowing;
  • Assurance of business continuity for your executives, customers and creditors;
  • The policy's cash value may be available to your business through a withdrawal or loan if needed for business opportunities or retirement benefits.

If you are interested in key person insurance, contact one of our agents to go over the correct coverage for your company. Or click here to get a free key person indication.


Termination of an insurance policy due to the insured's failure to pay the premium


A liability is an obligation between one party and another not yet completed or paid for. In the world of accounting, a financial liability is also an obligation but is more defined by previous business transactions, events, sales, exchange of assets or services, or anything that would provide economic benefit at a later date.

Within the context of insurance, the obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.

Law of Large Numbers

A statistical analysis that states that the larger the number of exposure units independently exposed to loss, the greater the probability that actual loss experience will equal expected loss experience. In other words, the credibility of data increases with the size of the data pool under consideration.

Management Liability Insurance

Insurance that covers exposures faced by directors, officers, managers, and business entities that arise from governance, finance, benefits, and management activities (also called "executive liability insurance"). This includes (1) directors and officers (D&O) liability insurance, (2) employment practices liability (EPL) insurance, (3) fiduciary liability insurance, and (4) "special crime" insurance (covering kidnap, ransom, and extortion exposures). These coverages may be written as stand-alone insurance policies or combined into a single "package" policy. Management liability policy "package" policies usually contain a set of common conditions applying to all of the coverage lines purchased. In most cases, an insured must select a minimum of two types of coverage to be eligible to purchase a management liability "package" policy. This arrangement offers meaningful premium discounts because much of the same data is needed to underwrite EPL, D&O, fiduciary, and special crime coverages. Management liability "package" policies are usually available only to privately held firms, not-for-profit organizations, and small publicly traded companies (i.e., those with annual sales of under $25 million). Large publicly traded firms generally purchase stand-alone policies.

Network Breach

A situation that occurs when someone gains access to a computer network, despite not being authorized to do so; transmits malicious code (e.g., a virus) to a computer network; or prevents a third party, who is authorized to do so, from gaining access to a computer network (i.e., a denial of service attack).

Occurrence Policy

A policy covering claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made. Most commercial general liability (CGL) insurance is written on an occurrence form.

Personal Articles Insurance

A personal article insurance, or personal article floater, covers valuable items that your homeowners or renters insurance may not cover because they exceed the coverage amount on your policy.

What are some items you might need a personal article insurance policy for?

  • Furs
  • Jewelry, such as engagement or wedding rings;
  • Electronics, such as digital cameras;
  • Silver or other precious metals;
  • Fine art;
  • Sports and golf equipment; and
  • Other items with high financial value (typically worth $1,000 or more).
Personal Umbrella

Imagine being involved in a long and drawn-out lawsuit. You've exceeded the liability limits that either your auto or homeowners policy covers or you have no idea how you'll be able to pay the rest of your legal fees.

Then you find out that they all could have been covered by insurance if you had spent only a few extra hundred dollars that year on a personal umbrella policy.

What Is A Personal Umbrella Policy? A personal umbrella policy or personal liability umbrella policy, as it is also referred to, is a policy that provides an extra layer of liability coverage encompassing all properties the insured owns, as well as all vehicles/motorcycles/boats, etc. registered to them.

Even with higher-than-average limits of liability on homeowners and personal auto policies, those that are insured are still at risk for liability related incidents that could exceed the policy limits. In order to qualify for an umbrella policy, underlying coverage on cars must be at a minimum of 250/500/100 for liability and homes must have no less than $300,000 in liability coverage.

What Does A Personal Umbrella Policy Cover? A personal umbrella policy is always the most beneficial to have when there are a greater number of risks. Here are a few examples:

  • Many different types of vehicles all belonging to the same named insured means different levels of liability coverage per vehicle. Having extra layer of coverage can be a good thing to have in case something catastrophic happens where the underline insurance coverage limit is exhausted.
  • Big families with many drivers on the same policy. More drivers on the road at any given time means a greater chance that there could be a mishap.
  • Families with young and inexperienced drivers. Lack of experience and some initial nervousness could lead younger drivers to being involved in accident.
  • Families with very elderly drivers. Elderly drivers can have diminished eyesight, especially when driving at night, and slower reflexes, resulting in car crashes.
  • An insured that owns several properties and rents them out. If a renter moves into a property you own and gets hurt due to your negligence of the property's upkeep, they could sue you.
Personally Identifiable Information (PII)

Any information that can be used to uniquely identify, contact, or locate an individual, either alone or in conjunction with other sources, such as their name, Social Security number, driver's license number, date of birth, place of birth, mother's maiden name, and genetic information.


A message, usually delivered via e-mail (and less frequently via telephone), that falsely claims to be from a lawful business or otherwise legitimate entity or person. The message attempts to entice the recipient into providing personal information, such as Social Security, credit card, and bank account numbers. This information, if obtained, is later used to commit identity theft. In addition to phishing that targets personal information, many phishing attacks are aimed at obtaining sensitive business information, like corporate bank account numbers. "Fraudulent instruction" (e.g., a message claiming to be from a company's CEO and instructing a mid-level employee to wire transfer a sum of money to a certain account) can also be considered a form of phishing.


An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.


A technique in which hackers typically replace an organization's website home page with a ransom demand.

Retroactive Date

A provision found in many (although not all) claims-made policies that eliminates coverage for claims produced by wrongful acts that took place prior to a specified date, even if the claim is first made during the policy period.

For example, a January 1, 2010, retroactive date in a policy written with a January 1, 2016-2017, term would bar coverage for claims resulting from wrongful acts that took place prior to January 1, 2016, even if claims (resulting from such acts) are made against the insured during the January 1, 2016-2017, policy period.

There are two purposes of retroactive dates: (1) to eliminate coverage for situations or incidents known to insureds that have the potential to give rise to claims in the future and (2) to preclude coverage for "stale" claims that arise from events far in the past, even if such events are unknown to the insured. In the former case, the retroactive date preserves the principle of "fortuity"-that is, the insurer should not be called upon to cover the so-called burning building. In the latter instance, the retroactive date makes policies more affordable by precluding coverage for events that, while insurable, are remote in time.

Replacement Cost

A property insurance term that refers to the amount of money a business must currently spend to replace an insured property, with one of the same or higher value. Sometimes referred to as a "replacement value", a replacement cost may fluctuate, depending on factors such as the market value of the asset, and the expenses involved in preparing assets for use. Insurance companies routinely use replacement costs to determine the value of an insured item. Replacement costs are likewise ritually used by accountants, who rely on depreciation to expense the cost of an asset over its useful life. The practice of calculating a replacement cost is known as "replacement valuation".

Replacement Value

The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.


The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

Renter's Insurance

Renters insurance coverage is designed for those who rent an apartment, a condo, or a home to cover belongings in the case of accidental damage or covered losses such as fire or theft.

What Does Renters Insurance Cover? Renters insurance can help you replace stolen or damaged items - whether they're in your home or with you when you travel.

  • Personal Property.

    Renters insurance may cover losses from..

    • Accidents: impacts from vehicle, falling objects that hit your property, fire, smoke, water damage from plumbing or appliances
    • Weather impacts: weight of snow, sleet, or ice; lightning, windstorms, hail, and water damage from freezing of plumbing systems
    • Malicious mischief: vandalism, theft, riots or civil commotion
    • Special coverage limits apply to certain types of personal property

  • Liability.

    A renters insurance policy covers liability you may have in the event of a covered claim which causes bodily injury or property damage. It may also provide payment for legal defense against any covered claims or lawsuits.

    You may also be covered for medical expenses (up to the limits in the policy) for people on your premises who are injured in an accident.

  • Loss of Use.

    When your home is damaged and you're unable to live in it due to an insured loss, this coverage provides additional living expenses for the shortest time needed to repair (or replace) the premises, or for the people in your household to settle in another home for up to 24 months.

What Does Renter's Insurance Not Cover?

  • Property damage to your buildings, roof, and siding (these are covered by your landlord)
  • Water damage caused by flooding or underground water
  • Damage caused by earth movements, such as earthquakes and landslides
Right of Recourse Provision

The right of recourse provision is a provision in fiduciary liability policies giving an insurer the right to subrogate against an insured.

Sexual Harassment

Conduct involving unwelcome sexual advances; requests for sexual favors; and verbal, visual, or physical conduct of a sexual nature. There are two types of sexual harassment: quid pro quo sexual harassment, in which sexual contact is made a condition of employment, and hostile environment sexual harassment, in which such conduct creates an intimidating, hostile, or offensive working environment. Lawsuits against businesses that allege sexual harassment have increased significantly during the past decade. Accordingly, around 1990, the insurance market began offering employment practices liability (EPL) policies, a specialized form of insurance covering claims of sexual harassment as well as other employment-related torts.

Short-Rate Cancellation

When the policy is terminated prior to the expiration date at the policyholder's request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

Spear Phishing

Phishing aimed at specific individuals and/or companies, relying on the use of personal information to make e-mails appear convincing and trustworthy. See also phishing.

Social Engineering/Fraudulent Instruction Coverage

Coverage for losses resulting from attempts to have insureds transfer monies (usually by means of wire transfers) based on instructions (typically in the form of an e-mail), in which the recipient is instructed to transfer funds from one financial institution to another.

Social Media

Web-based and mobile-based technologies that are used to turn communication into interactive dialogue between organizations, communities, and individuals

Spam, Spamming

Sending unwanted and unsolicited e-mail to an individual's or corporation's computer system. A massive spam attack on a company's e-mail system can take up so much space on its server that it causes the system to crash. Such risks can be insured against under Internet/online policy forms that cover business interruption losses.


Subrogation is the process by which an insurer collects monies from a party responsible for causing a loss, for which an insurer has already made an indemnity payment.

For example, assume that a fiduciary's negligence in administering an employee benefit plan caused a loss that was covered by a fiduciary liability policy. After the insurer pays that loss, a right of recourse provision would give the insurer the right to seek reimbursement from the fiduciary whose negligence caused that loss. Right of recourse provisions represent an exception to the general practice in the insurance industry whereby insurers do not subrogate against insureds. The right of recourse provisions have become relatively uncommon. In fact, few fiduciary liability insurers currently include right of recourse provisions in their forms. Instead, most fiduciary liability forms are silent as to the issue of subrogating against an insured


Many claims-made liability policies provide an option to purchase a Tail also known as Extended Reporting Period (ERP). A Tail is a specified period of time after clamies-made policy has expired for reporting claims to the insurer.

Technology Errors and Omissions (E&O) Insurance

A type of insurance designed to cover providers of technology services or products. For example, data storage companies and website designers provide technology services, while computer software and computer manufacturers offer technology products.

Technology E&O policies cover both liability and property loss exposures. Major liability insuring agreements include losses resulting from (1) technology services, (2) technology products, (3) media content, and (4) network security breaches. Key property insuring agreements provide coverage for extortion threats, crisis management expense, and business interruption.

Technology E&O insurance is often confused with cyber and privacy insurance. In contrast to technology E&O coverage, cyber and privacy insurance is intended to protect consumers of technology products and services. Nevertheless, cyber and privacy insurance policies do offer a number of the same insuring agreements as technology E&O policies.

Transactional Website

Internet website that accepts orders or purchase using credit/debit cards, accepts bill payment, or allows customers to view account balances or transfer funds between accounts.

Trojan Horse

A type of malicious software (malware) named after the wooden horse the Greeks used to infiltrate Troy that masquerades as a legitimate computer program, such as a game, image file, disk utility, or even an antivirus program. Users are typically tricked into downloading Trojan horses on their systems because they appear in the form of benign, useful software or files from a legitimate source. Once activated, Trojan horses can perform a number of attacks on a computer system that can cause pop-up windows to delete files, steal data, give malicious users access to a system, or activate and spread other malware, such as viruses. Unlike computer viruses and worms, a Trojan horse does not reproduce by infecting other files, nor do they self-replicate.

Umbrella Liability

Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.

Vicarious Liability

The assignment of liability to a person or entity that did not cause the injury or loss but has a legal relationship to the party that was negligent.

Website Media Content Liability Coverage

Coverage that applies when the insured incurs liability in conjunction with material published on its website.

Wrongful Termination

The act of terminating an employee in a manner that is against the law. In recent years, erosion of the employment-at-will doctrine has been the factor most responsible for the increase in claims alleging wrongful termination. Coverage for this exposure is provided under employment practices liability (EPL) policies.


An X-date is the expiration date of an insurance policy

Yellow Book

Annual reporting form for property and casualty insurers in the United States. Also known as Yellow Peril, for its size and complexity, although with the advent of computerized work sheets and electronic filings, much less of a peril than in the days of typewriters and calculators.

Zone Rating

A commercial auto rating system that divides the country into 50 zones with different rating tables applicable for each zone. Vehicles (excluding light trucks or trailers used with light trucks) that fall into the long-distance radius class are zone-rated.

401(k) Plan

The most common type of defined contribution retirement plan, in which employees choose to defer part of their compensation. Under the typical 401(k), employees contribute anywhere from 1 percent to 15 percent of their pre-tax annual salary each year to the plan. In addition to this amount, many employers will match the employee's contribution, such as 50 percent of up to 6 percent of the employee's contribution. For example, if an employee contributes 6 percent of his or her salary to the 401(k) plan, the employer will contribute an additional 3 percent so that the employee will have saved a total of 9 percent of his or her annual salary (i.e., 6 percent contribution, plus 3 percent employer match). There are annual maximum amounts that employees can contribute as well as distribution restrictions prior to age 59.5.