9 Common Commercial Insurance Terms Explained

Let’s face it. Insurance terms can be confusing.
Do you understand all the terms in your insurance paperwork?
Chances are, probably not.
You’re not alone.

As a trusted local insurance provider in Tyler, Texas, Bosworth Insurance understands that many insurance terms can be confusing. Therefore, we want to make sure you know and understand what your insurance is all about.

Some terms that people are generally familiar with are the many types of insurance and their basic mechanics: renter’s insurance, homeowner’s policy, rental insurance, medical insurance, insurance rates, insurance policy, car insurance, truck insurance, insurance premiums, and deductibles. If these terms are unfamiliar to you, it’s a good idea to contact your insurance provider and find out exactly what your coverage entails and if it’s right for you.

To help make things a little easier, here’s a list of common commercial insurance terms and an explanation of what they mean.

 

1. Additional Insured:

An insurance policy covers you and your business from liability. But what about third parties associated with your business?

An “additional insured” is someone aside from the policyholder who the insurance policy covers. There are different types depending on the situation, meaning the coverage could be for the entire lifetime of the policy or limited to one instance.

This type of insurance can be useful if you routinely hire outside businesses or individuals to work for you. You’ll want to make sure they’re covered in case of the possibility of third-party lawsuits such as physical injuries, damage to property, or libel/slander issues.

If you feel your business might need an additional insured added to your original policy, call your local insurance provider today and ask what might be best for your business.

 

2. Cyber Liability:

Cyber liability insurance is necessary to give financial coverage in the event of a cyberattack or data breach in your business. You may have noticed incidents of data breaches more and more in the news these days. It’s a very real concern for businesses big and small.

Especially if your business stores information for clients of a personal nature such as addresses, social security numbers, or credit/debit card numbers.

Because most businesses operate online in some capacity these days, having cyber liability coverage is a must. However, you then need to determine whether you need first-party coverage, third-party coverage, or both. Contact your business insurance provider today and find out what cyber liability is best for your business.

3. Indemnity:

When there’s an agreement between two parties on financial compensation for a potential loss or actual loss, the payment is called an indemnity. Insurance works based on an indemnity agreement between the insurer and policyholder. The policyholder pays a premium to the insurance provider to agree that if the policyholder incurs losses covered under the agreement, they will be compensated for those losses.

 

4. Liability Insurance:

If you have a business, liability insurance is important and necessary.

This type of insurance helps protect your business against lawsuits from third parties (except in specific instances).

Some examples of things covered by liability insurance: settlement and judgment amounts, court fees, attorney fees, and direct payments.

Liability insurance is part of other crucial small business insurances such as cyber liability, worker’s compensation, general liability, and more.

 

5. Commercial Property Insurance:

This kind of insurance is especially important for those businesses with physical property.

Commercial property insurance covers you and your business when it comes to covering the cost of repairs or replacements to your property. That might mean buildings, equipment, inventory, etc.

 

A Few other Commercial Insurance Terms to Be Aware Of:

 

6. Product Liability Insurance:

If you have a business that manufactures anything, this is important insurance for you. The purpose is to protect you in the instance that a product manufactured by your company malfunctions in any way.

7. Employment Liability Insurance:

This is crucial commercial insurance for most businesses. Most businesses have employees, which leaves a lot of room for potential liability. Employment Liability Insurance protects your business in the case of hiring, letting go, and the day-to-day management of your employees.

8. Commercial Auto Insurance:

If your business has any involvement with vehicles, you’re going to make sure you have commercial auto insurance. There are different types, so make sure you ask an experienced insurance provider to advise you on what’s right for your business.

9. Business Owner’s Policy:

Sometimes, insurance companies will bundle these different insurances for your business. This is another good question for your insurance company.

 

While insurance terms can be confusing, they don’t have to be. As a trusted community insurance company, Bosworth Insurance encourages you to talk with your insurance provider and not be afraid to ask questions or ask to have specific terms explained. That’s what we’re here for!