The world of business insurance can get complicated, especially with all the fancy words that get thrown around. Some of these words are just not self-explanatory, and they might make you feel like someone’s speaking gibberish to you. Maybe you find yourself smiling and nodding when you’re on the phone with your agent, or when you’re researching business insurance. There’s a lot to know – so we’ve put together a little cheat sheet with ten business insurance words you should know.
10 business insurance words you need to know.
Your deductible is the amount you agree to pay if you have a claim. For example, let’s say your deductible is $1,000. But then you have a claim for $7,000. You’d pay $1,000 and your insurance pays $6,000. You may be able to get a lower premium by choosing a higher deductible, but you don’t want to set your deductible so high that it would be a huge financial burden to pay.
The limit is the maximum your policy will pay out for a covered loss. Basically, when your claim reaches that number, the insurance company is going to tap out. And then you could be on your own to cover the rest of the loss.
(It’s important to make sure you have the appropriate limit for your various coverages. You need to make sure you have enough insurance to fully protect your business.)
Your premium is the amount you pay for your insurance. The premium for your business insurance depends on many factors – for example, your location, the industry you’re in, your premises, and the number of employees you have. It’s a fact that insurance costs money, so it’s important to understand what affects your premium.
Binder is one of those business insurance words that gets tossed around a lot. No, it’s not a mythical three-ringed folder that contains the answers to life’s mysteries. It’s a temporary “a-okay” for coverage. You’ll get the binder before the actual insurance policy. It basically means that you’re good to go for your insurance coverage and that the insurance company is okay with covering you.
5. Declarations page.
The declaration page of your policy shows the who, what, when, and where of your policy. It’s a convenient overview of your insurance coverage. It shows details like the name of the policyholder, the address, the property insured (along with its location), the policy period, the premium, and other extra information that’s helpful to know. If you ever have any quick questions about your policy, the dec page is a place you can turn to for answers.
An exclusion is something that’s not covered by your policy. It means that a certain type of loss won’t be covered. An exclusion can get rid of coverage for risks, property classes, or locations.
7. Certificate of insurance.
A certificate of insurance is a document verifying that you have the insurance coverage you say you do. They’re also often required for contracts if you need to carry a certain amount of insurance. (You can request it from your agent.)
A peril is simply a potential cause of loss such as a fire. Your policy will outline the perils that it does and does not cover, so you have to be very careful to read over your policy to understand what perils will be covered – and which will not. As with many things, the devil can be in the details. Don’t be afraid to ask questions of your agent if you want some clarification about perils and such.
A BOP is short for Business Owner’s Policy. This is a policy for small to medium-sized businesses, and it combines general liability, property insurance, and business interruption coverage into one policy.
- General liability can help cover claims of bodily injury or property damage, like if a guest trips and falls and hurts themselves.
- Property coverage can protect your business against losses like fire.
- Business interruption can help reimburse your business for lost income if you have to close your doors due to a covered loss.
10. Risk management.
Risk management consists of identifying the risks your business faces and taking steps to lessen or minimize those risks and potential loss. Safety and insurance can be part of risk management.
So, those are a few business insurance words that it could be helpful for you to know as you venture into the world of commercial insurance. To get started with your quotes, give us a call, message us, or fill out our online quote for. Our agents would be happy to help you with your insurance needs.