Accelerated Benefits Rider
A life insurance rider that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.

Accidental Death and Dismemberment
Insurance providing payment if the insured's death results from an accident or if the insured accidentally severs a limb above the wrist or ankle joints or totally and irreversibly loses his or her eyesight.

Accidental Death Benefit Rider
A life insurance policy rider providing for payment of an additional benefit related to the face amount of the base policy when death occurs by accidental means.

Accounts Receivable
Covers the inability to collect billings owed to your company, after supporting records are damaged in a property loss.

Advertising Injury
Unintentional slander, libel infringement of copyright, trademark or slogan arising from your company's advertising. Companies in the advertising business need more specialized coverage

Agreed Value (Amount)
Insurers will often agree to accept a specified amount of insurance as satisfying the Coinsurance requirement. This is called an Agreed Amount or Agreed Value endorsement. It can reduce the chance of disputes over the required amount of insurance following a loss. This endorsement is worthwhile.

Aircraft Liability
Coverage for liability arising out of the use of aircraft owned by your company or held under long-term lease. Damage to your airplane is normally covered as well. Liability resulting from an airplane accident can be great. Consequently these policies are complicated and require specialized expertise.

Amount of Insurance
The best reason for carrying an adequate amount of insurance is your own protection. Adequate coverage should be available to restore your property in the event of a loss. Insurance companies, however, will not select the necessary amount of coverage for you. There are several ways to establish the value of your property. Professional appraisal services are available to help you. Their appraisal should determine the Replacement Cost, and not the "Market Value" of your property. Market Value means the price your property would bring if sold, which can be very different from the cost to rebuild your property. Some businesses update the original construction cost to allow for the effects of inflation. Trending factors are available to help you measure inflation. Another method is to check construction costs with a local contractor. Normally, they can provide a cost per square foot for your type of construction. You would then multiply this cost times your actual square footage to determine the cost to rebuild at today's prices. Furniture, office equipment and machinery prices can be determined from a current catalog. Vendors and suppliers are other sources of current values. "Book value" normally does not reflect current Replacement Cost, which is the value required on most insurance policies. If your inventory fluctuates considerably throughout the year, you may be required to report values on a monthly basis. The amount of your property insurance should be reviewed every year. Property values should be increased to reflect the current rate of construction cost inflation. Coverage for new property or equipment should be discussed as it is acquired. Insurers may offer an inflation guard endorsement, which will automatically raise your limit of insurance to reflect inflation increases. Policies usually show a specified amount of coverage for each of your locations. If you have several locations, it may be advantageous to obtain a "blanket limit" that covers all locations.

Annually Renewable Term
A form of renewable term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year, without evidence of insurability. Also called Yearly Renewable Term (YRT).

Annuitize
The accumulated value of the annuity is converted into a guaranteed stream of income.

Application
Form supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives information to the home office underwriting department so it may consider whether an insurance policy will be issued and at what premium rate.

Asbestos
Asbestos is another major environmental concern. The use of asbestos in buildings was banned during the 1970's. The Environmental Protection Agency estimates that 20% of the nation's 3.6 million public and commercial buildings

Back Dating
The practice of making a policy effective at an earlier date than the present.

Beneficiary
Person to whom the proceeds of a life policy are payable when the insured dies. The various types of beneficiaries are: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies).

Best's Insurance Report
A guide, published by A.M. Best, Inc., that rates insurers' financial integrity and managerial and operational strengths.

Boiler and Machinery Insurance
Boiler and Machinery insurance is an important coverage that is frequently overlooked. Insurers sometimes refer to this coverage as "energy systems" insurance to emphasize that it does not apply solely to boilers. Boiler and Machinery policies add coverages that are normally excluded under the standard property policy. In addition to damage to and from steam boilers and pressure vessels, these policies can cover: Electrical Injury damage from artificially generated electrical current Mechanical Breakdown sudden breakage or rupture of machinery or equipment A few examples of losses: * a hotel’s air conditioning equipment breaks down during the summer * a food processing plant loses its refrigeration equipment * a machine operator errs, expensive equipment is damaged, and production stops * power is lost due to a short circuit in electrical switchgear, and production stops The consequences of a boiler and machinery loss can be greater than the actual property damage. Business Interruption, Extra Expenses, Utility Service Interruption and Consequential Damage (for spoilage due to lack of heat or refrigeration) can normally be added, along with other important modifications. In assessing the need for Boiler and Machinery coverage, important questions include: 1. What is the value of important equipment (e.g. air conditioning, electrical panels, boilers or machinery)? What are the costs to repair or replace this equipment? 2. What would happen to the business if this equipment were lost? 3. How long are repairs likely to take? Is replacement equipment readily available? Are critical spare parts kept on premises?

Builders Risk Coverage
These are policies specifically designed to insure buildings and structures, such as bridges, in the course of construction.

Business Continuation Plans
Arrangements between business owners that provide that the shares owned by any one of them who dies shall be sold to and purchased by the other co-owners or by the business.

Business Income
Business Income includes Business Interruption Coverage and/or Extra Expense coverage. These coverages can be combined in one form or written separately.

Buy-Sell Agreements
Agreement that a deceased business owner's interest will be sold and purchased at a predetermined price or at a price according to a predetermined formula.

Cash Value
The equity amount or "savings" accumulation in a whole life policy.

CGL Rating
General Liability policies are usually rated on area (office space), sales and/or payroll. At the beginning of the policy year, you supply an estimate of the sales or payroll for the upcoming year. The initial premium is based on that estimate. At the end of the policy year, the insurer audits the actual payroll/sales figures and the premium is adjusted up or down accordingly. Policies are often subject to minimum premium requirements.

Claim Reporting
Workers Compensation claims must be reported to your state’s Industrial Accident Commission as well as to the insurance company.

Claims
All insurance policies have a section that explains your duties in the event of a loss. You should review this section carefully and mark it for easy reference. Property policies typically require prompt notification of a loss. You must also protect the property from further damage and provide a complete description of damaged property to the insurer. Insurers may want to inspect damaged property before it is discarded. Liability policies also require prompt notification of claims. Summons and other legal papers should be forwarded immediately to the insurer. You cannot assume any obligation or incur any expense (other than first aid) without the insurer’s permission. Excess Liability policies may have very specific loss reporting requirements. Insurance policies require that you cooperate with the insurer in the settlement of a loss. This includes making books and records available. You cannot waive the insurer’s right of recovery, if another party is responsible for your loss. (Insurers may allow waivers that were made prior to a loss, or in accordance with the Contractual Liability coverage of a Commercial General Liability policy). Review all waivers carefully and discuss them with your broker or insurer. Claims are arising today that are the result of activities which took place 20 or 30 years ago. Consequently, expired policies should be saved indefinitely. Several people in your company should know where the old policies are stored.

Coinsurance
Most property policies have "Coinsurance" requirements, and most business people find them difficult to understand. Briefly stated, coinsurance requires you to maintain an amount of insurance equal to a specified percentage, usually 80% or 90% of the Replacement Cost (or Actual Cash Value if coverage is written on that basis) of the covered property. In other words, you cannot just "pick" an amount of insurance. You must comply with the minimum requirement in the Coinsurance Clause. Failure to carry the required amount of insurance will make you a "coinsurer" in the event of a loss. The policy says, in effect, that if you insure only part of the required amount, the insurance will only pay part of the loss. The penalty can be significant if the actual amount of insurance is well under the amount required. The Coinsurance Clause apportions claims payments according to the following formula: Amount Carried X Loss = Payment Amount Required

Computer Fraud
Computer fraud insurance covers the loss of money or property resulting from unauthorized access to your computer system by an outside party.

Concealment
Failure of the insured to disclose to the company a fact material to the acceptance of the risk at the time application is made.

Conditional Receipt
Given to policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.

Contingent Beneficiary
Person or persons named to receive proceeds in case the original beneficiary is not alive. Also referred to as secondary or tertiary beneficiary.

Contingent Business Interruption (Dependent Properties)
Covers lost profits and ongoing expenses during a business shutdown caused by a covered property loss. This coverage is critical because many businesses could lose their income for several months if their premises were seriously damaged. It can be written to include loss of rental income from damaged rental property. Business Interruption also has a Coinsurance requirement (see "Coinsurance" under property). Salaries of "key" employees are normally covered, because these people are needed to get the business back in operation. Coverage is available for "ordinary" payroll (such as factory workers) as well. Workers may seek other jobs if they are not kept on the payroll during an extensive plant shutdown, so this can be an important coverage decision.

Contractual Liability
The CGL provides certain coverages for bodily injury and property damage liability assumed under contract

Conversion Privilege
Allows the policy-owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue).

Convertible Term
Contract that may be converted to a permanent form of insurance without medical examination.

Coverages
The Declarations Page will show which of the following coverages apply:

Covered Autos
Most Automobile policies use numerical "symbols" to tell you which automobiles are covered. The symbols are shown with the coverages on the Declarations (cover) page. (A list of these symbols follows). Symbol 1 ("any auto") is preferable for Liability insurance because it is the broadest. If your policy shows Symbol 7 (specifically described autos) for Liability, you should also have Symbol 8 (Hired autos) and Symbol 9 (Non-Owned autos) shown Symbol 8 and 9 cover the liability of your company resulting from employees using personal or rental vehicles on company business. Even companies that do not own automobiles should have coverage for Non-Owned and Hired Automobiles Liability (e.g. employees use personal or rental vehicles on company business). This can usually be endorsed to your General Liability policy if you do not have an Automobile policy. The cost is minimal. Hired and Non-Owned Auto Liability does not normally cover the owner of the vehicle, who should have separate insurance.

Credit Card Forgery
This covers losses resulting from unauthorized usage of your company's credit cards. Additional Crime coverages are available.

Crime Coverages
The loss of money is usually excluded under standard property policies. Losses involving employee dishonesty may also be restricted. Crime policies offer a package of coverages that are important to many businesses.

Cross-Purchase Plan
An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance.

Decreasing Term Insurance
Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

Deductibles - Automobile
Liability matters are complicated, and insurers need to be involved from the start. For that reason, the liability coverages are normally written without a deductible. Larger companies, however, often assume a significant liability deductible or retention (uninsured retained level of loss) to control the costs of their insurance. Comprehensive and Collision coverages (damage to your own vehicles) are normally subject to a deductible. You may wish to obtain quotes for several deductible levels to determine if cost savings are possible. Companies with large fleets of automobiles often self-insure all damage to their own vehicles. Due consideration, however, must be given to the possibility that one loss (such as a fire) could damage multiple vehicles.

Deductibles - Liability
Liability matters are complicated and insurers need to be involved from the start of a claim. For that reason, CGL policies are often written without a deductible. Larger businesses, however, use a deductible or retention (uninsured retained level of loss) to help control the cost of their liability insurance.

Deductibles - Property
Property policies require that you pay a certain amount of all losses. The purpose is to eliminate the numerous small claims that routinely occur, and to encourage loss prevention. Only that portion of the loss in excess of the deductible will be paid by your insurer. You may wish to solicit quotes for various deductible levels to determine what cost savings are possible.

Directors' & Officers' Liability
This is an "errors and omissions" type coverage for corporate directors and officers. Even companies that are privately held should consider this coverage. Industry surveys have shown that many Directors and Officers liability claims - as much as half - come from sources other than shareholders. Claimants can include competitors, suppliers, customers, employees and government agencies. The indemnification of corporate officials is governed by state law, and these laws vary considerably. These laws determine which claims can and cannot be reimbursed by the corporation. Because of this, D&O policies normally provide two separate coverages. The first coverage reimburses the corporation for payments that it is permitted or required to make on behalf of its directors and officers. Insurance industry estimates indicate that the majority of claims fall into this category. The second policy coverage provides direct protection to the directors and officers for those claims, which their companies cannot reimburse. These claims are only a small percentage of all D&O claims. They are significant, however, because without insurance, corporate officials could be held personally liable. Certain claims are insurable, although, not legally indefinable by the corporation. Many state laws allow insurance companies to provide greater protection than the corporation can by itself. Liability claims against Directors and Officers have increased in recent years. Law firms that specialize in this field can offer assistance with loss awareness and loss prevention programs.

Disability Income Rider
A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury.

Double Indemnity
A provision in a life insurance policy, subject to specified conditions and exclusions, under the terms of which double the face amount of the policy is payable if the death of the insured is the result of an accident. In general, the conditions are that the insured's death occurs prior to a specified age and results from bodily injury effected solely through external, violent and accidental means independently and exclusively of all other cause, within 60 or 90 days after such injury.

Electronic Data Processing Equipment
This endorsement adds coverage for mechanical breakdown of computer equipment. It can also include costs to restore damaged media, Business Interruption and Extra Expense.

Employee Benefits Liability
This covers errors and omissions in the administration of Employee Benefit Plans. For example, through an oversight, your company fails to enroll an employee in the Medical Insurance program. As a result, substantial medical bills are not insured. This coverage can sometimes be added to a General Liability policy. It can also be obtained under a Fiduciary Liability policy (follows).

Employee Dishonesty (also known as Commercial Blanket Bond)
This covers the theft of your company's money, securities and inventory by employees acting alone or in collusion with other employees or outsiders. Losses often occur over a long period of time and can be substantial before discovery. The Employee Retirement Income Security Act (ERISA) requires an Employee Dishonesty bond for employee benefit plans. The bond limit must be equal to 10% of the plan's assets. The bond limit must be at least $1,000, but need not exceed $500,000 per fiduciary, per plan. Your company may wish to purchase limits in excess of the ERISA requirements to more adequately protect larger plans, and your company.

Environmental Impairment Liability
These specialized policies cover bodily injury and property damage liability resulting from a pollution incident. These policies are also written on a "Claims-Made" basis. Environmental risks are complicated and require sophisticated legal, environmental and insurance advice. A few common environmental concerns: 1. Operational exposures from the use of hazardous substances 2. Potential of pollution from discontinued operations and practices 3. Existing pollution in land or buildings that you acquire. Environmental concerns are now a major consideration in real estate and financial transactions

Errors and Omissions
Coverage for claims alleging negligence in the rendering of, or failure to render, professional services. Defense & Indemnity for financial/economic loss. (usually for doctors, lawyers, accountants, other types of professionals).

Errors and Omissions (Technology Errors and Omissions)
Coverage for claims alleging negligence in the provision of technology services or due to the failure of technology products. May cover, or be endorsed to cover: (not all carriers will do it)

• Intellectual Property (copyright, trademark only. not patent - that is a separate product. not trade secret - usually not insurable)
• Media Liability
• Internet services

Evidence of Insurability
Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Exclusions
Specified hazards listed in a policy for which benefits will not be paid.

Exclusions - Property
The Exclusions section of insurance policies should be reviewed carefully. All property policies exclude certain types of perils and certain types of property. Some perils or property are excluded because they are more appropriately addressed by a specialized type of policy. Others are excluded because insurance companies feel such losses are uninsurable.

Extra Expense
Covers extra expenses (over normal operating costs) incurred to remain in operation following a covered property loss. Typical examples include the costs of setting up temporary quarters elsewhere and subcontracting work that would normally be done at the damaged premises. This coverage is particularly important to businesses that must remain in operation or risk losing customers. Coverage is often subject to a monthly limitation. For example, 40% of the limit is available in the first 30 days after a loss, 80% if the period of restoration exceeds 30 days, and 100% if the period exceeds 60 days.

Face Amount
Commonly used to refer to the principal sum involved in the contract. The actual amount payable may be decreased by loans or increased by additional benefits payable under specified conditions or stated in a rider.

FELA, Jones Act and USLH
Federal law requires specific benefits for employees in certain occupational categories, such as the examples below. If you have employees in these occupations, you should discuss coverage with your broker. F.E.L.A. (Federal Employer’s Liability Act) This law normally applies to employees of railroads. Jones Act (Maritime Coverage) - This law normally applies to seamen. U.S.L.H. - United States Longshoremen and Harbor Workers Act. Outer Continental Shelf Lands Act - applies principally to oil exploration or production. Defense Base Act - civilians employed on U.S. Defense facilities. Both are extensions of the U.S.L.H. Act. Since there is a potential for greater reward under these laws, employees (outside of the above job categories) sometimes attempt to "stretch" the definition of coverage employees. Certain employers find it desirable to add coverage for these special Federal plans on an "if any" (contingency) basis to address this possibility.

Fiduciary Liability
This policy covers the liability of a person who acts as a fiduciary for his or her company’s Employee Benefit Plans. The Employee Retirement Income Security Act (ERISA) imposes fiduciary responsibilities upon the employers for the administration of such plans. A fiduciary can be held personally liable for shortages in the benefit plan's assets resulting from a breach of fiduciary duty, such as improper investment of funds. Fiduciary Liability should not be confused with the ERISA Employee Dishonesty bond requirement. The latter covers loss of funds resulting from employee dishonesty, and not the liability resulting from fiduciary responsibilities. Professional Liability policies may also provide fiduciary coverage for specialists, such as lawyers. Certain professionals have greater fiduciary responsibilities (e.g. administering estates and trusts) than just Employee Benefit Plans, and require specialized coverage.

Fine Arts
Frequently coverage is specifically endorsed for valuable paintings, statuary and other art objects. An appraisal may be required to establish an object’s value.

Fire Damage Legal Liability
Your liability for fire damage to leased or rented premises that your company occupies.

Floaters
Property policies normally cover property at a specified location. Property that travels or changes locations (e.g. exhibits, construction equipment or employee tools) is covered by a "Floater" endorsement or policy.

Foreign Travel
If employees travel out of the country on business, you should consider Endemic Disease and Repatriation Expense coverages. Workers Compensation covers job-related injuries. The Endemic Disease endorsement expands this to include local illness (malaria, for example) incurred because of business travel. Repatriation Expense covers the extra costs (which can be high) of returning a sick or deceased employee to the United States. Examples include special aircraft or medical arrangements.

Employees who work in a foreign country (as opposed to business travel) may require a foreign workers compensation policy. Discuss foreign travel and operations with your broker.

Forgery or Alteration
This section covers losses resulting from forgery or alteration of your company's checks or bank drafts.

Free Look
Provision required in most states whereby policy owners have either 10 or 20 days to examine their new policies at no obligation.