Business Liability Insurance: Terms You Need to Know

If you’re considering a business liability insurance policy, it’s a real advantage to understand the sometimes-unfamiliar terms and phrases used to describe these products. The more you know when you talk to an insurance agent, the better you’ll feel about making the right decision when comparing policies from different companies.

"It's important to have a working knowledge of insurance basics and commonly used terms," says Marc Vanderly, Commercial Sales Agent for Nationwide. "When you compare policy to policy, you’ll be able to make an informed decision based on solid information you understand. And you’ll be more able to ask your agent good questions."

The basics

A commercial liability insurance policy pays for losses arising from real or alleged bodily injury and property damage. It also covers personal injury occurring on your business premises or arising from your operations.

Bodily Injury and Property Damage Liability

Examples of covered losses include someone being hurt from a slip and fall at your business; and property damage, such as a person’s vehicle being damaged while parked at your business.

Medical Payments

Provides coverage for medical expenses to a third party as a result of a bodily injury for which you, or the company, are liable.

Personal and Advertising Injury Liability

Protects you for situations such as an employee speaking or publishing inaccurate information that slanders or libels a person or organization; publishing material that violates a person's right of privacy; copyright infringement; or wrongful eviction from a dwelling or premises.

Top 10 business liability insurance terms you should know

Aggregate Limit of Indemnity

The maximum amount an insurer will pay for all accumulated claims arising within a specified period of insurance.

Binder

A temporary agreement stating that an insurance policy is in effect, often used to protect the insured when it’s not possible to endorse the policy immediately.

Conditions

The portion of an insurance policy that stipulates the rights and duties of the insured, and the insurer for the policy period. Failure to comply with the conditions may result in insurers refusing to pay a claim.

Exclusion

This is a restriction in your business liability insurance limiting and/or excluding coverage for certain potential catastrophic events, persons, property or locations.

Grace Period

This is a period of time that insurance coverage continues beyond the actual expiration date of a policy that you intend to renew. A policy will lapse if the premium is not paid by the end of this period.

Reinstatement

The restoration of a lapsed or cancelled policy.

Risk

The probability of an insured loss occurring.

Risk Management

The identification, measurement and economic control of risks that threaten the assets of a business or other enterprise.

Schedule

Policy section stating the main details of the insured, their business activities, the period of cover the application of any special terms or restrictions plus other details specific to the particular insurance and premium.

Subrogation

The insurance company’s right to pursue legal action in the policyholder’s name against the party considered legally liable for the loss or damage.

Contact a Nationwide agent today, and learn why this is one of the easiest business decisions you can make today.