Liability Insurance Terms
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Learn the Top Business Liability Terms to Make an Informed Choice

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

Top business liability terms

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, up to the limits of your policy.

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 against situations such as an employee speaking or publishing inaccurate information that slanders or libels a person or organization. It can also help protect against publishing material that violates a person's right of privacy, copyright infringement or wrongful eviction from a dwelling or premises.

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, people, 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 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.

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