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A commercial liability insurance policy pays for losses arising from bodily injury and property damage – real or alleged. It also covers personal injury that happens on your business premises or results from your operations, up to the limits of your policy.

If you’re considering a business liability insurance policy, it helps to know the terms and phrases used to describe these products. Here are some important liability insurance terms and definitions to know:

Bodily injury and property damage liability

The basic coverage for injuries and damages. Examples of covered losses include someone being hurt from a slip and fall at your business, or a person’s vehicle getting damaged while parked at your business.

Medical payments

Coverage for medical expenses to a third party, resulting from a bodily injury for which you or the company are liable.

Personal and advertising injury liability

Coverage to protect you against situations such as an employee speaking or publishing inaccurate information that slanders or libels another person or organization. Also helps protect against publishing material that violates a person's right of privacy, infringes on a copyright or results in wrongful eviction.

Aggregate limit of indemnity

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


A temporary agreement stating that an insurance policy is in effect, often used to protect the insured when policy documents can’t be issued immediately.


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.


A restriction on your insurance policy limiting and/or excluding coverage for certain potential catastrophic events, people, property or locations.

Grace period

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


The restoration of a lapsed or cancelled policy.


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.


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


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

Now that you understand the important terms and definitions, find out what's covered under a general liability insurance policy and get a quote today.

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Product, coverage, discounts, insurance terms, definitions, and other descriptions are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in your individual insurance contracts, policies, and/or declaration pages from Nationwide-affiliated underwriting companies, which are controlling. Such products, coverages, terms, and discounts may vary by state and exclusions may apply.

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