Any type of jargon— but especially insurance jargon—can be confusing and frustrating to understand. Whether you’re a newer business owner or have decades of experience, choosing the right insurance for your business is always a daunting task.
The first step to choosing a policy that works for your company is understanding important insurance terms and vocabulary so you can have an informed discussion with your insurance agent. Here are 10 foundational terms that will help you sound like an expert.
10 Important Insurance Terms You Should Know for Your Business
1. Claim
A claim is a request for payment from your insurance company. You typically have to file a claim after suffering a covered loss, such as damage to your property or liability for injuries caused by your business.
2. Deductible
This is the amount you have to pay out of pocket before your insurance policy kicks in. For example, if you have a $1,000 deductible and suffer $5,000 worth of damage in a covered event, your insurer will only have to pay $4,000.
3. Premium
A premium is the amount you pay for your insurance coverage—in other words, your bill. Your premium is based on a variety of factors, including the type of business you have, the amount of coverage you need, and the deductible you choose.
4. Aggregate Limit
This important insurance term refers to the maximum amount your insurance company will pay out for all claims during the policy period. Once this limit is reached, you’re on your own.
5. Additional Insured
An additional insured is another important insurance term to know. It is an additional person or entity that you’ve added to your insurance policy. This could be a business partner, vendor, or anyone else who has a financial interest in your business. For example, if you’re renting office space, your landlord may require you to add them as an additional insured on your policy.
6. Policyholder
The policyholder is the person or business who owns the insurance policy. He or she is the one who pays the premium and is the primary beneficiary of the coverage.
7. Beneficiary
A beneficiary is a person or entity that receives payment from an insurance policy. In most cases, the policyholder is also the beneficiary, but this isn’t always the case. For example, if you have a life insurance policy, your beneficiaries would be the people you designate to receive the death benefit.
8. Employers Liability Insurance
This type of insurance protects businesses from claims filed by employees who are injured or become ill as a result of their job. Employers liability insurance is required in some states, and it’s a good idea to have even if it isn’t required.
9. General Liability Insurance
General liability insurance, also known as business liability insurance, is an important insurance term to make a part of your plan. It protects businesses from claims arising from their products, services, or operations. It can cover things like property damage, personal injury, and advertising injuries.
10. Business Owner’s Policy (BOP)
A BOP is a package policy that combines property and liability coverage for businesses. It’s typically less expensive than buying separate policies for each type of coverage. At Bethany Insurance, we can provide an affordable and customizable BOP for your business. To learn more, schedule a free consultation with us today!
Whether you’re just starting out or have been in business for years, it’s helpful to understand these 10 important insurance terms. Having a solid understanding of your policy will help you make better decisions about your coverage and protect your business in the event of a covered loss.
