Insurance Terms

Insurance terms can be confusing. Liability, occurrence limit, aggregate…what does it all mean? Here are some insurance terms and definitions to help you through all the lingo.

insurance terms and definitions


Structure described in the policy including: Completed additions; Fixtures, including outdoor fixtures Permanently installed machinery and equipment.

Property of Others

Property in your care, custody and control within your premise or within 100 feet of your premise.

Property Off Premise

Property while it is away from the described premises, if it is:;
Temporarily at a location you do not own, lease or operate;
In storage at a location you lease (provided the lease was executed after the beginning of the current policy term)
At any fair, trade show or exhibition

Does not apply to property:
In or on a vehicle; or In the care, custody or control of your salespersons, unless the property is in such care, custody or control at a fair, trade show or exhibition.

Business Personal Property

Your Property located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises, consisting of the following :
Furniture and fixtures;
Machinery and equipment;
All other personal property owned by you and used in your business; tenant improvements and betterments Leased personal property which you have a responsibility to insure
Not all property may be covered. Policy also includes a Property Not Covered section.

Business Income

Loss of Net Income and Continuing operating expenses (limits on payroll may exist) as a result of covered direct damage to your building or business personal property.

Extra Expense

Payment of extra expenses above and beyond normal operating expenses due to a covered property claim.

Utility Services-Direct Damage

Damage caused by an interruption in utility service to the described premises. The interruption in utility service must result from direct physical loss or damage by a Covered Cause of Loss to Water, Power or Communication Services.

Utility Services-Business Income

Resulting loss of income due to loss of; utility services from a covered cause of loss to Power, Water or Communication services.

Replacement Cost

Covered property will be paid with no deduction for depreciation. May not apply to all covered property and is usually subject to coinsurance (a requirement for a minimum amount of insurance to be carried).

Bodily Injury & Property Damage Occurrence Limit

Coverage amount afforded for an insured arising from your premise or operations that results in bodily injury to another or damage to their property. The limit is the most that will be paid per occurrence regardless of the number of suits or claims.

General Aggregate

The amount that will be paid for covered Liability occurrences in one policy year. The General Aggregate resets at the policy renewal. Product and completed operations claims are not included in this aggregate.

Product & Completed Operations Occurrence Limit

Coverage for bodily injury or property damage to another resulting from your product or completed operations.

Product & Completed Operations Aggregate

The aggregate amount that will be paid in one policy year for bodily injury and property damage losses that result from your product and/or completed operations. Premise and Operations claims are not included in this aggregate.

Personal & Advertising Injury Occurrence Limit

This limit applies to losses associated with libel, slander, defamation of character and unintentional copyright or trademark infringements used in advertising material. This coverage is not a substitute for intellectual property coverage and is limited to advertising.

Medical Payments to Others

Payment of necessary medical expenses incurred by another resulting from injury stemming from your operations(other than your products and completed operations). Unlike liability coverage, negligence is usually not an issue and is paid on a per person basis.

Property Damage to Property Rented to You

This coverage is important for tenants of a building. The premise rented is excluded from liability coverage in general and this separate limit is applied to the premise you occupy for the peril of fire.

Liquor Liability

Exclusions exist in General Liability for those businesses that sell, serve and manufacture alcoholic beverages. Liquor Liability needs to be purchased to void this exclusion. If these activities are not part of your business then liquor liability coverage does exist. Some policies will list a “Host Liquor” coverage as long as no fee is charged or permit to serve is necessary.

Products Consumed on Premise

Products coverage is technically designed for products that are away from your place of business. If you offer tastings on your premise then the definition in your policy needs to be redefined to offer coverage once you relinquish possession as oppose to once it leaves your property.

Hired & Non-Owned Auto Liability

This coverage is not Auto coverage as you may know it. It applies as an excess coverage to your business if a hired (rented) or non owned (perhaps an employee owned vehicle) is used in your business and the insurance on that vehicle is not in effect or the limits are insufficient to pay the loss. This coverage can be added to General Liability or it can be attached to a Commercial Auto policy.

Product Recall Expense

Exclusions exist in General Liability policies for the expenses incurred due to a voluntary or mandatory recall of your product from the market. If coverage has been purchased a limited amount of expense reimbursement is available. Higher limits of coverage may require a separate Product Recall policy.


Covered Property means perishable stock at the described premises owned by you or by others that is in your care, custody or control for

Change in temperature or humidity resulting from mechanical breakdown or mechanical failure of refrigerating, cooling or humidity control apparatus or equipment, only while such equipment or apparatus is at the described premises

Contamination by the refrigerant

Power Outage, meaning change in temperature or humidity resulting from complete or partial interruption of electrical power, either on or off the described premises, due to conditions beyond your control

Selling Price valuation can be requested.

Equipment Breakdown

A very comprehensive coverage that provides spoilage, business income and other coverages for a breakdown of covered equipment. Covered equipment can include machinery used in production of food and beverages.

Insurance terms can be confusing. Hopefully these definitions helped. If we can help you understand what insurance you need for your business, contact us or request a quote.