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As a business owner, there’s so much more to know about insurance than premiums (payments in exchange for coverage), losses (incidents that cause financial harm), claims (requests to pay for a loss), and deductibles (the value that an insured party must pay before an insurer will begin paying). It can be an intimidating piece of the business puzzle. But learning the basics — and a few not-so-basics — can remove some of the mystery and help you become a well-informed consumer.  

  • Risk: The possibility of a loss occurring. 
  • Risk Management: Identifying potential hazards and taking action to reduce the likelihood that they will cause a loss. Liability: 1. A legal obligation to pay for damages caused by an insured party to someone else.  2. A type of insurance that pays for those losses.
  • Certificate of Insurance: A document that shows proof of coverage present in an insurance policy. Certificates verify coverages, limits of insurance, and policy effective and expiration dates, among other facts about a policy.  Underwriting: The process of analyzing risk to determine the insurability prior to taking on the risk. 
  • Workers Compensation: Insurance that helps cover the costs connected to a work-related injury. 
  • Workers Compensation Experience Modifier: A number that, based on the frequency and severity of previous losses, affects a business’ workers compensation premiums. 
  • Endorsement: A page in an insurance policy that either adds, changes, or removes insurance coverage.  

Additional Insured Endorsement: Adds coverage for a person or organization to the policy that would not have automatically been covered.  
Primary and Non-Contributory Endorsement: States that the policy must pay before other insurance for the additional insured. 
Waiver of Subrogation Endorsement: An endorsement that restricts an insurance carrier from recovering the damages paid on a claim from a negligent party listed in the endorsement. 

Aggregate Limit: The maximum amount that will be paid by an insurance company during the annual policy period for a particular coverage.  

Per-Project Aggregate: The general liability aggregate limit will apply separately to designated construction projects. Umbrella: A policy that provides additional limits of liability in case a claim exceeds the established policy limits of the primary liability policy. 
While these terms are just a small fraction of what there is to know in the insurance industry, they will help you form a foundation of knowledge you can use as you navigate the complexities of running — and protecting — your business. 

Umbrella: A policy that provides additional limits of liability in case a claim exceeds the established policy limits of the primary liability policy. 

While these terms are just a small fraction of what there is to know in the insurance industry, they will help you form a foundation of knowledge you can use as you navigate the complexities of running — and protecting — your business.