From doctors to architects, accountants to lawyers, most industries have their own vocabulary and use distinctive words to convey specialised meanings. Insurance is no different in its use of key terms. However, unlike other industries, most people (especially business owners) will at some point need to understand specialised insurance terms, which is where the confusion begins.
It’s therefore vital that as a business owner, you have a basic understanding of the most used insurance terms. If you are aware of the following terms, when it comes to renewal time, you’ll be one step ahead. The more you educate yourself about the insurance vocabulary, the more adept you’ll be at determining the type and scope of the coverage necessary for your business.
The 9 insurance terms every business owner should understand
2. Business Interruption Insurance: Business Interruption Insurance is designed to protect your business from loss of income or expenditures sustained as a result of direct loss, damage, or destruction to your insured property.
3. Certificate of Insurance / Currency: The document issued by an insurance company that is used to verify the insurance coverage under the specific conditions granted to listed individuals. It will list important information with regard to the policy such as the effective date, the type of insurance cover purchased, and the types and amount of liability.
4. Named Insured: A common insurance term is ‘named insured’. Named insured is any person, firm, organisation, or any of its members specifically designated by name as an insured. Others may also fall within a policy but will be distinguished as unnamed.
5. Public Liability Insurance: Public Liability Insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or economic loss resulting from your negligence.
6. Premium: The insurance premium is the amount of money that an individual or business must pay in return for transferring those risks in an insurancepolicy.
7. Professional Indemnity Insurance: Professional Indemnity Insurance is designed to protect professionals against legal costs and claims for damages to third parties, which may arise out of an act, omission or breach of professional duty in the course of their business.
8. Property Insurance: Insurance that covers loss or damage to assets, including equipment, inventory, or other real property owned by a policyholder.
9. Under-insurance: Under-insurance refers to the circumstance where a business has a form of insurance in place, but it does not offer complete financial protection. In the event of a claim, this results in the under-insured business incurring out-of-pocket expenses to bridge the gap in cover.
It’s important to know exactly what you’re getting when you pay your premium. Your Morgan Insurance Group representative can provide you with further information or explanation.
Adapted from a story on the PSC Connect website.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.