Glossary of Insurance Terms

Business insurance should be straightforward and easy to understand. There are a number of terms commonly used but they can be overwhelming for even the most seasoned of business owners. That’s why we created this glossary of  insurance terms to help you make more informed decisions about protecting your livelihood.

Independent Insurance Agent: Local independent insurance agents are the ones you can count on to provide the best combination of service, price and protection with tailored coverage options and risk insight. They work in insurance agencies and have the ability to sell multiple insurance companies’ policies. Whether it’s setting you up with the best coverage for your business or answering your policy questions, your insurance agent is committed to customer satisfaction. And as local community members, they’re close at hand the minute an issue arises.

Underwriter: An underwriter is the person in an insurance company who reviews the application for insurance and decides if the applicant is acceptable and at what premium rate. Underwriters work closely with independent insurance agents.

Businessowners Policy (BOP): A BOP begins with a solid base of property and liability insurance in one convenient policy.  It includes various business insurance coverages to help protect your business from claims of injury or property damage.

Umbrella Liability Coverage: Umbrella liability coverage can protect your business against catastrophic losses.  An umbrella policy can increase protection on liability coverages where your business could get sued for staggering amounts due to injury or property damage.

Dram Shop Coverage: A dram shop is a place of business that sells alcoholic beverages, such as a restaurant or bar. Dram shop insurance or liquor liability insurance covers liabilities associated with the sale of alcohol. This type of coverage can vary by state. 

Read, “Liquor Liability: Limit Your Exposure.”

Employment Practices Liability Insurance (EPLI): EPLI is designed to protect your business from employee-related claims and allegations such as sexual harassment, discrimination, abuse or wrongful termination. In today’s litigious business climate, this sort of protection can prevent a damaging claim from effectively putting you out of business.

Commercial Auto Insurance: Commercial auto insurance provides protection for vehicles that are used for business purposes. Commercial vehicles require a separate policy because they’re usually exposed to more risk than personal vehicles. 

Insurance Loss Run: Also known as a loss run report, an insurance loss run is a document that records the history of claims made against a business insurance policy, much akin to an incident report. The report is a document you can provide to prospective insurers when shopping for new business insurance coverage. Loss runs allow underwriters to determine how risky your business will be to insure.

Certificate of Insurance Form: A certificate of insurance form is often needed when a business needs to provide evidence that certain general types of insurance coverage and limits have been purchased. In a nutshell, it summarizes your insurance coverage to a single document. This may be important if a claim occurs and the business is found liable while providing their service or engaged in their trade.

Hold Harmless and Indemnification Agreement: Hold harmless indemnification agreements are clauses within a contract or agreement that can work to your business’s advantage, or they can just as easily work against your business. Hold harmless and indemnification are terms that are used interchangeably, but do not necessarily mean the same thing. The intent of a hold harmless or indemnification agreement is to impose on one party the responsibility to pay all liability, damages, costs, expenses, and even attorney’s fees for the other party to the agreement.

Additional Insured Endorsement: An additional insured endorsement can be added to a general liability insurance policy. It’s important to note that coverage may be limited to a single event or it could last for the policy’s lifetime depending on the provisions laid out in the policy. One of the distinct advantages is coverage against third-party lawsuits for situations like property damage and bodily injury.

Proof of Insurance: Documentation that proves you have valid insurance with an insurance company.

Risk Control: When it comes to risk management, proactive is better than reactive. Risk control professionals work with business owners to identify and evaluate dangers that could result in financial loss or injury – and then develop solutions to mitigate the risk. 

Browse our safety resources to strengthen your loss prevention efforts.

Premium Audit: A premium audit is used to calculate your final premium and helps to ensure you  only pay what you truly owe. When your policy was issued, the premium was an estimate of an exposure basis (usually payroll or sales) multiplied by a rate. Premium audits are commonly performed on General Liability, Liquor Liability and Workers Compensation policies.
For answers to more insurance questions, please visit our faq page or contact your local Society agent.


As a mutual insurance company, we operate and exist for the benefit of our policyholders. For more than 100 years, Society has been helping businesses overcome the unexpected with comprehensive coverage packages and outstanding claims handling, underwriting and risk management.

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