Index | Liability Insurance | Liability Insurance Lingo

Liability Insurance Lingo

Business Liability Insurance is coverage for liability exposure which results from the activities of a business. It includes direct liability, contingent (secondary) liability, and medical payments to others. This coverage is provided by the Businessowners Liability Coverage Form and includes liability for bodily injury, property damage, personal injury, advertising injury, and fire damage.

Direct Liability is legal obligation of a person or business due to negligent acts or omissions resulting in bodily injury or property damage to another party.

Contingent Liability is a potential liability which may be incurred by a business for acts other than those of its own employees (e.g. outstanding lawsuit).

Professional Indemnity Insurance (PI ) is the type of insurance which protects businesses that sell skills, knowledge or services to a third party from negligence claims filed by clients. It will cover the costs of any compensation sought by a client as a result of negligence or mistake, as well as any legal costs.

Product Liability Insurance is protection against financial loss which arises out of the legal liability incurred by a manufacturer, merchant, or supplier of goods because of injury or damage resulting from the use of a covered product. It covers your business against claims for dangerous, defective or faulty products and goods made or sold by you.

Products and Completed Operations Insurance is coverage for manufacturers, merchants, distributors and contractors which protects the insured against claims for injury or damage arising out of products sold, manufactured, handled, or distributed, or operations which are complete. The insurance company will pay for the legal expenses and the damages incurred.

Premises and Operations Liability Insurance is the liability coverage designed for exposures which arise out of an insured's premises, ownership, and maintenance, as well as business operations. Commercial General Liability policies normally cover liabilities arising from business operations on the premises of the business.

Commercial General Liability Insurance (CGL) is a broad form of Liability Insurance which covers businesses against liability claims for bodily injury and property damage arising out of operations, completed operations, or independent contractors.

Business Automobile Policy (BAP) covers automobiles that are used by a business for liability judgment arising out of the use of the automobile, whether business, personal, or hired, and provides coverage in case the business automobile is subject to damage or destruction.

Employers Liability and Workers Compensation (Workers' Comp) provides medical care and compensation for employee job-related injuries or diseases in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence. This coverage provides four types of benefits: medical care, death, disability, and rehabilitation.

Manufacturers and Contractors Liability (M&C) is liability insurance coverage which arises from manufacturing and/or contracting operations including ownership and maintenance of premises and applies to persons or corporations engaged in manufacturing, construction and installation work. M&C coverage is included in the simplified CGL. Policies normally exclude automobile liability, activities of independent contractors, damage to property by explosion, collapse, or underground property damage.

Owners, Landlords and Tenants Liability Insurance Policy (OL&T) is liability insurance coverage for bodily injury and property damage caused to others by negligence and arising from the ownership, use, occupancy, operation, or maintenance of an insured premises. Excluded perils are: operation of an automobile, aircraft, contractual liability, war, nuclear disaster, and liquor liability. The OL&T form has been replaced by the Commercial General Liability Coverage Form.

Personal Liability Insurance is issued as part of a Homeowner's policy and covers negligence of the insured that results in legal expenses and claims for compensation. It may also include medical payments insurance covering accidental injury to guests.

Comprehensive Personal Liability is a form of liability insurance coverage which protects you or the relative residents of your household from liability for nearly all types of accidents caused by the policyholder's negligence in his/her personal life (except liability that may arise from the business operations) and reimburses for damage or injury caused to others. It is most commonly included in a Homeowners policy or Renters policy.

Uninsured Motorist Endorsement covers the costs associated with damage, injury or repairs caused by an uninsured, underinsured, or hit-and-run driver.

Basic Limits of Liability is the minimum amounts of liability insurance you can legally purchase. This term is usually applied to Bodily Injury and Property Damage limits.

Manual Excess is the premium for an insurance amount in excess of the basic limits of liability.

Bodily Injury Liability (BI) is a legal liability that arises as a result of the injury or death of another person. This coverage protects you against financial loss and legal defense in case you are found at fault for injuring other persons in an automobile accident.

General Liability Insurance is a form of insurance used to protect business owners from a wide variety of liability exposures, for example, claims arising out of accidents resulting from the insured's premises or operations, sale or distribution of products, operations completed by the insured, contracting operations, operation of machinery, and professional services.

Comprehensive General Liability is a policy which provides coverage for a variety of general liability exposures, for example Premises and Operations (OL&T or M&C), Completed Operations, Products Liability, and Owners and Contractors Protective. Comprehensive General Liability policy has been largely replaced by the Commercial General Liability (CGL) forms.

Professional Liability Insurance is coverage for specialists in various professional fields, which protects them against financial losses from claims filed against them by their clients.

Errors and Omissions Insurance is an insurance form which indemnifies the insured for any loss sustained because of an error, omission, negligence or oversight on his part within a specified profession or activity. It is often used by banks, real estate companies, builders, architects, escrow companies, brokers, agents etc.

Malpractice is professional misconduct or act of improper or unethical practice done either intentionally or through ignorance while performing professional duties, which results in injury, damage, or loss. It is commonly applied to physicians, surgeons, dentists, lawyers, and public officers.

Malpractice Insurance is the type of coverage professional practitioners need to protect themselves against liability claims filed against them for malpractice. It pays any damages set by a court, subject to policy limits and is generally purchased by physicians, hospitals and lawyers.

Physicians, Surgeons and Dentists Professional Liability is coverage for a practicing physician, surgeon, or dentist, protecting for bodily injury, personal injury, and/or property damage in case it is incurred by a patient. This coverage protect a professional for the costs of defending if the patient sues him/her for injuries or damages and includes legal fees, court costs, and other expenses.

Personal Injury is the term relating to injury caused to a person or a person's reputation, other than bodily injury, arising out of false arrest or detention, libel, slander, malicious prosecution, wrongful entry or eviction etc.

Public Liability Insurance applies to forms of third party liability insurance which protects the insured against lawsuits brought by members of the public for accidental injury and/or property damage.

Owners and Contractors Protective Liability Policy (also known as Independent Contractors Insurance) is an insurance policy which protects an insured against losses caused by the negligent acts of a contractor or subcontractor.

Property Damage Liability Insurance is protection against liability for damage to the property of another in case the negligent acts or omissions of an insured result in damage or destruction to another's property. This coverage may include compensation for loss of the use of the property and is usually written along with Bodily Injury Liability protection.

Umbrella Liability Policy is coverage which provides excess amounts of insurance above the primary policy as well as additional liability coverages. The term "umbrella" means that it is a separate policy carried over and above any other basic Liability policies of the insured.

Underground Property Damage is the policy which covers the damage to underground property beneath the surface of the ground, for example wires, pipes, sewers, etc. The damage may be caused by the use of mechanical equipment for the purpose of paving, excavating, drilling, burrowing, filling, pile driving etc.

Named Insured is an individual, business or company that is listed on the declarations by name as the insured under a policy and with whom an insurance contract is made. There can be additional individuals or organizations added as named insureds. The named insured has the responsibility for premium payments, receipt of notices, and adjustment of losses.

Endorsement (rider) is an agreement or modification added to the policy which is used to change or expand the coverage provided by the original terms of the policy. It fulfills specific requirements of the insured.

Underwriting is the analysis of risks and the process of selecting applicants for insurance, as well as classifying them according to their degrees of insurability so that standard or modified rates may be charged. This process involves rejection of unacceptable risks too.

Garage Keepers Insurance is part of the Garage coverage form or a separate endorsement, which covers garage operators against legal liability for damage to autos in the care, custody or control of the insured.