business insurance terms explained

Business insurance terms explained

Starting a business is a risky venture and smart risk-takers do what they can to protect themselves from the unexpected.

First step: Choose the right business insurance.

Your independent insurance agent is your best resource. But it doesn’t hurt to learn a little about insurance before you meet with your agent so you have an idea of what you need.

Basic insurance terms

Here are some basic terms that can help you communicate when you need to talk insurance.

Here are some basic insurance terms that can help you communicate when you need to talk insurance:

  • Actual cash value: The cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence.
  • Additional insured: This type of coverage is a type of status associated with general liability that provides coverage to individuals not named in the policy but added at the request of the insured.
  • Adjuster: A person who investigates claims and recommends settlement options based on estimates of damage and insurance policies held.
  • Agent: The person who sells and services insurance policies.
  • Carrier: The company that underwrites the policy (i.e. is responsible for paying claims covered by the policy).
  • Claim: A demand made by the insured, or the insured's beneficiary, for payment of the benefits as outlined by the policy.
  • Coverage: The scope of protection provided under an insurance policy.
  • Declarations: Also known as a Dec. page, usually the first page(s) of your policy, it lists the details and terms of the policy and your coverages.
  • Deductible: Amount of money you pay out of pocket. A higher deductible will lower your premium but will cost you more out of pocket.
  • Endorsement: An amendment or addition to an existing policy that changes the terms or scope of the policy. It’s sometimes called a “rider.”
  • Indemnity: Restoration to the victim by payment, repair, or replacement.
  • Policy: The written contract stating the conditions of your insurance coverage.
  • Replacement cost (RC): The cost to repair or replace damaged property with materials of like kind and quality without a deduction for depreciation.

Businessowners insurance

A businessowners policy (BOP) combines property, liability, and business interruption coverages into one convenient policy.

Our targeted commercial coverages protect your building, business personal property, and income like business owner insurance packages generally do. But we tailor these programs to the specific needs of your business, so you aren’t paying for insurance you don’t need.

Learn more about targeted businessowners insurance Contact a Grinnell Mutual agent

Commercial property insurance

Commercial property insurance offers coverages for things that can be damaged by weather, fires, and some types of accidents. Basic property insurance helps cover losses caused by fires, explosions, and vandalism. Additional coverages, often referred to as endorsements or enhancements, can be purchased to provide added layers of protection or higher limits on basic coverages.

Before you meet with an agent, take stock of your physical inventory:

  • Building(s) that house your business
  • Additional structures like sheds and warehouses
  • All office equipment, including computers, phones, and furniture
  • Manufacturing or processing equipment
  • Inventory in stock
  • Accounting records and important company documents
  • Outdoor signs
  • Fences and landscaping

General liability insurance

General liability insurance helps cover the liability exposures of your business, including product liability, operations, premises, and damages. You can upgrade your basic general liability policy with additional business insurance policies. These include:

Umbrella insurance

While standard liability coverage will help protect you in many situations, it may not be enough. Umbrella coverage helps you prepare for the worst with an added layer of protection. Grinnell Mutual’s Commercial Umbrella insurance can help ensure that your business and assets stay afloat when you have an unexpectedly large claim.

Learn more about commercial umbrella

Equipment breakdown insurance

Equipment breakdown coverage helps protect the equipment, machinery, and systems that keep your business running. It can pay for direct physical damage to covered equipment caused by accidents from electrical arcing, mechanical breakdown, power surges, centrifugal force, and more.

This Grinnell Mutual coverage is attached to eligible policies (unless waived) in some states and added by request in others. Ask your agent if Equipment Breakdown automatically attaches to your policy.

Types of equipment covered may include:

  • Heating and cooling
  • Computers and PBX phone systems
  • Electronic retail equipment
  • Electrical systems
  • Communication systems
  • Boilers
  • Elevator motors and machinery
  • Fire detection and security systems
  • Rooftop machinery

Types of accidents covered may include:

  • Mechanical breakdown
  • Artificially generated electrical current
  • Explosions of steam boilers, pipes, engines, or turbines
  • Loss or damage to steam boilers, pipes, engines, or turbines
  • Loss or damage to hot water boilers or other water heating equipment resulting from any condition or event inside

Commercial auto insurance

Our Commercial Auto coverage offers additional coverages for your business vehicles and liability coverage that protects you and your employees during at-fault accidents that result in injuries or damages.

Employment Practices Liability insurance

Employment laws are complicated and there are a whole host of employment laws that employers should be aware of. Even accidental violations can lead to a lawsuit. Jury awards and out-of-court settlements can run into hundreds of thousands of dollars. Add legal fees and time lost to dealing with the problem, and the total cost can be staggering.

Grinnell Mutual’s Employment Practices Liability insurance (EPLI) helps provide financial protection from a variety of employment suits and complaints, such as harassment, discrimination, and wrongful dismissal. It also can cover defense costs.

Learn more about EPL insurance

Cyber Liability and Breach Response insurance

Breaches can involve personal health information (PHI), personally identifiable information (PII), trade secrets, or intellectual property, and the information can be electronic or physical records. Coverages include the cost of breach event responses such as regulatory actions and investigations.

This Grinnell Mutual coverage is attached to eligible policies (unless waived) in some states and added by request in others. Ask your agent if Cyber Liability and Breach Response automatically attaches to your policy.

Learn more about Cyber Liability insurance

For more information

The insurance coverages above are just part of the included and enhanced coverages we offer to protect every aspect of business property and liability exposures. And don’t forget about protecting your employees with Workers’ Compensation and Return to Work programs.

Learn more about our business insurance Find a Grinnell Mutual agent