Buying insurance can be as simple as contacting an insurance broker, obtaining quotes and signing on the dotted line. But when it comes to understanding your business insurance policy and what it covers, it can be much more complicated. At Fuse, we want to simplify and speed up the process of obtaining business insurance. Our goal is for you to gain a better understanding of what you’re buying so that you can be confident that you’re getting the protection you need. The terms below are some that you may commonly find when you are looking for an insurance quote or reviewing your policy for your business.
Actual Cash Value (ACV)
This is a method of valuing insured property. ACV is the value of property that is the same age, and in similar condition to the property or item that was lost or damaged. The value is determined by subtracting depreciation from the replacement cost. This is often defined as “fair market value”. Learn more about actual cash value.
An additional insured refers to anyone that is added and named on your commercial insurance policy. Anyone who is named as an additional insured will also be covered under your policy. The additional insured’s protection may be more limited than the policyholder, so it is best to ask your broker about coverage under your policy.
The aggregate limit is the maximum amount your insurer will pay for all claims during your policy period (usually one year).
A binder is a document that serves as your temporary proof of insurance until your formal insurance policy is issued.
Certificate of Insurance (COI)
A COI is a document that summarizes your insurance coverage and serves as proof of your insurance policy. It can be shared with clients, partners, investors or landlords to show that you are insured.
The coinsurance clause requires the policyholder to carry a limit of insurance equal to a specified percentage of the total value of your property. The standard percentage is usually 80%, but can also be 90% or 100%. It is usually found in the policy conditions section of your commercial property policy. Learn more about coinsurance.
A deductible is the amount you’ll pay out of pocket on a covered claim before your insurance kicks in and covers the remaining amount, depending on your policy limits.
An endorsement is a modification to your existing insurance policy – whether that is an addition, removal or other change that alters the terms of your original insurance policy.
An exclusion is a statement found in your insurance policy that lists anything not covered by your insurer. This could include perils, hazards, circumstances, or property that are not covered under your insurance policy.
The person or business that is named in your insurance policy and is covered by your policy. You can usually find this on the first page of your policy documents.
The maximum amount your insurer will pay for all claims resulting from a single incident or covered loss under your policy.
The amount you will pay for your insurance coverage. In other words, the premium is what you pay insurance companies in exchange for coverage for your business.
This is a method of valuing insured property. Replacement cost is the cost to repair or replace an item brand new with no deduction for depreciation. Learn more about replacement cost.
Third-Party Bodily Injury or Property Damage
The third-party liability portion of your insurance provides protection for your business in the event you are held responsible for physical injury or damage to others (known as the third-party) or to their property.
We hope these terms help you make informed decisions when reading through your insurance documents and discussing your business insurance policy. If you’re ready to get started on your quote now, you can do so by using our online quote application. If you have questions or would like to speak with one of our brokers, call 1-866-387-FUSE (3873) and we would be happy to assist you.