Insurance Terms

Commercial insurance terms, explained in plain English.

277 terms Texas property owners run into on policies, quotes, leases, loan documents and claims — each with a plain-English definition, a worked example and what to watch for.

Not sure what your policy says? Have us review it or call (713) 367-1706.

A

Aboveground Storage Tank (AST): An aboveground storage tank (AST) is a tank that sits on or above the ground surface, often used to hold fuel, used oil or chemicals. Leaks and spills from these tanks can cause pollution cleanup costs and lawsuits that standard property and liability policies usually exclude.
ACORD 25 (Certificate of Liability Insurance): The ACORD 25 is the standard one-page Certificate of Liability Insurance. It summarizes your liability, auto, umbrella and workers' compensation policies so a landlord, lender, tenant or client can see what coverage you have. It is proof of insurance, not the policy itself.
ACORD 28 (Evidence of Commercial Property Insurance, Evidence of Property): The ACORD 28, Evidence of Commercial Property Insurance, is the standard form that shows a lender or other interested party what property coverage is in place on a building. It lists the property, limits, deductibles and the lender's interest. It summarizes the policy; it does not change it.
ACORD Forms (ACORD): ACORD forms are standardized insurance forms, such as applications and certificates, published by ACORD, a nonprofit industry standards group. Agents, insurers and lenders use them so the same information appears in the same place on every form.
Actual Cash Value (ACV): Actual cash value (ACV) is a way of valuing a loss that pays the cost to repair or replace damaged property minus depreciation for age, wear and condition. It pays less than replacement cost, sometimes much less, for older property such as roofs.
Additional Insured (AI): An additional insured is a person or company added to someone else's liability policy by endorsement. It gets protection for claims that arise from the policyholder's work or premises. Landlords, lenders and project owners often require it in leases and contracts.
Adjuster (Insurance Adjuster, Claims Adjuster): An adjuster is the person who investigates an insurance claim, inspects the damage, reviews the policy and recommends or decides what the insurer will pay. Most adjusters work for or are hired by the insurer; a public adjuster works for the policyholder.
Admitted Insurer (Admitted Carrier): An admitted insurer is an insurance company licensed by a state's insurance regulator to sell insurance there. In Texas, admitted insurers are licensed by the Texas Department of Insurance, generally follow state rate and form rules, and are generally backed by the state guaranty association, within limits, if they fail.
Agency Lender Insurance Requirements (Fannie Mae insurance requirements, Freddie Mac insurance requirements): Agency lender insurance requirements are the insurance rules that Fannie Mae and Freddie Mac set for multifamily loans they buy or guarantee. They usually cover property limits, deductibles, rent loss, liability and insurer ratings, and the lender must enforce them for the life of the loan.
Agent of Record (AOR, Broker of Record, BOR Letter): The agent of record is the agent or broker an insurance company recognizes as representing a policyholder on a particular policy. A policyholder can change it by signing a broker of record (BOR) letter, which lets the new agent service the policy or market the renewal.
Aggregate Limit (Annual Aggregate): An aggregate limit is the most an insurance policy will pay for all covered claims combined during the policy period, usually one year. Once it is used up, the policy pays nothing more for that period, even if each claim was under the per-claim limit.
Agreed Value (Agreed Amount): Agreed value is an optional property coverage feature where the insurer accepts your reported values and waives the coinsurance penalty for the policy term. If you insure to the agreed amount, a partial loss will not be reduced for being underinsured.
All Other Perils Deductible (AOP Deductible): The all other perils (AOP) deductible is the standard deductible on a property policy that applies to every covered cause of loss without its own separate deductible, such as fire, theft, vandalism or water damage. It is usually a flat dollar amount.
AM Best Rating (A.M. Best, Financial Strength Rating): An AM Best rating is an independent opinion of an insurance company's financial strength and ability to pay claims. Lenders and contracts often require insurers rated at or above a minimum level, such as A-, along with a minimum financial size category.
Appraisal Clause (Appraisal Provision): The appraisal clause is a policy condition that lets you or the insurer demand a neutral process to settle a disagreement over the amount of a covered loss. Each side picks an appraiser, the appraisers pick an umpire, and an agreement by any two sets the amount.
Assault and Battery Exclusion (A&B Exclusion): An assault and battery exclusion removes or limits liability coverage for injuries from fights, attacks or other intentional harm on your property. It can apply even when the lawsuit says you were careless. It is common on policies for apartments, hotels, bars and convenience stores.
Auto Physical Damage (Comprehensive and Collision): Auto physical damage coverage pays to repair or replace your own business vehicles when they are damaged. It has two parts: collision, for crashes, and comprehensive (also called other than collision), for things like theft, hail, fire, flood and vandalism.
Automatic Sprinkler System (Sprinklered): An automatic sprinkler system is a network of water pipes and heat-activated sprinkler heads that discharge water when they sense a fire. Insurers treat sprinklered buildings as lower risk, which can improve pricing, but sprinklers also bring water damage and maintenance obligations.

B

Bad Faith (Unfair Claim Settlement Practices): Bad faith is when an insurer handles a claim unreasonably, such as denying or delaying payment without a reasonable basis, failing to investigate, or misrepresenting the policy. In Texas, statutes and court decisions give policyholders remedies for certain unfair claim practices.
Bailee's Customers Coverage (Bailee Coverage): Bailee's customers coverage insures customers' property while it is in your care for service, storage or repair, such as garments at a dry cleaner or goods in a storage business. It can pay for the loss whether or not you were legally at fault.
Binder (Insurance Binder): A binder is a temporary written agreement that puts insurance in force right away, before the full policy is issued. It shows the insurer, coverages, limits and dates, and it is replaced by the policy once that is delivered.
Binding Moratorium (Binding Restriction, Binding Suspension): A binding moratorium is a temporary suspension on writing new insurance or increasing coverage in an area facing an imminent catastrophe, such as a hurricane forecast to make landfall. Existing policies usually stay in force, but new coverage or changes may be unavailable until the threat passes.
Blanket Additional Insured Endorsement (Blanket AI): A blanket additional insured endorsement automatically makes any person or company an additional insured on your liability policy when a written contract requires it, without naming each one. It saves time when you sign many leases, vendor agreements or service contracts.
Blanket Limit (Blanket Coverage): A blanket limit is a single property insurance limit that covers several buildings, locations or types of property together, instead of a separate limit for each one. It lets a large loss at one location draw on the combined limit, subject to the policy's conditions.
Bodily Injury (BI): Bodily injury means physical injury, sickness or disease to a person, including death that results. It is one of the main harms a liability policy covers when you are legally responsible, such as a visitor's fall on your property.
Builders Risk Insurance (Builder's Risk, Course of Construction): Builders risk insurance covers a building while it is under construction or major renovation, including materials, equipment to be installed and the structure itself. It protects the project's value against covered losses such as fire, wind, theft and vandalism until the work is complete or occupied.
Building and Personal Property Coverage Form (CP 00 10, BPP Form): The Building and Personal Property Coverage Form (CP 00 10) is the standard ISO commercial property form that defines what counts as your building, your business personal property and others' property, and the main conditions for claims. It is paired with a causes of loss form that lists which perils are covered.
Building Coverage: Building coverage is the part of a commercial property policy that pays to repair or rebuild the physical structure after a covered loss. It usually includes permanently attached fixtures, building systems and some equipment used to maintain the building.
Building Valuation (Replacement Cost Appraisal, Insurance Appraisal): A building valuation is an estimate of what it would cost to rebuild a building today with similar materials and quality. It is used to set the insurance limit and is different from market value, purchase price or appraised tax value.
Business Income (Business Interruption, BI): Business income coverage, often called business interruption, replaces the income you lose and helps pay continuing expenses when covered physical damage forces your operations or rental income to stop while the property is repaired. It is usually triggered by the same kinds of damage your property policy covers.
Business Income Worksheet (BI Worksheet): A business income worksheet is a form used to estimate how much business income coverage you need. It projects your revenue and expenses for the coming year and removes costs that would stop during a shutdown, giving a basis for the limit.
Business Personal Property (BPP, Contents): Business personal property (BPP), often called contents, is the movable property your business owns and uses, such as furniture, equipment, computers, inventory and supplies. Commercial property policies insure it separately from the building, with its own limit.
Businessowners Policy (BOP): A businessowners policy (BOP) is a ready-made package for small and mid-sized businesses. It combines property, general liability and business income coverage in one policy. It is usually simpler, and can cost less, than buying each part separately. But not every business qualifies.

C

Cancellation: Cancellation is the ending of an insurance policy before its expiration date, either by you or by the insurer. You can generally cancel any time; an insurer can cancel only for reasons and with advance notice allowed by the policy and state law.
Capacity (Insurance Capacity): Capacity is the amount of insurance that insurers are willing and able to write for a type of risk or area. When capacity is plentiful, coverage is easier to get and prices tend to soften; when it is scarce, terms tighten and limits become harder to find.
Captive Insurance Company (Captive): A captive insurance company is an insurer owned by the businesses it insures, set up to cover their own risks. Large owners or groups of similar businesses use captives to gain more control over coverage and costs, but captives bring regulatory, tax and capital obligations.
Catastrophe (CAT, Catastrophe Event): A catastrophe, or CAT, is a single event, such as a hurricane, hailstorm, freeze or wildfire, that causes large insured losses across many policyholders. Catastrophes drive deductibles, pricing and claim delays, and some policy terms apply only to them.
Causes of Loss – Basic Form (Basic Form, CP 10 10): The Causes of Loss – Basic Form (CP 10 10) is a commercial property form that covers only a short list of named perils, such as fire, lightning, explosion, windstorm or hail, smoke, vandalism and sprinkler leakage. If a cause of loss is not on the list, it is not covered.
Causes of Loss – Special Form (Special Form, Open Perils, All Risk, CP 10 30): The Causes of Loss – Special Form (CP 10 30) is the broadest standard commercial property causes of loss form. It covers direct physical loss from any cause unless the form specifically excludes or limits it. It is often called open perils or, informally, all risk.
Central Station Alarm (Monitored Alarm): A central station alarm is a burglar or fire alarm monitored around the clock by an outside monitoring company, which alerts police, fire or the owner when it is triggered. Insurers often give credit for it and may require it to be kept in service.
Certificate Holder: A certificate holder is the person or company named on a certificate of insurance as the one receiving proof of your coverage, such as a landlord, lender or client. Being the certificate holder alone does not give them coverage under your policy.
Certificate of Insurance (COI, Proof of Insurance): A certificate of insurance (COI) is a short document that summarizes a policy's key details, such as insurer, dates, limits and named insured, to prove coverage exists. It is a snapshot for information only; it does not change or add to the policy.
Chapter 542A Pre-Suit Notice (HB 1774, Texas Insurance Code Chapter 542A): Chapter 542A of the Texas Insurance Code sets special rules for lawsuits over weather-related property claims, such as hail, wind and storm damage. Before suing an insurer or agent, the policyholder generally must give written notice at least 61 days in advance stating the specific amount alleged owed.
Civil Authority Coverage (Civil Authority): Civil authority coverage pays lost business income and extra expense when a government order prevents access to your property because of covered damage to nearby property. It applies even if your own building is not damaged, within the limits and time periods the policy sets.
Claim (Insurance Claim): A claim is a request to your insurance company for payment under your policy after a loss, or a demand someone makes against you that your liability insurance may need to defend or pay. How and when you report it can affect the outcome.
Claims-Made Policy (Claims-Made Coverage): A claims-made policy covers claims first made against you during the policy period, for events after a retroactive date. That differs from an occurrence policy, which covers events during the policy period no matter when the claim is made.
Classification Code (Class Code): A classification code, or class code, is a numeric code that groups businesses or jobs by type of work so insurers can rate them. Workers' compensation and general liability policies use class codes to set rates per unit of payroll, sales or area.
CMBS Insurance Requirements (Securitized Loan Requirements): CMBS insurance requirements are the insurance rules in a commercial mortgage-backed securities loan. In these loans, many mortgages are pooled and sold to investors. A loan servicer enforces the rules. They are often detailed and strict about limits, deductibles, insurer ratings and terrorism coverage.
Coinsurance (Coinsurance Clause, Coinsurance Penalty): Coinsurance is a property policy clause that requires you to insure a building for at least a set percentage of its value, commonly 80% or 90%. If your limit is below that, the insurer reduces partial loss payments in proportion to the shortfall.
Combined Single Limit (CSL): A combined single limit (CSL) is one dollar limit that covers bodily injury and property damage together for any one accident, instead of separate limits for each. It is common on commercial auto and liability policies.
Commercial Auto Insurance (Business Auto Policy, BAP): Commercial auto insurance covers vehicles used for business, such as maintenance trucks, vans and company cars. It pays for injuries and damage you cause to others, and can cover your own vehicles, medical costs and uninsured drivers.
Commercial Crime Insurance (Crime Coverage, Crime Bond): Commercial crime insurance covers money, securities and other property lost to crimes such as employee theft, forgery, robbery and certain computer or funds transfer fraud. Property and liability policies usually exclude or limit these losses.
Commercial General Liability (CGL, General Liability, GL): Commercial general liability (CGL) insurance protects your business when others say you hurt someone or damaged their property. It also covers some personal and advertising injury claims. It typically pays for your legal defense and the damages you owe, up to the policy limits.
Commercial Package Policy (CPP, Package Policy): A commercial package policy (CPP) combines two or more commercial coverage parts, such as property, general liability and crime, under one policy with shared declarations. It offers more flexibility than a businessowners policy for larger or more complex risks.
Commercial Property Insurance (Commercial Property Policy): Commercial property insurance pays to repair or replace your business buildings and contents after covered physical damage, and often your lost income while repairs are made. It does not cover every cause of loss; flood, earthquake and wear and tear are common exclusions.
Computer Fraud: Computer fraud coverage is a crime insurance agreement that pays for money or property stolen through someone's fraudulent use of a computer to transfer funds or property. It usually requires that the computer use, not a person's voluntary decision, directly cause the loss.
Construction Defect: A construction defect is a flaw in a building's design, workmanship or materials that causes damage or keeps the building from performing as it should. Examples include a leaking roof, a cracked foundation or faulty plumbing. Defect disputes often lead to claims against contractors, developers and design professionals years after the work is finished.
Construction Type (ISO Construction Class, Frame, Joisted Masonry, Masonry Non-Combustible, Fire Resistive): Construction type is how insurers classify a building by what its walls, floors and roof are made of and how well they resist fire. Common classes run from frame (wood) to joisted masonry, non-combustible, masonry non-combustible and fire resistive. It is one of the biggest drivers of a property rate.
Contingent Business Income (Dependent Property Coverage, Contingent Business Interruption): Contingent business income covers income you lose when a business you depend on suffers physical damage from a covered cause. That business might be a key supplier, a major customer or a nearby attraction that draws your customers. Your own property isn't damaged; the loss flows from damage at someone else's location.
Contractors Equipment Coverage (Contractor's Equipment Floater, Equipment Floater): Contractors equipment coverage insures movable machinery and tools, such as excavators, loaders, scaffolding and generators, against physical loss at job sites, in storage or in transit. It is an inland marine coverage written apart from a building policy, which usually doesn't cover mobile equipment away from your premises.
Contractual Liability: Contractual liability is legal responsibility you take on by signing a contract, such as agreeing in a lease or service agreement to defend and pay for another party's injury claims. A general liability policy covers some of these promises, but only those that fit the policy's definition of an insured contract.
Contractual Risk Transfer (Risk Transfer): Contractual risk transfer is using contracts to shift the cost of certain losses to another party, usually the one best able to control the risk. For property owners, it typically means requiring tenants, vendors and contractors to indemnify you, name you as an additional insured and carry set insurance limits.
COPE (Construction, Occupancy, Protection, Exposure): COPE stands for Construction, Occupancy, Protection and Exposure, the four basic factors underwriters use to judge a property's risk. Together they describe what a building is made of, how it is used, how well it is protected from fire and theft, and what hazards surround it.
Cosmetic Damage Exclusion (Cosmetic Hail Exclusion): A cosmetic damage exclusion removes coverage for hail damage that only changes how a roof or exterior looks. Think of dents in metal roofing or siding that don't let water in or shorten the material's life. Hail damage that harms function or watertightness generally stays covered.
Covered Auto Symbols (Auto Symbols, Symbol 1): Covered auto symbols are numbers on a business auto policy's declarations that show which vehicles each coverage applies to. Symbol 1 means any auto, while other symbols limit coverage to owned, listed, hired or non-owned vehicles. Picking the wrong symbol can leave a vehicle or driver without coverage.
Cyber Liability Insurance (Cyber Insurance): Cyber liability insurance covers costs and claims from data breaches, ransomware and other computer attacks. It typically pays for experts to investigate, notices to affected people, restoring data, income lost during an outage and related lawsuits. Property and general liability policies usually exclude most of these losses.

D

Damage to Premises Rented to You (Fire Legal Liability, Tenant Legal Liability): Damage to premises rented to you is a part of general liability coverage. It pays when you are legally responsible for damage to space you rent from someone else, most often by fire. It protects a tenant against the landlord's claim, and its limit is usually far lower than the policy's main occurrence limit.
Data Breach (Privacy Breach): A data breach happens when sensitive information, such as names with Social Security numbers, bank account details or payment card data, is accessed or taken without permission. Breaches can come from hacking, a lost laptop, a misdirected email or an insider, and they often trigger legal notice duties and costs.
Debris Removal (Debris Removal Coverage): Debris removal coverage pays to clear away the remains of covered property after a covered loss, such as hauling off burned framing or a collapsed roof. Under many standard forms, it is paid within your building limit up to a set share of the loss, with a modest extra amount available above the limit.
Declarations Page (Dec Page, Declarations): The declarations page, or dec page, is the summary at the front of an insurance policy. It lists who is insured, the policy dates, insured locations, coverages, limits, deductibles, premium and the forms and endorsements that make up the policy. It is the first page to check when your policy arrives.
Deductible: A deductible is the part of a covered loss you pay before the insurance company pays. On commercial property policies it may be a flat dollar amount, such as $10,000, or a percentage of the building's insured value, often for wind, hail or named storms. Higher deductibles generally lower the premium.
Deductible Buy-Down (Wind/Hail Buyback, Deductible Buyback): A deductible buy-down is a separate policy that pays part of a large deductible on your main property policy, usually a percentage wind, hail or named-storm deductible. It lets you keep a high-deductible main policy while limiting what you would actually pay out of pocket after a storm.
Defense Costs (Defense Outside Limits, Defense Within Limits): Defense costs are the legal expenses of defending you against a covered lawsuit, including attorney fees, expert witnesses, court costs and investigation. Whether they are paid on top of your policy limit or reduce it is one of the most important, and most overlooked, details in a liability policy.
Delay in Completion (Delayed Opening, Delay in Start-Up, DSU): Delay in completion insurance, often added to a builders risk policy, covers lost income and extra costs when a covered loss during construction pushes back a project's opening date. It may pay lost rents, extra interest on the construction loan and other costs caused by the delay.
Demolition Cost Coverage (Ordinance or Law Coverage B): Demolition cost coverage pays to tear down and clear the undamaged part of a building when a building code or ordinance requires it after a covered loss. It is usually Coverage B of an ordinance or law endorsement, and standard property forms don't include it.
Depreciation: Depreciation is the loss in value of property over time from age, wear and obsolescence. In a claim, it is the amount subtracted from replacement cost to arrive at actual cash value. Depending on your policy, depreciation may be held back until repairs are done, or not paid at all.
Difference in Conditions (DIC): Difference in conditions (DIC) insurance is a separate policy that fills gaps in your main property policy, most often by adding flood or earthquake coverage the main policy excludes. It can also add higher limits or broader terms where the main policy falls short.
Directors and Officers Liability (D&O): Directors and officers (D&O) liability insurance protects the people who run a company, association or nonprofit. It often protects the organization too. It covers claims that leaders made wrongful management decisions. It typically pays defense costs, settlements and judgments that general liability doesn't cover.
Dram Shop Act (Dram Shop Liability, Texas Dram Shop Act): Texas's Dram Shop Act lets an injured person sue a business that sold or served alcohol to someone who was obviously intoxicated and a clear danger. The intoxication must have been a proximate cause of the injury. It can apply to bars, restaurants, hotels and stores licensed to sell alcohol.
Drop-Down Coverage (Drop Down): Drop-down coverage is when an umbrella policy steps in as primary insurance, either for claims the underlying policies don't cover or after an underlying aggregate limit has been used up. For claims the primary doesn't cover, you usually pay a self-insured retention before the umbrella responds.
Duties After Loss (Duties in the Event of Loss): Duties after loss are the steps a policy requires you to take after damage or a claim. They include giving prompt notice, protecting property from more damage, keeping records and cooperating with the investigation. Failing to meet them can reduce or put at risk payment on an otherwise covered claim.
Duty to Defend: The duty to defend is a liability insurer's obligation to provide and pay for your legal defense. It applies when a lawsuit alleges facts that could be covered by the policy, even if the claims are groundless. It is generally broader than the insurer's duty to pay a judgment or settlement.
DWC Form 005 (Employer Notice of No Coverage): DWC Form-005 is the notice Texas employers without workers' compensation insurance, called non-subscribers, file with the state to report that they don't carry coverage. It is generally filed each year between February 1 and April 30, and also after hiring a first employee or ending a workers' comp policy.

E

Each Occurrence Limit (Per Occurrence Limit): The each occurrence limit is the most a liability policy will pay for all damages from a single accident or event. That cap holds no matter how many people are hurt or how many claims result. A common amount on general liability policies is $1 million, beneath a larger aggregate limit for the policy year.
Earthquake Coverage: Earthquake coverage pays for damage caused by the ground shaking in an earthquake, which standard commercial property policies exclude. It is usually added by endorsement or bought as a separate policy, often with a percentage deductible and its own limit.
Effective Date (Inception Date): The effective date, or inception date, is the day and time your insurance coverage begins. It appears on the declarations page with the expiration date, and a loss that happens before it isn't covered by that policy. Many commercial policies start at 12:01 a.m. standard time at your mailing address shown on the declarations.
Elevation Certificate (EC): An elevation certificate (EC) is a FEMA form that documents a building's flood zone, its elevation and features like the height of the lowest floor. A licensed land surveyor, engineer or architect usually completes it. Under the NFIP's current pricing it is optional, but submitting one may lower a flood premium.
Employee Theft (Employee Dishonesty): Employee theft coverage reimburses you when an employee steals money, securities or other property from your business. It is part of commercial crime insurance, and property policies generally don't cover it, because they usually exclude dishonest acts by your own employees.
Employers Liability (EL, Part Two): Employers liability is Part Two of a workers' compensation policy. It covers lawsuits over employee injuries that fall outside workers' comp benefits. It pays defense and damages up to three limits: each accident, disease policy limit and disease each employee.
Employment Practices Liability (EPLI): Employment practices liability insurance (EPLI) covers claims by employees, former employees or job applicants alleging wrongful treatment, such as discrimination, harassment, wrongful termination or retaliation. It pays defense costs and settlements, which general liability policies typically exclude.
Endorsement (Rider): An endorsement is a written change to an insurance policy that adds, removes or modifies coverage, limits, insureds or conditions. Endorsements can be attached when a policy is issued or added mid-term, and when an endorsement conflicts with the main form, the endorsement generally controls.
Environmental Site Assessment (Phase I ESA, Phase I): An environmental site assessment (ESA) is a study of a property's current and past uses to find possible contamination, such as leaking fuel tanks or chemical spills. A Phase I ESA reviews records, interviews and a site visit; if it raises concerns, a Phase II tests soil or groundwater.
Equipment Breakdown (Boiler and Machinery, Mechanical Breakdown): Equipment breakdown insurance covers sudden mechanical or electrical failure of building systems and machines. Examples include HVAC units, boilers, electrical panels, coolers and elevators. Standard property policies usually exclude these breakdowns. This coverage fills that gap and often includes spoiled goods and lost income.
Examination Under Oath (EUO): An examination under oath (EUO) is a formal, recorded interview in which an insurer questions you under oath about a claim. Most property policies let the insurer require one, and refusing to cooperate can put the claim at risk. You can usually bring your own attorney.
Excess Flood Insurance (Excess Flood): Excess flood insurance provides flood coverage above the limits of a primary flood policy, usually an NFIP policy. Owners use it when a building or its contents are worth more than the NFIP maximums, which are $500,000 for a non-residential building and $500,000 for its contents.
Excess Liability Insurance (Excess Liability, Excess Policy): Excess liability insurance adds higher limits above your primary liability policies and pays only after those limits are used up. A pure excess policy usually follows the terms of the policy beneath it and doesn't broaden coverage, unlike an umbrella, which may cover some claims the primary policy doesn't.
Exclusion: An exclusion is a policy provision that removes coverage for specific causes, property, people or situations. Exclusions shape what a policy actually covers. Most commercial property policies exclude things like flood, earth movement, wear and tear, and mold unless coverage is added back.
Experience Modification Rate (EMR, Experience Mod, X-Mod): The experience modification rate (EMR, or mod) is a number that adjusts your workers' compensation premium based on your past claims compared with similar businesses. A mod of 1.00 is average; below 1.00 lowers the premium and above 1.00 raises it. Contractors are often asked for their EMR.
Extended Period of Indemnity (EPI): An extended period of indemnity is optional business income coverage. It keeps paying lost income for a set number of days after repairs are finished and you reopen, while customers or tenants return. It lengthens the short extension that many standard business income forms already include.
Extended Reporting Period (Tail Coverage, ERP): An extended reporting period (ERP), often called tail coverage, gives you extra time to report claims after a claims-made policy ends or isn't renewed. The claim must arise from an act that happened before the policy ended and after its retroactive date.
Extra Expense: Extra expense coverage pays the reasonable added costs you take on to keep operating, or to reopen faster, after a covered loss. Examples include renting temporary space, speeding up repairs or renting equipment. It is often paired with business income coverage on the same form.

F

First Notice of Loss (FNOL): First notice of loss (FNOL) is your first report to your insurer or agent that a loss or claim has happened. It opens the claim and gets an adjuster assigned. Most policies require prompt notice, so report as soon as you can, even before you know the full cost.
First-Party Coverage: First-party coverage pays you, the policyholder, for your own losses, like damage to your building or lost income. Third-party coverage, by contrast, pays others you have harmed and defends you against their claims. Property insurance is first-party; general liability is third-party.
Flood Insurance: Flood insurance covers physical damage from flooding, such as rising water, overflowing rivers or bayous, and storm surge, which standard commercial property policies exclude. It is available through FEMA's National Flood Insurance Program and from private insurers, each with its own limits and rules.
Flood Zone (Special Flood Hazard Area, SFHA): A flood zone is an area FEMA labels by flood risk on a Flood Insurance Rate Map. High-risk areas, called Special Flood Hazard Areas, face a 1% or greater chance of flooding each year and carry zone labels starting with A or V. Moderate- and low-risk areas are usually labeled X.
Follow Form (Following Form): Follow form means an excess or umbrella policy adopts the same terms, conditions and exclusions as the policy beneath it. A follow-form excess policy generally covers a claim only if the underlying policy covers it, which helps keep coverage consistent from layer to layer.
Force-Placed Insurance (Lender-Placed Insurance): Force-placed insurance, also called lender-placed insurance, is coverage your lender buys and charges to you when your required insurance lapses, is canceled or doesn't meet the loan terms. It mainly protects the lender's interest and is often costlier and narrower than a policy you would choose yourself.
Forensic Accountant: In insurance, a forensic accountant is a financial expert who measures business income and extra expense losses after a claim. Insurers often hire one to review your records, and you can hire your own. Some policies help pay the cost of preparing your claim.
Freeze Damage (Frozen Pipes, Winter Storm): Freeze damage is harm caused when water freezes, expands and bursts pipes, sprinkler lines or equipment, plus the water damage that follows when it thaws. Many property policies cover it, but often only if you kept the building heated or drained and shut off the water system.
Funds Transfer Fraud (Wire Fraud): Funds transfer fraud coverage pays when a criminal, without your knowledge, sends fraudulent instructions to your bank to move money out of your account. It is commonly part of a crime or cyber policy and differs from social engineering fraud, where you are tricked into sending the money yourself.

G

General Aggregate Limit: The general aggregate limit is the most a general liability policy will pay for all covered claims during the policy year. Claims under a separate aggregate, such as products-completed operations, don't count toward it. Once it's used up, the policy pays nothing more for the rest of that year.
Glass Coverage (Plate Glass): Glass coverage pays to replace broken windows, storefront glass, glass doors and similar building glass. Many commercial property forms now cover building glass as part of the building, but deductibles, limits and vacancy rules can make a separate glass endorsement worth considering for storefront-heavy properties.

H

Habitability Exclusion: A habitability exclusion is a liability policy provision that removes coverage for claims that a rental unit was unfit to live in, such as complaints about mold, pests, broken heat or unsafe conditions. It is most common on apartment and other residential rental policies.
Habitational Risk (Habitational): Habitational risk is the insurance industry's name for properties where people live or sleep, such as apartments, hotels, motels, senior housing and student housing. Insurers treat these as a separate class because they tend to produce more liability and water claims than offices or warehouses.
Hail Damage (Hail): Hail damage is physical harm to a building or other property caused by falling ice, most often to roofs, skylights, HVAC units, gutters, siding and signs. Most commercial property policies cover hail, but deductibles, roof payment rules and cosmetic damage exclusions can sharply change what the insurer pays.
Hard Costs: Hard costs are the direct, physical costs of building a project: labor, materials, equipment and the structure itself. On a builders risk policy, hard costs are usually the main amount insured, separate from soft costs like interest, fees and lost rent.
Hard Market: A hard market is a period when insurance is harder to buy: prices rise, insurers write less business, deductibles go up and terms get stricter. It usually follows heavy catastrophe losses or rising reinsurance costs, and it eventually gives way to a softer market.
Hired and Non-Owned Auto (HNOA): Hired and non-owned auto (HNOA) coverage protects your business from liability when someone uses a vehicle your business does not own for business purposes. That includes rented vehicles and employees' personal cars used for errands, bank runs or trips between properties.
Hold Harmless Agreement (Hold Harmless Clause): A hold harmless agreement is a contract clause where one party promises not to hold the other responsible for certain losses or claims, and often to pay those costs. Leases, vendor contracts and construction contracts commonly include one.
Host Liquor Liability: Host liquor liability is coverage for a business that serves or gives away alcohol but is not in the business of selling it, such as at a tenant appreciation party or an open house. Standard general liability policies usually include it automatically.

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Increased Cost of Construction (Ordinance or Law Coverage C, ICC): Increased cost of construction is the part of ordinance or law coverage that pays the extra cost of rebuilding a damaged building to meet current building codes. It is often called Coverage C. A standard property policy generally does not pay for these code upgrades without it.
Indemnity (Indemnification): Indemnity is a promise to make someone whole for a loss. In contracts it means one party agrees to pay for certain losses or claims of the other. In insurance it is the basic idea that a policy restores you to where you were before a loss, not better.
Independent Adjuster (IA): An independent adjuster is a claims professional hired by an insurance company on a contract basis to investigate and estimate a claim. They work for the insurer, not for you, even though they are not the insurer's employee.
Independent Contractor (1099 Contractor): An independent contractor is a person or business hired to do a job who controls how the work is done and is not your employee. Property owners hire them for repairs, cleaning, landscaping and construction. Whether someone truly is an independent contractor depends on the facts, not just a 1099 form.
Independent Insurance Agent (Independent Agent, Broker): An independent insurance agent is a licensed agent or agency that can place coverage with several insurance companies rather than just one. They compare options across markets and help you choose, then service the policy over time.
Inland Marine: Inland marine is a type of property insurance for things that move, are in transit or do not fit neatly into a building policy. Examples include contractors' equipment, property under construction, signs, valuable items and customers' goods in your care.
Innkeepers Liability (Innkeepers Legal Liability, Guest Property): Innkeepers liability coverage pays when a hotel or motel is legally responsible for loss or damage to guests' belongings, such as theft from a room or items left in a safe deposit box. Standard general liability policies usually exclude damage to property in your care, so this coverage fills that gap.
Insurable Interest: Insurable interest means you would suffer a real financial loss if the property were damaged. You need it to collect on a property policy. Owners, lenders and some tenants each have their own insurable interest in the same building.
Insurance Carrier (Insurer, Insurance Company): An insurance carrier is the company that issues the policy, takes on the risk and pays covered claims. Your agent places the coverage, but the carrier makes underwriting and claim decisions and holds the money to pay losses.
Insurance to Value (ITV): Insurance to value means carrying a property limit close to what it would actually cost to rebuild the building today. When the limit is too low, the owner is underinsured and may receive less than the loss, even on a partial claim, because of coinsurance.
Insured Contract: An insured contract is a type of agreement that a general liability policy treats as covered, even though the policy otherwise excludes liability you take on by contract. It commonly includes leases, easements and agreements where you take on another party's liability for injuries or damage.

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Lapse in Coverage (Coverage Gap): A lapse in coverage is any period when a property or business has no insurance in force, usually because a policy was canceled, not renewed or allowed to expire. Losses during a lapse are generally not covered, and a lapse can make future insurance harder to buy.
Lease Insurance Requirements (Lease Insurance Clause): Lease insurance requirements are the sections of a commercial lease that say what insurance the landlord and tenant must each carry, at what limits, and how they protect each other. They decide who pays when something goes wrong at the property.
Lender Insurance Requirements (Loan Insurance Requirements): Lender insurance requirements are the insurance terms a lender sets as a condition of a commercial real estate loan. They usually cover the type and amount of property coverage, deductibles, liability limits, flood, rent loss and how the lender must be named on the policy.
Lender's Loss Payable Endorsement (LLPE, CP 12 18): A lender's loss payable endorsement is a property policy endorsement that names a lender and gives it strong rights to claim payments, often including the right to be paid even if the owner's own claim is denied. It is commonly added using the CP 12 18 Loss Payable Provisions endorsement.
Lessor's Risk Only (LRO): Lessor's risk only (LRO) is general liability coverage for a building owner who leases space to tenants and does not occupy or run a business there. It covers the owner's liability as landlord, such as injuries in parking lots and common areas, while tenants insure their own operations.
Limit of Insurance (Policy Limit): The limit of insurance is the most a policy will pay for a covered loss or claim. It is shown on the declarations page and may apply per occurrence, per building, per location or in total for the policy period.
Liquor Liability: Liquor liability insurance covers a business that sells, serves or furnishes alcohol against claims that it contributed to someone's intoxication and the injuries or damage that followed. General liability policies usually exclude this for businesses in the alcohol trade, so it is bought separately.
Loss Control Inspection (Risk Engineering Survey, Inspection): A loss control inspection is a visit to your property by someone working for the insurer to check its condition and risks. The insurer uses the report for underwriting and may send recommendations or requirements you must complete to keep coverage.
Loss of Rents (Rental Income Coverage, Rental Value): Loss of rents coverage pays a landlord the rental income lost when covered damage, such as a fire or storm, makes space unusable and tenants stop paying. It is a form of business income coverage designed for property owners and is often required by lenders.
Loss Payee: A loss payee is a person or company, usually a lender or lessor, named on a property policy to receive claim payments for specific property along with the owner. It protects their financial interest in property they financed or own, such as equipment.
Loss Run (Loss History, Loss Runs): A loss run is a report from an insurance company listing every claim made on your policies over a period, usually the last 3 to 5 years, with dates, amounts paid and amounts reserved. Insurers use loss runs to decide whether to quote you and at what price.
Loss to Undamaged Portion (Ordinance or Law Coverage A): Loss to the undamaged portion is the part of ordinance or law coverage that pays for the value of undamaged parts of a building that must be torn down because of building laws after a covered loss. It is often called Coverage A.

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Managing General Agent (MGA): A managing general agent (MGA) is a specialized firm that an insurance company authorizes to underwrite, price and sometimes issue policies on its behalf. Agents often reach an MGA for harder-to-place risks, such as coastal property or certain habitational accounts.
Margin Clause: A margin clause is a provision in a blanket property policy that caps payment for any one building at a set percentage of the value you reported for it, such as 110% or 125%. It limits how much of a shared blanket limit a single building can use.
Matching (Uniform Appearance): Matching is the question of whether an insurer must pay to replace undamaged materials so repairs look uniform with the rest of the building. It comes up when a damaged section of roofing, siding or tile can no longer be matched in color or style.
Medical Payments (Med Pay): Medical payments coverage pays small medical bills for people injured on your property or by your operations, regardless of who was at fault. It is part of most general liability policies and is meant to resolve minor injuries quickly, often before a lawsuit.
Minimum Earned Premium (MEP, Fully Earned Premium): A minimum earned premium is the part of a policy's premium the insurer keeps no matter when the policy is canceled. If a policy has a 25% minimum earned premium, you will not get back more than 75% of the premium, even if you cancel after one day.
Mitigation of Damages (Duty to Mitigate): Mitigation of damages means taking reasonable steps after a loss to keep the damage from getting worse, such as tarping a roof or shutting off water. Property policies generally require it, and damage that grows because you did not act may not be covered.
Mold Exclusion (Fungi Exclusion): A mold exclusion removes or sharply limits coverage for damage caused by mold, fungus, wet rot or bacteria. Most commercial property policies include one, often with a small limited coverage that applies only when the mold results from a covered cause like a sudden pipe burst.
Mortgagee Clause (Standard Mortgage Clause, Mortgage Holder): A mortgagee clause is the part of a property policy that protects the lender holding a mortgage on the building. It lets the lender collect claim payments for its interest and usually keeps the lender protected even if the owner's own claim is denied for the owner's actions.

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NAIC (National Association of Insurance Commissioners): The NAIC (National Association of Insurance Commissioners) is the organization of the chief insurance regulators from each U.S. state, the District of Columbia and the U.S. territories. It writes model laws, sets common standards and collects data, but it does not regulate insurers directly.
Named Insured (First Named Insured): The named insured is the person or business listed on the declarations page as the policyholder. The first named insured, the one listed first, usually has extra duties and rights, such as paying premium, receiving notices and receiving refunds.
Named Perils (Specified Perils): A named perils policy covers only the causes of loss it specifically lists, such as fire, lightning or windstorm. If a cause is not on the list, it is not covered. This differs from an open perils policy, which covers all causes not excluded.
Named Storm Deductible (Hurricane Deductible): A named storm deductible is a separate, usually larger deductible that applies to damage from a storm given a name by the National Weather Service, such as a tropical storm or hurricane. It is often a percentage of the building's insured value rather than a flat dollar amount.
National Flood Insurance Program (NFIP): The National Flood Insurance Program (NFIP) is the federal flood insurance program run by FEMA. It sells flood coverage for buildings and contents through insurance agents and companies, because standard commercial property policies exclude flood.
Negligence: Negligence is a failure to use reasonable care that causes harm to someone else. It is the legal basis for most injury lawsuits against property owners, such as slip-and-fall claims, and it is what a general liability policy is mainly built to defend.
Negligent Security (Inadequate Security): Negligent security is a claim that a property owner failed to take reasonable steps to protect people from foreseeable crime, such as an assault in a parking lot. It is a common and costly lawsuit for apartments, hotels, gas stations and shopping centers.
Non-Admitted Insurer (Non-Admitted Carrier): A non-admitted insurer is an insurance company that is not licensed in your state but is allowed to write certain coverage there through the surplus lines system. They often insure risks that licensed insurers will not, with more flexible forms and pricing.
Nonrenewal (Notice of Nonrenewal): A nonrenewal is an insurer's decision not to offer another policy term when your current policy expires. Coverage stays in force until expiration, but you must find replacement coverage before then to avoid a gap.
Notice of Cancellation: A notice of cancellation is the written notice an insurer sends before it ends a policy early, or that confirms a cancellation you requested. Lenders, landlords and others with an interest often ask to receive a copy so they know if coverage stops.

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Obligee: The obligee is the party a surety bond protects. On a construction bond, it is usually the project owner, who can make a claim on the bond if the contractor fails to perform or to pay.
Occupational Accident Insurance: Occupational accident insurance pays benefits such as medical bills and lost wages to workers hurt on the job, without proving fault. In Texas it is often used by employers who choose not to carry workers' compensation, called non-subscribers.
Occurrence Policy (Occurrence Form): An occurrence policy covers injuries or damage that happen during the policy period, no matter when the claim is filed. If an accident happened while the policy was active, that policy responds even if the lawsuit arrives years later.
Ordinance or Law Coverage (Building Ordinance Coverage): Ordinance or law coverage pays added costs that building codes and other laws impose after a covered loss, such as tearing down undamaged parts of a building or rebuilding to current code. Standard property policies generally exclude these costs, so it is added by endorsement.
Outdoor Property: Outdoor property is property outside a building, such as fences, signs not attached to the building, trees, shrubs, lawns and radio or TV antennas. Standard commercial property forms give it only a small, limited coverage extension, often for a short list of causes that may not include wind or hail.

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Payment Bond: A payment bond is a surety bond that guarantees a contractor will pay its subcontractors, laborers and suppliers on a project. If the contractor does not pay, those parties can claim against the bond instead of pursuing the owner or the property.
Per Location Aggregate: A per location aggregate is a general liability endorsement that gives each of your locations its own separate aggregate limit, instead of all locations sharing one. It keeps a bad year at one property from using up liability coverage for the others.
Per Project Aggregate: A per project aggregate is a liability policy feature that gives each construction project its own separate total limit, instead of making every job share one general aggregate. It keeps heavy claims on one project from using up the coverage needed for the others.
Percentage Deductible: A percentage deductible is a deductible set as a percentage of the insured value of the property, not as a fixed dollar amount. A 2% deductible on a building insured for $3 million means you pay the first $60,000 of a covered loss.
Performance Bond: A performance bond is a guarantee, issued by a surety company, that a contractor will finish a construction project according to the contract. If the contractor defaults, the surety steps in to complete the work or pay the owner, up to the bond amount.
Peril (Cause of Loss): A peril is a cause of loss — something that can damage or destroy property, such as fire, wind, hail, lightning, theft or vandalism. Every property policy spells out which perils it covers and which it excludes.
Period of Restoration: The period of restoration is the stretch of time that business income and extra expense coverage pays for after a covered loss. It generally starts shortly after the damage and ends when the property should be repaired, rebuilt or replaced with reasonable speed.
Permission to Occupy (Occupancy Clause): Permission to occupy is a provision or endorsement on a builders risk policy that lets you move in, open or lease part of a building before construction is finished, without automatically ending the builders risk coverage.
Personal and Advertising Injury: Personal and advertising injury is the part of a general liability policy that covers certain harms that are not physical injuries. Examples include false arrest, malicious prosecution, wrongful eviction, wrongful entry, slander or libel, invasion of privacy and some advertising claims.
Personal Injury Protection (PIP): Personal injury protection (PIP) is auto insurance that pays medical bills and some lost income for people in your vehicle after an accident, regardless of who caused it. In Texas, an auto liability policy must include it unless a named insured rejects it in writing.
Personal Property of Others: Personal property of others is coverage for things that belong to someone else while they are in your care, custody or control at your property. Examples are a tenant's equipment, a guest's luggage or a customer's goods you are holding.
Policy Period (Policy Term, Expiration Date): The policy period is the span of time a policy is in force, from its effective date to its expiration date. Most commercial policies run for one year, and losses generally must happen during the policy period to be covered.
Pollutant Cleanup and Removal: Pollutant cleanup and removal is a small additional coverage in many commercial property policies. It pays to extract pollutants from land or water at your premises when the release was caused by a covered cause of loss.
Pollution Legal Liability (PLL, Environmental Insurance): Pollution legal liability (PLL) insurance covers cleanup costs and third-party claims for bodily injury or property damage caused by pollution at or from your property. It fills a gap left by pollution exclusions in standard property and liability policies.
Premises Liability: Premises liability is the legal responsibility a property owner or occupant has when someone is hurt, or their property is damaged, because of an unsafe condition on the property. It is usually insured under a commercial general liability policy.
Premium: A premium is the price you pay for an insurance policy for a set period, usually one year. It is based on the insurer's rates, the details of your property or business, your loss history and market conditions.
Premium Audit (Payroll Audit, Audit): A premium audit is a review, done after a policy period ends, of your actual payroll, sales or other exposures. The insurer compares them with the estimates used at the start, then charges additional premium or issues a refund.
Premium Finance Agreement (Premium Financing): A premium finance agreement is a loan that pays your insurance premium up front, which you repay in installments with interest or fees. If you miss payments, the finance company can cancel the policy.
Premium Indication (Indication): A premium indication is an early, non-binding estimate of what a policy might cost, based on limited information. It helps you decide whether a market is worth pursuing, but it is not a firm offer and the final quote can differ.
Preservation of Property: Preservation of property is an additional coverage in many commercial property policies. It covers property you move to another place to protect it from a covered loss, for a limited time after you move it.
Primary and Noncontributory (P&NC): Primary and noncontributory is wording that makes your liability policy respond first for a party you've added as an additional insured, without asking that party's own insurance to share the loss. Landlords, lenders and project owners commonly require it in contracts.
Private Flood Insurance: Private flood insurance is flood coverage written by a private insurer instead of the National Flood Insurance Program. It can offer higher limits, broader coverage or shorter waiting periods, but terms vary widely from policy to policy.
Products-Completed Operations (Products-Completed Operations Hazard, PCOH): Products-completed operations is the part of general liability coverage for injury or damage caused by a product you sold, or by work you finished, after it has left your hands. Most policies give it its own aggregate limit.
Proof of Loss (Sworn Statement in Proof of Loss): A proof of loss is a formal, signed and usually sworn statement you give the insurer that sets out what was damaged, how it happened, and how much you are claiming. Many policies require it within a set time after the insurer asks for it.
Property Damage Liability (PD): Property damage liability covers damage you cause to other people's property, such as a neighbor's building or a customer's car. It is a core part of general liability and commercial auto policies.
Protective Safeguards Endorsement (Protective Devices Endorsement): A protective safeguards endorsement makes certain safety systems — such as sprinklers, fire alarms, burglar alarms or kitchen hood suppression — a condition of your property coverage. If a listed system isn't working and you didn't tell the insurer, a loss may not be covered.
Public Adjuster (PA): A public adjuster is a licensed professional you can hire to prepare, present and negotiate your property insurance claim. Unlike the insurer's adjuster, a public adjuster works for you and is usually paid a percentage of the claim settlement.
Public Protection Classification (PPC, Protection Class): A Public Protection Classification (PPC) is a 1-to-10 rating of a community's public fire protection. It looks at things like the fire department, the water supply and emergency call handling. Many insurers use it to price property insurance.

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Quote (Insurance Quote, Proposal): An insurance quote is an insurer's offer to provide specific coverage, at a stated premium, on stated terms, for a set period. It is not coverage yet — coverage starts only when the quote is accepted and bound.

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Ransomware (Cyber Extortion): Ransomware is harmful software that locks or steals your data and demands payment to release it. Depending on the policy, cyber insurance may pay response costs and lost income and, in some cases, the ransom itself.
Rate: A rate is the price of insurance per unit of exposure — for example, a dollar amount per $100 of building value or per $1,000 of sales. The insurer multiplies the rate by your exposure to calculate the premium.
Recoverable Depreciation (Holdback): Recoverable depreciation is the part of a replacement cost claim that the insurer holds back at first and pays later, once you complete repairs or replacement. It is the difference between the actual cash value payment and the full replacement cost.
Reinsurance: Reinsurance is insurance for insurance companies. An insurer transfers part of its risk to a reinsurer so a big disaster doesn't overwhelm it, which affects how much coverage insurers can offer and at what price.
Renewal: A renewal is the continuation of an insurance policy for a new policy period, usually another year. It is a chance for the insurer to update price and terms — and for you to review your coverage and compare options.
Replacement Cost (RC, RCV, Replacement Cost Value): Replacement cost is a way of valuing property that pays what it would cost to repair or replace damaged property with new material of like kind and quality, without subtracting for depreciation. It usually pays more than actual cash value.
Reservation of Rights (ROR Letter): A reservation of rights is a letter from an insurer saying it will handle a claim — often by defending you in a lawsuit — while keeping the right to deny coverage later if it finds the policy doesn't apply.
Retroactive Date (Retro Date): A retroactive date is the earliest date an incident can have happened and still be covered under a claims-made policy. Claims arising from events before that date are generally excluded, even if the claim is made during the policy period.
Risk Management: Risk management is the process of identifying what could cause losses for your property or business and deciding how to handle each risk — avoid it, reduce it, transfer it or keep it. Insurance is one tool among several.
Roof Age: Roof age is how many years have passed since a roof was installed or last fully replaced. Insurers rely on it heavily to decide whether to offer coverage, at what price, and whether the roof is valued at replacement cost or actual cash value.
Roof Surfacing Payment Schedule (Roof Schedule, Roof ACV Endorsement): A roof surfacing payment schedule is a policy endorsement that pays roof damage — often from wind or hail — based on a schedule tied to the roof's age and material, instead of full replacement cost. Older roofs receive a smaller percentage of the repair cost.

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Salvage: Salvage is damaged property that still has some value after a loss. When an insurer pays for a total loss, it may take ownership of the damaged property and sell it to recover part of what it paid.
Schedule Rating (Scheduled Credits and Debits): Schedule rating is a way insurers adjust your premium up or down with credits and debits, based on features of your risk the basic rate doesn't capture, such as building upkeep, management or safety programs.
Scheduled Limit (Specific Limit, Per-Location Limit): A scheduled limit is a separate, specific limit of insurance assigned to each building, or each type of property at each location. Each item has its own limit, and a loss at one place can't borrow unused coverage from another.
Scope of Loss (Repair Estimate): A scope of loss is the detailed list of damage to your property and the repairs needed, usually with measurements and quantities. It is the foundation of the repair estimate used to settle a property claim.
Self-Insured Retention (SIR): A self-insured retention (SIR) is an amount of each claim that you must pay yourself — often including defense costs — before the insurance policy starts to respond. It is common in liability and umbrella policies.
Sewer Backup Coverage (Water Backup, Sewer or Drain Backup): Sewer backup coverage pays for damage when water or sewage backs up through drains, sewers or sump pumps into your building. Many commercial property policies exclude it unless you add it, often with a separate limit.
Shared and Layered Program (Layered Property Program): A shared and layered program is a way to insure large or high-value property by splitting the total limit among several insurers. Each insurer takes a share of a layer, and the layers stack on top of each other up to the full value.
Short-Rate Cancellation: Short-rate cancellation is a method of calculating the refund when a policy is canceled early. The insurer keeps more than the time-based share of the premium as a penalty, so your refund is smaller than a straight pro-rata refund.
Signs Coverage (Outdoor Signs): Signs coverage protects outdoor business signs — such as pylon signs, monument signs and building-mounted signs — against physical damage. Many property policies limit or exclude signs, so added coverage is often needed.
Slip and Fall Claim: A slip and fall claim is a liability claim from someone injured after slipping, tripping or falling on a property, often blaming a hazard like a wet floor, uneven pavement or poor lighting. These claims are usually handled under general liability insurance.
Social Engineering Fraud: Social engineering fraud is a scam where someone tricks an employee into sending money or information by pretending to be a trusted person, such as a vendor, tenant, executive or closing company. Coverage usually has to be added to a crime or cyber policy.
Soft Costs: Soft costs are the extra expenses a construction project incurs because a covered loss delays completion — beyond the physical repairs — such as additional loan interest, property taxes, insurance, permit fees and professional fees. Builders risk policies can cover them if added.
Soft Market: A soft market is a period when insurance is easier to buy: insurers compete for business, prices level off or fall, and terms like deductibles and limits become more flexible. It is the opposite of a hard market.
Spoilage Coverage (Food Spoilage): Spoilage coverage pays for perishable goods, like food, drinks or medicine, that spoil when refrigeration fails. Causes can include a power outage, a breakdown or contamination. It is usually added by endorsement or comes with equipment breakdown coverage.
Sprinkler Leakage: Sprinkler leakage is the accidental discharge of water or other substances from an automatic fire sprinkler system. Many commercial property policies cover it as a cause of loss, with conditions such as protecting the system from freezing when a building is vacant.
Statement of Values (SOV, Schedule of Values): A statement of values (SOV) is a spreadsheet listing each property you want insured, with details like address, construction, size, year built and the values for building, contents and business income. Insurers use it to price your policy and set limits.
Storage Tank Liability Insurance (Tank Insurance, Petroleum Storage Tank Insurance): Storage tank liability insurance covers cleanup costs and third-party claims from leaks of fuel or chemicals from underground or aboveground storage tanks. For petroleum tank owners, it is a common way to meet federal and Texas financial responsibility rules.
Sublimit: A sublimit is a smaller limit within a policy that caps what the insurer will pay for a specific type of loss, property or cost. It sits inside the main limit and doesn't add to it.
Submission (Insurance Submission): A submission is the package of information your agent sends to insurance companies to ask for a quote. It usually includes an application, property details, a schedule of values and several years of claim history. A complete, accurate submission tends to get faster answers and better terms.
Subrogation: Subrogation is the insurer's right, after paying your claim, to step into your shoes and recover the money from whoever caused the loss. It lets you get paid by your own insurer quickly, while the insurer pursues the responsible party afterward.
Suit Limitation Clause (Legal Action Against Us): A suit limitation clause sets the deadline for suing your insurer over a claim, and the conditions you must meet first. Commercial property policies commonly allow two years after the loss, but your policy's wording and Texas law control the exact timing.
Surety Bond (Bond): A surety bond is a three-party guarantee: a surety company promises a project owner or agency that a contractor or business will keep its obligations. If the contractor fails, the surety pays or fixes the problem, then seeks repayment from the contractor. It is not insurance for the contractor.
Surface Water: Surface water is rain or runoff that collects and flows across the ground before it enters a drain, creek or bayou. Most commercial property policies exclude damage from surface water along with flood, so water that rolls in under your doors is usually not covered without flood insurance.
Surplus Lines Insurance (E&S, Excess and Surplus Lines): Surplus lines insurance is coverage from insurers that are not licensed (admitted) in Texas but are allowed to cover risks the regular market won't take or can't price. It offers more flexibility, but with less state oversight, a 4.85% Texas premium tax, and generally no state guaranty fund protection.
Surplus Lines Stamping Office of Texas (SLTX): The Surplus Lines Stamping Office of Texas (SLTX) is the organization that records and reviews surplus lines policies placed in Texas. Surplus lines agents file their policies with it, and it helps the state track the market and the taxes and stamping fees owed.
Surplus Lines Tax: Surplus lines tax is the Texas state tax on premiums for policies placed with non-admitted (surplus lines) insurers. The rate is 4.85% of premium, and a small stamping fee is also charged. Both are added on top of the insurer's premium and shown separately on your quote.

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TABC Safe Harbor (Seller-Server Training): The TABC safe harbor is a Texas rule that can shield a business that sells alcohol from blame for an employee's illegal sale. It applies when the employer requires TABC-approved seller-server training, the employee attended it, and the employer did not encourage the violation.
TCEQ (Texas Commission on Environmental Quality): TCEQ, the Texas Commission on Environmental Quality, is the state's environmental regulator. For property owners, it matters most for petroleum storage tanks at gas stations, contamination cleanups, and environmental permits. It also administers the financial assurance rules that require tank owners to prove they can pay for leaks.
TCEQ Financial Assurance (Financial Responsibility for Storage Tanks): TCEQ financial assurance is the Texas requirement that owners or operators of petroleum underground storage tanks prove they can pay to clean up leaks and compensate others harmed. Most owners meet it with storage tank liability insurance. Federal rules set minimums of $500,000 or $1 million per occurrence.
Tenant Improvements and Betterments (Improvements and Betterments): Tenant improvements and betterments are permanent upgrades a tenant pays for in a rented space, such as walls, flooring, lighting or built-in counters. They become part of the building but the tenant has a financial stake in them, so leases must make clear who insures them.
Tender of Defense (Tender): A tender of defense is a formal written request asking another party or its insurer to defend you against a lawsuit or claim. Owners commonly tender to a tenant or contractor's insurer when they are named as an additional insured or are protected by an indemnity clause.
Terrorism Insurance (TRIA, TRIPRA, Certified Act of Terrorism): Terrorism insurance covers losses from acts of terrorism, which many commercial policies would otherwise exclude. Under a federal program created by the Terrorism Risk Insurance Act (TRIA), insurers must make coverage for certified acts of terrorism available, and you choose whether to buy it. The program currently runs through December 31, 2027.
Texas Anti-Indemnity Act (Texas Insurance Code Chapter 151): The Texas Anti-Indemnity Act (Insurance Code Chapter 151) voids most construction contract clauses that make a contractor indemnify or defend an owner for the owner's own negligence. It also limits additional insured coverage to the same scope. It affects developers and owners who hire contractors.
Texas Catastrophe Area (First-Tier Coastal Counties, Designated Catastrophe Area): The Texas catastrophe area is the coastal area where the Texas Windstorm Insurance Association (TWIA) can write wind and hail coverage. It covers 14 first-tier coastal counties plus parts of Harris County east of Highway 146 in La Porte, Morgan's Point, Pasadena, Seabrook and Shoreacres.
Texas Department of Insurance (TDI): The Texas Department of Insurance (TDI) is the state agency that regulates insurance in Texas. It licenses insurers and agents, oversees admitted insurers' rates and forms, handles consumer complaints, and runs the windstorm inspection program. Workers' compensation is overseen by its Division of Workers' Compensation.
Texas Division of Workers' Compensation (DWC, TDI-DWC): The Texas Division of Workers' Compensation (DWC) is the part of the Texas Department of Insurance that runs the state's workers' comp system. It sets rules for benefits and medical care, resolves disputes, and receives required notices and injury reports from employers that do not carry coverage (non-subscribers).
Texas Non-Subscriber (Non-Subscriber, Nonsubscription): A Texas non-subscriber is a private employer that chooses not to carry workers' compensation insurance, which Texas allows for most private employers. In return, the employer can be sued by injured employees and loses key legal defenses, such as blaming the employee's own negligence.
Texas Prompt Payment of Claims Act (Texas Insurance Code Chapter 542): The Texas Prompt Payment of Claims Act (Insurance Code Chapter 542, Subchapter B) sets deadlines for insurers to acknowledge, decide and pay claims. If an insurer misses them on a claim it owes, it can be liable for interest and attorney's fees on top of the claim.
Texas Property and Casualty Insurance Guaranty Association (TPCIGA, Guaranty Fund): The Texas Property and Casualty Insurance Guaranty Association (TPCIGA) pays certain claims when a property or casualty insurer licensed in Texas becomes insolvent. It is a safety net with limits set by law, and it generally covers only insurers that hold a Texas certificate of authority, not surplus lines insurers.
Texas Windstorm Insurance Association (TWIA): The Texas Windstorm Insurance Association (TWIA) is the state-created insurer of last resort for wind and hail damage along the Texas coast. It covers properties in 14 coastal counties and parts of eastern Harris County, usually after a private insurer has declined the wind risk.
Theft (Burglary): Theft is the taking of property without permission. Commercial property policies often cover theft of your business property, but with important limits: certain valuables may have small sublimits, employee theft is usually excluded, and under the common vacancy condition, theft is not covered once the building has been vacant more than 60 consecutive days.
Third-Party Coverage (Third-Party Liability): Third-party coverage pays for harm you cause to other people, such as injuries or damage to their property, and for your legal defense. It is the opposite of first-party coverage, which pays for your own losses, like damage to your own building.
Title Insurance (Owner's Title Policy): Title insurance protects a buyer or lender against losses from problems with legal ownership of real estate, such as forged deeds, unknown liens or recording errors that existed before the purchase. It is usually bought once at closing and lasts as long as you or your heirs own the property.
Total Insured Value (TIV): Total insured value (TIV) is the sum of all values insured on a property policy: buildings, business personal property, business income or rents, and other listed items. Underwriters use it to size and price the risk, and many percentage deductibles are calculated from it.
Total Loss (Constructive Total Loss): A total loss happens when property is destroyed or so badly damaged that repairing it is not possible or not worth it. A constructive total loss is when repairs would cost about as much as, or more than, the property is worth. Either way, the claim focuses on full limits and rebuilding costs.
Total Pollution Exclusion (Pollution Exclusion): The total pollution exclusion is wording in many general liability policies that removes coverage for injury or damage caused by pollutants, with very few exceptions. So a fuel leak, chemical spill or contamination claim against a property owner is often not covered by general liability.
Triple Net Lease (NNN Lease): A triple net (NNN) lease is a commercial lease where the tenant pays rent plus its share of property taxes, insurance and maintenance. The owner may still buy the building insurance and bill it back, so the lease must say clearly who insures what.

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Umbrella Insurance (Commercial Umbrella): Commercial umbrella insurance adds extra liability limits above your general liability, auto liability and employer's liability policies. If a lawsuit uses up those limits, the umbrella pays more, up to its own limit. Some umbrellas also cover certain claims the underlying policies do not.
Underground Storage Tank (UST): An underground storage tank (UST) is a tank system, including connected underground piping, with at least 10% of its volume below ground, used to store regulated substances like gasoline or diesel. Gas stations rely on them, and federal and Texas rules require registration, leak detection and proof of financial responsibility.
Underinsurance (Underinsured): Underinsurance means your limits are lower than what it would actually cost to rebuild or replace your property. It can leave you paying part of a loss yourself, either because your limit runs out or because a coinsurance penalty reduces your claim payment even on a partial loss.
Underlying Insurance (Schedule of Underlying): Underlying insurance is the primary liability coverage that an umbrella or excess policy sits on top of, such as general liability, auto liability and employer's liability. The umbrella lists these policies on a schedule and usually requires you to keep them in force at stated minimum limits.
Underwriting (Underwriter): Underwriting is how an insurer decides whether to insure a risk, on what terms, and at what price. An underwriter reviews your property's details, history and protections, then sets coverage terms, deductibles and premium, or declines.
Uninsured/Underinsured Motorist (UM/UIM): Uninsured/underinsured motorist coverage (UM/UIM) pays for injuries and, in some cases, vehicle damage when another driver who is at fault has no insurance or too little. It is part of a commercial auto policy and protects you and people in your covered vehicles.
Unoccupied Building (Unoccupancy): An unoccupied building is one that still contains furniture, equipment or stock but has no one actively using it, such as a closed store with its fixtures still inside. Some policies treat unoccupied buildings like vacant ones or apply separate conditions, so tell your insurer when operations stop.
Utility Services Coverage (Off-Premises Power, Utility Service Interruption): Utility services coverage extends your property and business income insurance to losses caused when power, water or communications service to your property is cut off by damage away from your premises. Without it, many policies do not cover losses from an off-site utility failure.

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Vacancy Clause (Vacancy Provision): A vacancy clause reduces or removes property coverage when a building has been vacant for more than 60 consecutive days. Under the common standard wording, some losses like vandalism, theft and water damage are not covered, and other covered losses are paid 15% less.
Vacancy Permit Endorsement (Vacancy Permit): A vacancy permit endorsement is an add-on to a property policy that suspends or relaxes the vacancy clause for a set period and set locations. It lets you keep coverage for losses like vandalism and sprinkler leakage while a building is empty, usually for an extra premium.
Vacant Land Liability: Vacant land liability insurance covers an owner's legal liability for injuries or damage that happen on undeveloped land with no buildings or operations. It protects against claims like a trespasser or neighbor getting hurt, even when nothing is built on the land yet.
Vandalism and Malicious Mischief (VMM): Vandalism and malicious mischief (VMM) is deliberate damage to property by someone, such as graffiti, broken windows or slashed equipment. It is a covered cause of loss on most commercial property policies, but coverage usually stops if the building has been vacant more than 60 days.

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Waiting Period (Time Deductible): A waiting period is a stretch of time after a loss, or after buying coverage, before certain coverage starts paying. On business income insurance it acts like a deductible measured in hours, commonly 72 hours. Flood policies through the NFIP generally have a 30-day wait before coverage begins.
Waiver of Subrogation (WOS): A waiver of subrogation is an agreement that your insurer will not try to recover what it paid on your claim from a specific other party, such as a tenant, landlord or contractor. Leases and construction contracts often require it, and your policy must allow it.
Warehouse Legal Liability (Warehouseman's Legal Liability): Warehouse legal liability insurance covers a warehouse operator's legal responsibility for customers' goods stored in its care when they are damaged or lost because of the operator's negligence. It does not cover the operator's own property or goods it owns.
Water Damage: Water damage is harm to a building or contents from water, and whether it is covered depends on where the water came from. Sudden leaks from pipes or appliances are often covered. Flood, surface water and slow long-term leaks are commonly excluded, and sewer backup usually needs added coverage.
Wear and Tear Exclusion: The wear and tear exclusion removes coverage for gradual deterioration of property from age and normal use. Property insurance is meant for sudden, accidental losses, not maintenance. Damage that results from wear and tear, like water from a sudden pipe break, may still be covered.
Wholesale Broker (Wholesaler): A wholesale broker is an insurance intermediary that works with retail agents, not directly with property owners, to find coverage in specialty or surplus lines markets. Your retail agent stays your contact, while the wholesaler brings access to insurers the agent cannot reach directly.
Wind and Hail Deductible (Windstorm or Hail Deductible): A wind and hail deductible is a separate, usually larger deductible that applies only to damage caused by windstorm or hail. In Texas it is often a percentage of the building's insured value, such as 1%, 2% or 5%, rather than a flat dollar amount.
Windstorm (Wind): Windstorm is a covered cause of loss on most commercial property policies for damage from strong winds, including hurricanes, tornadoes and severe thunderstorms. It often has its own deductible, and on the Texas coast it may be excluded and covered separately through TWIA or another insurer.
Windstorm Exclusion (Wind/Hail Exclusion, Ex-Wind): A windstorm exclusion removes wind and hail damage from a property policy, so the policy covers fire and other perils but not wind. It is common on the Texas coast, where owners buy wind coverage separately through TWIA or a dedicated wind policy.
Workers' Compensation Insurance (Workers' Comp, Workman's Comp): Workers' compensation insurance pays medical bills and lost wages for employees injured on the job, regardless of fault. In exchange, it generally protects the employer from most employee injury lawsuits. In Texas, most private employers can choose whether to carry it.
WPI-8 Certificate of Compliance (WPI-8, Windstorm Certificate): A WPI-8 certificate of compliance is a document from the Texas Department of Insurance showing a building, addition or repair in the Texas coastal area was built to windstorm building codes. Commercial buildings generally need one for TWIA coverage on work done since January 1, 1988.
Wrap-Up Program (OCIP, CCIP): A wrap-up program is a single insurance program bought by the project owner or general contractor that covers most contractors working on a construction project. An owner-controlled program is called an OCIP, and a contractor-controlled one is a CCIP.