DOCUTRAX Resource Center

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Certificate of Insurance Glossary


Association for Cooperative Operations Research & Develpoment - A global nonprofit organization which serves the insurance industry in the creation and filing of standardized forms.

ACORD 25 form

A form representing, in summary, the types and amount of insurance coverage an insured has in force. Titled "Certificate of Liability Insurance," it is used for most casualty situations in which the insured has requested certification to a third party of issued casualty coverage.

actual cash value (ACV)

In property and auto physical damage insurance, one of several possible methods of establishing the valued of insured property to calculate the premium and determine the amount the insurer will pay in the event of loss. Although the term is seldom defined in the policy, the generally accepted insurance industry definition of actual cash value is the cost to repair or replace the damaged property with materials of like kind and quality, less depreciation of the damaged property.

additional insured

A person or organization not automatically included as an insured under an insurance policy, but for whom insured status is arranged, usually by endorsement.

additional named insured

(1) A person or organization, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations. (2) A person or organization added to a policy after the policy is written with the status of named insured.

admitted company

A company licensed or authorized to sell insurance to the general public. In the United States, admitted companies are licensed on a state-by-state basis and differentiate from surplus lines insurers, which are authorized to sell insurance in a state on a nonadmitted basis.


Independent insurance agents, also known as insurance sales agents or "producers," typically sell a variety of insurance and financial products, including property insurance and casualty insurance, life insurance, health insurance, disability insurance, and long-term care insurance.

aggregate limit of liability

An insurance contract provision limiting the maximum liability of an insurance for a series of losses in a given time period, i.e. a year or for the entire period of the contract.

all risk coverage

Property insurance covering loss arising from any fortuitous causes expect those that are specifically excluded.

alternate employer endorsement

An endorsement to a workers compensation policy that provides an entity scheduled as an alternate employer with primary workers compensation and employers liability coverage as if it were an insured in the policy.

automobile liability

Coverage is provided for protection from liability arising out of negligent operation, maintenance or use of a covered auto, which results in bodily injury or property damage to a third party. There are several options:
  • Any Auto: Any automobile is covered regardless of ownership.
  • All Owned Autos: Only the autos the insured owns and any trailers they don't own that are attached to the owned autos are covered.
  • Scheduled Autos: Extends coverage only to autos actually listed in the policy declaration section. Also covers non-owned trailers while attached to covered autos.
  • Hired Auto: Extends coverage to autos that are leased, hired, rented or borrowed but coverage is not afforded for autos of employees, partners or families.
  • Non-Owned Autos: Extends coverage to autos that the insured does not own, lease, hire, rent or borrow. Also includes coverage for Autos of the insurer's employees, partners and families for business or personal use.

assigned risk plan

A method of providing insurance required by state insurance codes for those risks that are unacceptable in the normal insurance market.


A legal agreement issued by an agent or an insurer to provide temporary evidence of insurance until a policy can be issued.

blanket limit

A single limit of insurance that applies over more than one location or more than one type of coverage, or both. A blanket limit can be a hedge against the possibility of inaccurate property value estimates since the entire blanket limit can be applied to a loss at a single location.


A specialist in insurance and risk management. Brokers act on behalf of their clients and provide advice in the interests of their clients. An insurance broker may act as agent of an insurer.

builder's risk policy

A property insurance policy that is designed to cover property in the course of construction.

building ordinance coverage

Coverage available by endorsement to a standard property policy to insure against loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings.

business auto policy

A commercial auto policy that includes auto liability and auto physical damage coverages; other coverages are available by endorsement.

business income coverage

Insurance covering loss of income suffered by a business as a result of not being able to use property damaged by a covered cause of loss, during the time required to repair or replace it.

businessowners policy (BOP)

A package policy that provides both property and liability coverage for eligible small businesses. Businessowners policies are written on special coverage forms that are generally very similar to their monoline property and liability form counterparts, but they typically have some unique features that make them especially advantageous for businesses that qualify.


Commercial General Liability


A party to an insurance contract who passes financial obligation for certain potential losses to the insurer. In return for bearing a particular risk of loss, the cedent pays an insurance premium. The term cedent is most often used in the reinsurance industry, although the term could apply to any insured party.


A term describing an insurance policy that covers claims first (reported and filed) during the year the policy is in for any incidents that occur that year or during any previous period during which the insured was covered under a "claims-made" contract.

coinsurance provision

A property insurance provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not a least equal to a specified percentage (commonly 80 percent) of the value of the insured property.

commercial general liability (CGL) policy

A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations; and advertising and personal injury liability.

contingent business interruption insurance

Coverage for income loss suffered by the insured when its operations are suspended as a result of damage from a covered cause of loss to the property of a key supplier or customer, or to a leader location (a nearby business that attracts customers to the insured's business.

contractual liability insurance

Insurance that covers liability of the insured assumed in a contract. Under the standard commercial general liability (CGL) policy, such coverage is limited to liability assumed in any of a number of specifically defined insured contracts, or to liability that the insured would have in the absence of the contract.


The amount of risk or liability that is covered for an individual or entity by way of insurance services.

credit insurance

Coverage against insolvent of a customer, which provides protection against payment default on loan, interest, or payments.

cut through endorsement

A reinsurance contract endorsement providing that, in the event of the cedant's insolvency; the reinsurer will pay any loss covered by the reinsurance contract directly to the insured. Also called an "assumption endorsement."

damage to rented premises

One of the limits or liability prescribed by the standard commercial general liability policy; it applies to damage by fire to premises rented to the insured and to damage regardless of cause to premises (including contents) occupied by the insured for seven days or less. The basic limit is $100,000. This area provides limited coverage for property in the care, custody and control of the insured, which is normally excluded under general liability coverage and normally covered under a property policy.


A portion of covered loss that is not paid by the insurer.

duty to defend

A term used to describe an insurer's obligation to provide an insured with defense to claims made under a liability insurance policy.

each occurrence

The most the insurance policy will pay under one occurrence regardless of the total amount of damages.

employer's liability coverage

This coverage is provided by Part 2 of the basic workers compensation policy and pays on behalf of the insured (employer) all sums that the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured.


An addendum to an insurance policy that changes the original policy provisions.

equipment breakdown insurance

Coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment.

errors and omissions (E&O) insurance

An insurance form that protects the insured against liability for committing an error or omission in performance of professional duties.

excess and surplus (E&S) lines insurance

Any type of coverage that cannot be placed with an insurer admitted to do business in a certain jurisdiction.

excess liability policy

A policy issued to provide limits in excess of an underlying liability policy. The underlying liability policy can be, and often is, an umbrella liability policy.

excess workers' compensation insurance

A type of coverage available for risks that choose to self-insure the majority of workers compensation loss exposures.


A provision of an insurance policy or bond referring to hazards, circumstances, or property not covered by the policy.

fire legal liability coverage

Coverage of a tenant's liability for damage by fire to the rented premises the tenant occupies.

first named insured

The person or entity listed first on the policy declarations page as an insured. The primary or first named insured is granted certain rights and responsibilities that do not apply to the policy's other named insureds.

full prior acts coverage

A claims-made liability policy that does not contain a retroactive date and therefore covers claims arising from acts that took place at any time prior to the inception date of the policy.

general aggregate limit

Under the standard commercial general liability (CGL) policy, the maximum limit of insurance payable during any given annual policy period for all losses other than those arising from the products and completed operations hazard.

general liability insurance

Insurance protecting commercial insureds form most liability exposures other than automobile and professional liability.


Conditions that increase the probability of loss.

hired automobile

An automobile whose exclusive use and control has been temporarily given to another for a consideration.

improvements and betterments

Permanent additions or changes made to a building by lessee at his own expense that may not legally be removed.

inland marine coverage

A group of property insurance coverages designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or insured at a standard rate under a standard form.


The entity that has purchased the insurance coverages that are stated on the Certificate of Insurance and is considered the first named insured.

leasehold interest

Property insurance covering the loss suffered by a tenant due to termination of a favorable lease because of damage to the leased premises by a covered cause.

loss limit

A property insurance limit that is less than the total property values at risk but high enough to cover the total property values actually exposed to damage in a single loss occurrence.

manuscript policy

A policy form that is written to cover specific risk. Manuscript policies differ from "standard" policies in that they are one-of-a-kind. Most frequently, manuscript policies are used to cover either high value or unusual risks for which standard forms are not well-suited.

medical expenses

A no fault medical expense coverage provided to third parties injured on premises owned or rented by the insured, or on ways next to these premises, or injured because of operations of the insured.


North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. Each insurer is assigned a unique NAIC number.

named insured

Any person, firm, or organization, or any of its members specifically designated by name as an insured(s) in an insurance policy, as distinguished from others who, although unnamed, fall within the policy definition of an "insured".

nonowned automobile

Described in commercial auto policies as an auto that is used in connection with the named insured's business but that is neither owned, leased, hired, rented, or borrowed by the named insured.

notice of cancellation/nonrenewal clauses

Provisions in policies mandating that insurers are to provide advance notice of cancellation or nonrenewal of a policy. Most commonly, the required cancellation notice period is 30 days, although state amendatory extends this period to 60 days.

occurrence policy

a policy covering claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made.

owners and contractors protective (OCP) liability coverage

Covers bodily injury and property damage liability arising out of an independent contractor's operations for another party.

package policy

A combination policy providing several different coverages. Usually refers to a policy providing both general liability insurance and property insurance.


Cause of loss i.e., fire, windstorm, collision.

personal and advertising injury

A general liability coverage combined in standard commercial general liability policies with personal injury coverage that insures the following offenses in connection with the insured's advertising of goods or services: libel, slander, invasion of privacy, copyright infringement, and misappropriate of advertising ideas.

policy effective date

The commencement date of an insurance policy.

policy expiration date

The date an insurance policy is no longer in force.


Person in actual possession of insurance policy; policy owner.


The insurance broker or agent representing the insured.

product-completed operations

Under a general liability policy, work of the insured that has been completed as called for in a contract; or work completed at a single job site under a contract involving multiple job sites; or work that has been put to its intended use.

property insurance

First party insurance that indemnifies the owner or user of property for its loss, or the loss of its income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion.

pro rata cancellation

The cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy or bond, without penalty for interim cancellation.

qualified self-insurer

An organization that has satisfied state filing requirements met the minimum financial and size criteria and received approval to self-insure workers compensation or automobile liability.

replacement cost

The actual cost of replacing property that has been damaged or destroyed with new property of like kind and quality without regard to physical depreciation.

self-insured retention (SIR)

A dollar amount specified in an insurance policy that must be paid by the insured before the insurance policy will respond to a loss.

short-rate cancellation

A financial penalty incurred when the insured cancels an insurance contract prior to the expiration date of the contract. The insurer keeps a percentage of unearned premiums.


A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss.

surplus lines insurance

Refers to coverage lines that need not be filed with state insurance departments as condition of being able to offer coverage.

umbrella liability policy

A policy designed to provide protection against catastrophic losses. It generally is written over various primary liability policies, such as the business auto policy, commercial general liability policy and employers liability coverage.

vendors coverage

Additional insured coverage, usually under a manufacturer's general liability policy for specified vendors with respect to their distribution or sale of the manufacturer's products designated in the schedule on the endorsement.

waiver of subrogation

The relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured.