The insurance terminology handbook for small business

posted by 7 years ago in Guide

As a new business there’s so much you need to remember and probably the last thing on your mind is insurance. So we’ve put together a simple handbook of the most common insurance terms you have (or may) encounter.

Aggregate limit

Put simply, aggregate limit is the maximum amount that an insurer will pay out for any one claim and usually within any one policy year (assuming a yearly insurance policy).

Blanket insurance

This allows a business owner to insure multiple property types at one location or similarly one property type at multiple locations, all under the one policy.

Business owners policy (BOP)

If you are looking to combine both property and liability insurance as one package then this may save small businesses money.

Business interruption insurance

If your business is forced to close temporarily (or is relocated) due to events such as flood or fire, business interruption insurance covers pays out expenses and lost earnings caused by the event.

Commercial property insurance

If your business is looking for a policy that protects the building and property you own or lease, then commercial property covers you. Please note that this does not necessarily cover you for the equipment within those buildings as this is typically covered in a separate policy.

Continuous cover

As the name suggests continuous cover policies do not expire and therefore do not need to be renewed. Unlike most policies which last a year, continuous cover remains in force until you (or the insurance company) cancels.

Corporate legal liability

This covers a company against lawsuits or prosecutions for mistakes or negligence as well as protection for prosecution for violations of health and safety, trading standards laws or tax. Please note that this cover is at a company level and not an individual / employee.

Cyber risks insurance

If your business is subject to cyber risks such as hacker attacks, computer viruses or online identity theft, a cyber-risks insurance policy will protect you.


This is the total amount that you must pay towards a claim.

Employer liability insurance

If your business has employees then employer liability insurance is a legal requirement for all businesses. For example, if an employee suffers illness or injury at work and decide to sue the business, employers’ liability insurance will cover you.

Employment practices liability

If an employee (whether that be current or former) decides to sue, for example, discrimination, harassment, wrongful dismissal then this protects the company’s manager against such claims.

Errors and omissions insurance

Also known as professional indemnity insurance, this protects professionals against legal claims such as negligence in work, giving incorrect advice or making mistakes that led to a loss. Typically suitable for the likes of engineers, lawyers or contractors.

Key person insurance

As the name suggests, if you have a key person who is vital to your business who is unable to work as a result of illness or injury, a lump sum may be made to cover that period.

Limit of indemnity

This is the amount up to which you are covered by your policy.

Loss adjuster

This is an expert who will work at (or with) the insurance firm who can assess the size of an insurance claim and helps you find ways to get your business back on track.

Period of insurance

This is the length of time the insurance contract lasts, this can be found on your policy documents.

Personal accident insurance

This compensates your business if you or an employee were to suffer an injury that results in being unable to work both temporarily or permanently.


This is the price that an insurance policy will cost. It is calculated according to the likelihood a claim occurs.

Professional indemnity insurance

When a business takes out professional indemnity insurance it covers you against claims for a customer. For example, a contractor may have given incorrect advice or made a mistake that led to a loss in business for their client. It also covers claims such as breach of copyright or intellectual property.

Public liability insurance

When you take out public liability insurance you are covered against injury or property damage claims from third parties. For example, if you have visitors to your office who happen to injure themselves in a fall or a fault in a property that leads to damage in a client’s office.

Sum insured

This is the maximum amount that an insurer will pay in the event of a claim. This is typically found in building and contents insurance. If in the event of damage it is vital that you accurately calculate the total cost implication.