All the Insurance Terms you'll ever need

An index of insurance terms and short definitions to help you with buying and managing your insurance policy. Keep it in your back pocket as your secret weapon to navigate this complex area.

We are currently working to expand our terms. Stay tuned for updates.

1099 Employee

Making informed decisions is essential when it comes to critical elements for business success like workers’ compensation insurance. In most states, business owners are required by law to provide their employees with workers’ comp coverage.

Acord 25

An ACORD 25 is a certificate of insurance, and it is generally a one-page document that provides a summary of the most important information regarding your business insurance policy. This page is often called a workers’ comp certificate of insurance among other names. The form essentially serves as proof that a company has insurance coverage, and it can be provided by your insurance company when you purchase a business insurance policy.

Additional Insured

Additional insured endorsements can be a confusing part of insurance policies. To learn what an additional insured endorsement is, you first need to understand the full additional insured meaning and how it relates to other aspects of insurance.

Class codes

Workers’ comp class codes are the key to figure out what a workers’ comp insurance policy will cost. From the small mom-n-pop shops to the largest employers, all policies are written based on these 4 digit class codes. Where do they come from, what do they mean and how do they affect your workers’ comp policy?

Dividends

Workers’ comp insurance sometimes provides dividends, though they are not guaranteed and depend entirely on the insurance company's discretion. Availability can vary by the size of the policy, the industry involved, and the location of the insured business. Dividends act as a form of rebate, offering businesses the chance to recover part of their paid premiums.

Employers' Liability Insurance

A part of workers' compensation insurance is employers' liability insurance. Most policies for workers' compensation include employer liability insurance or EL. The simple answer is that this insurance protects your company if an employee sues because of an illness or injury at work.

Experience Modification Rate - ExMod

You might not have heard of experience modification or ExMod. Essentially, after a few years of maintaining your workers' compensation annual premiums, a factor is applied to your business.

Ghost Policy

As silly as the name may sound, it’s not a Halloween costume. A ghost policy for workers’ comp is the minimum workers' compensation policy available. It's designed for situations where the business owner is exempt from needing coverage but still requires proof of workers' comp insurance.

Indemnity

Indemnity is the principle where an insured person or company is restored to the same financial position as they were in before some sort of loss occurred.

Loss Payee

A loss payee on an insurance policy is a person or organization who has a financial interest in the insured property. In the event of a claim where the property is damaged or lost, the loss payee receives payments before the policy holder.

Loss Ratio

A loss ratio in an insurance policy is one of the most common metrics used by insurance companies. It determines how risky and profitable their policies are.

Loss Runs

A loss run report records the history of claims made against a business insurance policy. It is similar to an incident report as you might keep for management records. When looking for new business insurance coverage, you can provide the report to prospective insurance companies. Underwriters can use loss runs to determine how risky your company will be to insure. If there were no claims, these documents would state that there were none. Loss runs can be obtained by requesting them directly from the carrier with whom the policy was issued or by contacting the agent who sold you the policy.

Premium

An insurance premium is what you pay to the insurance company for your coverage. You make this payment regularly—monthly, quarterly, or yearly. In this article, we'll break down the details, exploring the definition, factors affecting costs, and why premiums matter in the broader insurance picture.

Quote

A quote in insurance is an estimate of the cost of insurance and is an important preliminary step on the way to getting insurance coverage. However, there can be challenges to getting insurance quotes, especially for businesses, and steps should be taken to get through the process quickly and efficiently.

Risk Management

Risk management in small business involves identifying, assessing, and preventing risks that could potentially affect the financial health of a company. Risk management is crucial for addressing the various uncertainties involved in running a business.

Sole Proprietor

Worker’s compensation is a requirement for most businesses. However, there are some notable exceptions in certain states. In many states, sole proprietorships are excluded from workers’ compensation requirements. But what is a sole proprietorship? Does your business fit the bill?

Subcontractor

Typically, a person or business that performs a job or service for another company based on a written or verbal contract is considered a subcontractor for workers’ compensation. Subcontractors are not considered employees of the company they are working for, and are often hired for specialized skills or to help complete a project for a client. They report to you, the business owner, and you oversee their work and pay them upon completion of their specific job.

Supplemental Application

A supplemental application for insurance is a specialized document used during the underwriting process. It is designed to gather detailed information not covered by standard insurance forms. This includes questions on your company's financial health, operations, and risk management to ensure fully tailored coverage.

Underwriting

Underwriting in insurance is when an insurance company figures out how much of a risk it is to insure someone or something and whether it makes sense for the insurance company from a business perspective.

Waiver of Subrogation

Okay, so you’ve been asked to provide a Certificate of Insurance (or COI). The business asking you to provide proof of coverage even provided you with a sample COI. It shows the limits and endorsements they require your policy to have that allow you to contract with them. While reviewing the sample COI, you may see an X in the box next to the requirement of a Waiver of Subrogation.

Workers' Comp Insurance

Workplace environments are designed to ensure employee safety and security. Still, accidents are inevitable and injury or illness can happen at any second. Having workers’ compensation insurance provides protection for employees and also offers support to the employer from legal issues.