Insurance Glossary for A&E Firms

Common insurance and contract terms, explained in plain words. These are general definitions, not an interpretation of any policy or contract. The wording of your own policy and contract always controls.

A C D E F G H L M N O P R T U W

Additional Insured (AI)

A person or company, like a client or owner, added to your policy so they can also be protected for claims arising from your work.

Certificate Holder

The person or company that asked for a certificate of insurance and is named in the certificate holder box, usually an owner, GC, landlord or client.

Certificate of Insurance (COI)

A one-page summary, usually on an ACORD 25 form, showing which policies a firm carries, the limits and key endorsements.

Claims-Made Policy

A policy that responds to claims first made while the policy is active, for work done after the retro date. Most professional liability policies for A&E firms work this way.

Cyber Liability

Insurance for costs from data breaches, ransomware and other cyber incidents, such as notification, recovery and claims.

Deductible

The amount your firm pays on a claim before the insurer pays. On professional liability it may include defense costs, damages or both.

Defense Outside the Limits

When legal defense costs are paid in addition to the policy limit instead of using it up.

Description of Operations

The free text box on a certificate of insurance used to name a project or location and note special terms such as additional insured status.

Endorsement

A written change to an insurance policy that adds, removes or changes coverage. Additional insured and waiver of subrogation are common examples.

Excess Liability

Extra limits above one specific underlying policy, following its terms.

Expert Witness Coverage

Whether your professional liability policy responds to claims about work as an expert or testifying witness. It depends on the policy's definition of professional services.

First Dollar Defense

A deductible that applies only to settlements or judgments, not to legal defense costs. The insurer pays defense from the first dollar.

General Liability

Insurance for bodily injury and property damage claims from your operations, like a visitor hurt at your office or damage during a site visit.

Hammer Clause

A policy clause about what happens if the insurer wants to settle a claim and you do not. It can shift part of the extra cost to your firm.

Hired and Non-Owned Auto

Liability coverage when employees drive rented cars or their own vehicles for work.

Limitation of Liability Clause

A contract clause that caps how much a design firm can owe the client if something goes wrong.

Limits of Liability

The most the policy will pay: per claim, and in total for the policy period (the aggregate).

Means and Methods

How construction work is physically carried out, including sequencing and jobsite safety. Contracts usually make this the contractor’s responsibility.

Notice of Cancellation

A requirement that a certificate holder be told before a policy is cancelled, often 30 days in advance.

Occurrence Policy

A policy that responds to injury or damage that happens during the policy period, even if the claim comes years later. Most general liability policies work this way.

Per Project Aggregate

An endorsement that applies the general liability aggregate limit separately to each project, so claims on one job do not use up the limit for the others.

Primary and Non-Contributory (PNC)

Wording that makes your policy pay first for the additional insured, without asking their own insurance to share the loss.

Prior Acts Coverage

Coverage for work you did before the current policy started, back to the retro date.

Professional Liability (E&O)

Insurance for claims that your design, advice or reports caused a client a financial loss. Also called errors and omissions.

Professional Services

The policy's definition of the work it covers. If a service is outside this definition, a claim about it may not be covered.

Project-Specific Policy

A professional liability policy for one project only, with its own limit separate from the firm's annual policy.

Retroactive Date

The earliest date of work a claims-made policy looks back to. Work done before this date is usually not covered.

Tail Coverage

Extra time to report claims after a claims-made policy ends. Often bought when a firm closes, retires or merges.

Umbrella Liability

Extra limits that sit above your general liability, auto and employers liability policies.

Waiver of Subrogation (WOS)

An agreement that your insurer will not try to recover what it paid from the other party named in the contract.

Weighted Revenue

How carriers adjust your revenue by the type of work behind it when pricing professional liability. Riskier work counts for more.

Workers Compensation

Insurance for employee injuries on the job, required by law in most states. It includes employers liability coverage.

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