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.
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.
Admitted Carrier
An insurance company licensed by your state's insurance department. Its rates and forms are generally filed with the state.
AM Best Rating
A grade of an insurer's financial strength, like A or A++, plus a size class shown in Roman numerals, like VIII or XV.
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.
Choice of Counsel
Whether you or the insurer picks the defense lawyer on a claim. Many policies let the insurer choose, and some let you choose with the insurer's approval.
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.
Demand Letter
A letter from a client or their lawyer asking you to pay for a loss they blame on your work. It is often the first sign of a claim.
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.
Employee Benefits Liability
Coverage for mistakes in running employee benefit plans, such as failing to enroll an employee in a health plan.
Employers Liability
The part of a workers compensation policy that covers lawsuits over employee injuries that fall outside workers comp benefits, such as a suit by an employee's family member.
Employment Practices Liability (EPLI)
Coverage for claims from employees or applicants, such as wrongful termination, discrimination or harassment.
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.
Pay on Behalf (Ransomware)
A cyber policy provision where the insurer pays covered ransomware costs directly, instead of the firm paying first and asking to be paid back.
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.
Pollution Liability
Coverage for claims that your work caused or contributed to a pollution incident, such as a release of fuel, sewage or contaminated soil.
Premium Audit
A review after the policy year to compare estimated payroll or revenue with the actual figures. Premium may go up or down.
Premium Financing
Paying an insurance premium over time through a finance company, usually with a down payment and monthly installments plus a finance charge.
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.
Products-Completed Operations
The part of general liability for injury or damage that happens after your work is finished, away from your premises. It usually has its own aggregate limit.
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.
Social Engineering
Theft of money by tricking someone at the firm, such as a fake email from a vendor asking you to change where payments go.
Subjectivity
A condition in a quote that must be met before or after binding, such as a signed application or a driver list.
Sublimit
A smaller limit for one type of loss inside a policy's main limit.
Waiting Period
How long a business interruption has to last before a cyber or property policy starts paying lost income.
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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