“Primary and noncontributory” is contract shorthand for the order in which policies pay when more than one covers the same loss: yours pays first, and your insurer does not ask the customer’s insurer to chip in.
Read more about Primary and noncontributory
Glossary · Plain English
Insurance glossary: 167 terms, defined plainly
Short definitions of the insurance terms people ask about most, for homes, landlords, auto, contractors, trucking, business and workers’ comp. Each one sums up the page on this site that covers the term in full; follow “Read more” for the details, sources and exceptions.
By Sam Alishahi, independent insurance broker · Reviewed October 2026 · En español
A
- ABC test
California law presumes that a person who performs services for pay is an employee, and it uses the ABC test, written into state law in 2019, to decide otherwise.
Read more about ABC test- Abuse and molestation coverage
Abuse and molestation coverage is for abuse and molestation claims, which many general liability policies exclude or limit, for organizations that serve children and vulnerable adults.
Read more about Abuse and molestation coverage- Accidental death and dismemberment (AD&D)
AD&D pays a set amount if an accident causes death or the loss of a limb or eyesight. It’s narrower than life insurance: it pays only when an accident is the cause.
Read more about Accidental death and dismemberment (AD&D)- ACORD 25
In liability insurance, the standard certificate of insurance form is the ACORD 25. Being the certificate holder on it means you receive the document; it does not make you an insured.
Read more about ACORD 25- Activities of daily living (ADLs)
A tax-qualified long-term care policy pays when you can’t perform two of six activities of daily living without substantial help, or need substantial supervision because of severe cognitive impairment.
Read more about Activities of daily living (ADLs)- Actual cash value (ACV)
Actual cash value starts from what it costs to repair or replace damaged property and subtracts depreciation for age and wear, so the check is smaller than replacement cost and the gap is yours.
Read more about Actual cash value (ACV)- Additional insured
An additional insured is a person or company, usually the property owner or the general contractor above you, added to your liability policy by endorsement so your insurer will defend and cover them for claims arising out of your work.
Read more about Additional insured- Admitted insurer
An admitted carrier is licensed in the state where the risk sits, its rates and forms are subject to state review, and the state guaranty fund stands behind it.
Read more about Admitted insurer- Agreed value
Agreed value is an amount you and the insurer agree a vehicle is worth when the policy starts, which is typically what’s paid for a covered total loss.
Read more about Agreed value- Annuity
An annuity is a contract with an insurance company that pays you income regularly for a period you choose, which can be the rest of your life.
Read more about Annuity
B
- Bare walls, walls-in and all-in
These name where an HOA master policy stops inside a unit: bare walls covers structure and common elements only, walls-in or single-entity adds original fixtures and finishes as built, and all-in adds owner improvements too.
Read more about Bare walls, walls-in and all-in- Bid bond
A bid bond backs your bid on public and private projects.
Read more about Bid bond- BMC-84 freight broker bond
A BMC-84 is the surety bond form a property broker files with FMCSA to show it has the financial security federal rules require. The bond provides for payments to shippers or motor carriers if the broker fails to carry out its agreements.
Read more about BMC-84 freight broker bond- BMC-91X filing
A BMC-91X is a certificate of insurance an insurance company files with FMCSA to show a motor carrier has the bodily injury and property damage liability coverage its operating authority requires. FMCSA won’t grant authority until a filing is on record.
Read more about BMC-91X filing- BOC-3 filing
A BOC-3 is the FMCSA form a motor carrier or broker must file to designate process agents: people in each state who can accept court papers on its behalf. FMCSA won’t grant operating authority without one on file.
Read more about BOC-3 filing- Builder’s risk insurance
Builder’s risk covers a building while it’s under construction or major renovation, including materials on site and in transit, for property owners and contractors.
Read more about Builder’s risk insurance- Business interruption (business income)
Business interruption insurance, sold as business income coverage, is designed to replace the net income and continuing expenses, payroll included, that a business loses while covered physical damage keeps it from operating.
Read more about Business interruption (business income)- Business owner’s policy (BOP)
A business owner’s policy, or BOP, bundles commercial property, general liability and business income into one policy. It is built for smaller, lower-risk businesses and leaves out coverages such as workers’ comp and commercial auto.
Read more about Business owner’s policy (BOP)
C
- California minimum auto liability (30/60/15)
California’s minimum is liability only: it pays for injuries and damage you cause to others, up to 30/60/15. It does nothing for your own car or your own injuries.
Read more about California minimum auto liability (30/60/15)- Carmack Amendment
The Carmack Amendment is the common name for 49 U.S.C. 14706, the federal law that makes a motor carrier liable for actual loss or damage to property it hauls in interstate commerce. The shipper does not have to prove the carrier was careless.
Read more about Carmack Amendment- Cash settlement option
A cash settlement option is policy wording that lets you resolve a covered total loss with a payment instead of rebuilding the same house on the same lot.
Read more about Cash settlement option- Certificate holder
A certificate holder gets a copy of the certificate of insurance and nothing else. The ACORD 25 says it is issued as a matter of information only and confers no rights upon the certificate holder.
Read more about Certificate holder- Certificate of insurance (COI)
A certificate of insurance is a one-page document, issued by the insured’s agent or broker, that summarizes the policies a business carries as of the day it was issued. It is evidence that insurance exists, not insurance itself.
Read more about Certificate of insurance (COI)- Claims-made policy
A claims-made policy responds to claims first made against you while it is in force and, when it carries a retroactive date, only for mistakes made on or after that date.
Read more about Claims-made policy- Class code
Class codes are the classifications your payroll, sales and subcontractor payments fall under. At a premium audit, the auditor checks that each employee’s pay sits in the class code that matches the work they actually did.
Read more about Class code- Coinsurance
Coinsurance is a condition requiring you to insure to a percentage of value. If you’re underinsured, a claim payment can be reduced.
Read more about Coinsurance- Commercial auto insurance
Commercial auto insurance covers business vans, pickups and fleets with liability, physical damage, uninsured motorist and hired and non-owned auto coverage. A personal auto policy may deny a claim if the vehicle was being used for business.
Read more about Commercial auto insurance- Commercial crime insurance
Commercial crime insurance covers employee theft, forgery, funds transfer fraud and social engineering, the losses most property and cyber policies leave out or limit.
Read more about Commercial crime insurance- Commercial package policy
A commercial package policy puts property, general liability and other coverage parts under one set of declarations and common conditions, each part on its own form. It’s where businesses go when a business owner’s policy is too small or too rigid.
Read more about Commercial package policy- Completed operations
Completed operations coverage is the part of a commercial general liability policy that responds to bodily injury or property damage caused by your work after the job is finished. It carries its own aggregate limit on the declarations.
Read more about Completed operations- Comprehensive personal liability (CPL)
Comprehensive personal liability covers injuries on property you own when your policy doesn’t include liability, such as FAIR Plan and dwelling fire policies, rentals, vacant homes and land.
Read more about Comprehensive personal liability (CPL)- Contingent cargo insurance
Contingent cargo insurance is coverage a freight broker carries for loads it arranges but doesn’t haul. Depending on the form, it can respond when a shipper’s goods are lost or damaged and the motor carrier’s own cargo insurance doesn’t pay.
Read more about Contingent cargo insurance- Contractor license bond (California)
A California contractor license bond is a surety bond the Contractors State License Board (CSLB) requires before it will issue, reactivate or renew an active license. If the bond lapses, the license is suspended.
Read more about Contractor license bond (California)- Contractor’s equipment floater
A contractor’s equipment floater is the inland marine policy that insures tools and equipment. It follows the property rather than a building, so it responds at the job site, in the truck, in transit and in storage.
Read more about Contractor’s equipment floater- Convertible term life
With convertible term, the owner can change the policy into permanent life insurance without new evidence of insurability. The right to convert usually ends at an age or date stated in the policy.
Read more about Convertible term life- Credit-based insurance score
A credit-based insurance score is a rating built in whole or in part from your credit history that auto and home insurers use to predict the likelihood of a claim. It isn’t the same as the credit score a lender pulls.
Read more about Credit-based insurance score- CSA score
“CSA score” is shorthand for the percentiles FMCSA’s Safety Measurement System assigns a carrier in seven safety categories, built from two years of roadside inspections, crashes and investigation results. FMCSA uses it to decide which carriers to look at next.
Read more about CSA score- Cyber liability insurance
Cyber insurance covers data breaches, ransomware, wire fraud and business interruption, plus liability if customer information is exposed.
Read more about Cyber liability insurance
D
- Declarations page
The declarations page is the summary page of your policy, usually first in the packet: the insurance company, policy number, dates, what’s insured, each coverage with its limit and deductible, and the premium.
Read more about Declarations page- Deductible buyback (deductible reimbursement)
Deductible reimbursement, often called deductible buyback, is coverage that pays back some or all of the deductible on a home, auto or business loss, used most where percentage deductibles have grown large.
Read more about Deductible buyback (deductible reimbursement)- Difference in conditions (DIC)
A difference in conditions (DIC) policy is a separate policy, sold by private insurers, that pairs with a California FAIR Plan dwelling policy to add coverage the FAIR Plan doesn’t include, such as liability, theft and water damage.
Read more about Difference in conditions (DIC)- Directors and officers (D&O)
Directors and officers can be sued personally over decisions they make for a company. D&O coverage pays defense costs and settlements for those claims.
Read more about Directors and officers (D&O)- Disability insurance
Individual disability insurance replaces part of your income if illness or injury keeps you from working.
Read more about Disability insurance- DOT inspection levels
Roadside inspections follow one CVSA standard, and the level tells you what the inspector looked at: Level I is the full driver-and-vehicle workup, Level III is the driver and paperwork only, Level V is the vehicle with no driver present, and Level VIII is a wireless check while the truck keeps rolling.
Read more about DOT inspection levels- Dwelling coverage (Coverage A)
Coverage A, the dwelling limit, is the most a homeowners policy pays to repair or rebuild the house itself. It should be based on the estimated cost to rebuild, not the purchase price or current market value.
Read more about Dwelling coverage (Coverage A)- Dwelling fire policy (DP-1, DP-3)
A dwelling fire policy insures the building, and optionally liability and loss of rent, without the personal-property package of a homeowners policy. It’s the standard form for a home rented to tenants.
Read more about Dwelling fire policy (DP-1, DP-3)
E
- Each occurrence limit
The each occurrence limit is the most a commercial general liability policy pays for a single accident. It is available again for the next event, but every payment reduces the aggregate it draws from.
Read more about Each occurrence limit- Earthquake insurance
Standard homeowners, condo and landlord policies in California exclude earthquake damage. Earthquake coverage is a separate policy with its own deductible.
Read more about Earthquake insurance- ELD (electronic logging device)
An electronic logging device is wired to the truck’s engine and records driving time on its own, so a driver’s hours-of-service log can’t be penciled in after the fact. Federal rules require one for any driver who has to keep a record of duty status, with a short list of exceptions.
Read more about ELD (electronic logging device)- Elimination period
The elimination period in a long-term care policy is the number of days you pay for care yourself before benefits start.
Read more about Elimination period- Employer’s liability
Employer’s liability is the companion coverage to workers’ comp. It responds to certain lawsuits that arise from employee injuries.
Read more about Employer’s liability- Employment practices liability (EPLI)
Employment practices liability covers claims by employees and applicants, including harassment, discrimination, retaliation and wrongful termination, with defense costs.
Read more about Employment practices liability (EPLI)- Equipment breakdown coverage
Equipment breakdown coverage is the current name for boiler and machinery insurance. It is designed to pay to repair or replace equipment that fails from an accidental mechanical or electrical breakdown, and the damage, lost income and spoilage that follow.
Read more about Equipment breakdown coverage- Excess flood insurance
Excess flood sits on top of an NFIP or private primary flood policy. On a home that costs far more to rebuild than the NFIP limit, the rest has to come from private primary flood, an excess flood policy, or your own pocket.
Read more about Excess flood insurance- Excess liability
An excess liability policy adds limits on top of a policy you already have. Written follow-form, it borrows that policy’s terms, so it is never broader than what sits beneath it.
Read more about Excess liability- Experience mod (EMR)
An experience modification rate is the factor a workers’ compensation rating bureau issues to compare an employer’s own claims with the average for its classifications. A mod of 1.00 means average.
Read more about Experience mod (EMR)- Extended replacement cost
Extended replacement cost raises the ceiling on your dwelling coverage by a stated percentage or dollar amount, a defined cushion above the dwelling limit for the times rebuilding costs more than expected.
Read more about Extended replacement cost- Extra expense
Extra expense is what you spend to avoid or shorten a shutdown after covered physical damage, paid under the business income and extra expense coverage on a commercial property policy.
Read more about Extra expense
F
- FAIR Plan
A FAIR Plan is a state’s residual-market property insurer: in most states, an association the property insurers there are required to fund, so a home or building the regular market won’t take can still get basic coverage. The policy is narrower than a homeowners policy.
Read more about FAIR Plan- Fiduciary liability
Fiduciary liability is coverage for people who manage an employee benefit or retirement plan, if they’re accused of mismanaging it. It’s separate from the bond ERISA can require.
Read more about Fiduciary liability- Flood insurance (NFIP)
Homeowners policies exclude flood, so flood coverage is a separate policy, either from the National Flood Insurance Program (NFIP) or from private flood markets.
Read more about Flood insurance (NFIP)- Flood zone X
Zone X is the label FEMA’s flood maps give to areas of moderate or minimal flood risk, outside the Special Flood Hazard Area. The federal flood insurance requirement for government-backed mortgages doesn’t apply there, but a lender can still require coverage.
Read more about Flood zone X- FMCSA Drug and Alcohol Clearinghouse
The FMCSA Drug and Alcohol Clearinghouse is a federal online database of drug and alcohol program violations by CDL and commercial learner’s permit holders. Employers query it before a driver’s first safety-sensitive duty and at least once a year after that.
Read more about FMCSA Drug and Alcohol Clearinghouse- For-hire vs private carrier
Federal rules sort motor carriers into two kinds: for-hire carriers, who move goods or passengers for compensation, and private carriers, who move their own. Which side you’re on decides whether you need operating authority and which federal insurance minimums apply.
Read more about For-hire vs private carrier- Force-placed insurance
If a home policy lapses while there is a mortgage, the servicer can buy force-placed coverage and charge you for it.
Read more about Force-placed insurance- Form 2290 (heavy vehicle use tax)
Form 2290 is the IRS return for the federal heavy highway vehicle use tax, filed for each truck registered in your name with a taxable gross weight of 55,000 pounds or more used on public highways. The stamped Schedule 1 is your proof of payment for state registration.
Read more about Form 2290 (heavy vehicle use tax)- Form E and Form H
Form E and Form H are the uniform certificates of insurance an insurance company files with a state agency to show a motor carrier has the liability and cargo coverage that state’s motor carrier law requires. They are state filings, separate from federal FMCSA filings.
Read more about Form E and Form H- FORTIFIED roof
A FORTIFIED Roof is a roof built or replaced to a construction standard from the Insurance Institute for Business & Home Safety (IBHS), then documented by an independent evaluator before IBHS issues a designation.
Read more about FORTIFIED roof- FR-44
An FR-44 is the certificate of financial responsibility Florida and Virginia use for DUI-related convictions. Like an SR-22, the insurer files it with the state, but it certifies limits above the state’s ordinary minimum.
Read more about FR-44
G
- Garage liability
Garage liability covers injuries and property damage from an auto business’s operations, including the work it does on vehicles. Customers’ vehicles in its care are a separate coverage, garagekeepers.
Read more about Garage liability- Garagekeepers insurance
Garagekeepers insurance covers damage to customers’ vehicles while they are in your care, custody or control: parked on your lot, up on a lift, in the paint booth or being road-tested.
Read more about Garagekeepers insurance- General aggregate limit
The general aggregate is the most a commercial general liability policy pays for all claims in the policy year, and every claim paid eats into it.
Read more about General aggregate limit- General liability (CGL)
General liability covers injuries, property damage and advertising injury your business causes others.
Read more about General liability (CGL)- Guaranteed replacement cost
Guaranteed replacement cost removes the ceiling and pays the full cost to repair or rebuild after a covered loss, whatever the dwelling limit on the declarations page says. It is offered by a limited number of insurers.
Read more about Guaranteed replacement cost
H
- Hired and non-owned auto (HNOA)
Hired and non-owned auto liability is the part of a commercial auto policy, or a businessowners policy endorsement, written to respond for the business when someone drives a car the business doesn’t own on company business: an employee’s own sedan, a rented van, a borrowed pickup.
Read more about Hired and non-owned auto (HNOA)- HO-2
HO-2 is a broad-form homeowners policy that covers the house and your belongings only for the perils it names, such as fire, windstorm and theft.
Read more about HO-2- HO-3
HO-3 is the common homeowners form. It covers the house against all perils except those it excludes, and covers belongings only for named perils.
Read more about HO-3- HO-5
HO-5 is a broader homeowners form with open-perils coverage on both the house and belongings, common for newer or higher-value homes.
Read more about HO-5- HO-6 (condo insurance)
An HO-6 is the unit owner’s policy in a condo. It insures whatever the association’s master policy stops at, plus your belongings, your liability and your share of the association’s deductible.
Read more about HO-6 (condo insurance)- HOA master policy
The association’s master policy insures the building and the common areas. Where it stops inside a unit is set by the CC&Rs and the master policy form: bare walls, single entity or all-in.
Read more about HOA master policy- Home warranty
A home warranty is a repair contract for appliances and home systems that wear out. It is not an insurance policy and doesn’t overlap with or replace homeowners insurance.
Read more about Home warranty- Host liquor liability
Host liquor liability is coverage when alcohol is served but not sold, often asked for by event venues.
Read more about Host liquor liability- Hurricane, named-storm or wind/hail deductible
A separate deductible on a homeowners policy that replaces the standard one when a specified storm trigger is met. It is usually a percentage of the dwelling limit, and the trigger definition decides whether it applies at all.
Read more about Hurricane, named-storm or wind/hail deductible
I
- IFTA (International Fuel Tax Agreement)
IFTA, the International Fuel Tax Agreement, lets an interstate trucker report and pay fuel tax owed to every member state and province on one quarterly return.
Read more about IFTA (International Fuel Tax Agreement)- Indexed universal life (IUL)
Indexed universal life is universal life whose cash value earns interest based on how an outside index changes over a set period. Your money isn’t placed in the index or the stock market.
Read more about Indexed universal life (IUL)- Inflation guard
Inflation guard is an endorsement that raises the dwelling limit gradually by a specified percentage over a set period, based on the insurer’s estimate of building cost increases.
Read more about Inflation guard- Inland marine insurance
Inland marine insurance is property coverage for things that don’t stay put: tools and equipment on job sites, materials you’re installing, freight on a truck, customers’ goods in your shop, and a building while it’s still being built.
Read more about Inland marine insurance- Installation floater
An installation floater covers materials you have bought and are installing, from the yard to the point the work is accepted.
Read more about Installation floater- Insurance binder
An insurance binder is a temporary agreement, issued by an insurer or an agent it has authorized to bind coverage, that puts insurance in force and serves as evidence of it until the policy itself is issued.
Read more about Insurance binder- IRP (International Registration Plan)
IRP, the International Registration Plan, lets an interstate trucker register the truck once, carry one apportioned plate and cab card, and split registration fees among jurisdictions by miles driven.
Read more about IRP (International Registration Plan)
K
- Key person insurance
Key person insurance is life insurance, and sometimes disability insurance, that a business buys on an owner or employee whose death would cost the company money. The business owns the policy, pays the premiums and is the beneficiary.
Read more about Key person insurance
L
- Landlord insurance
Landlord insurance covers the building, the rent it produces and the liability that comes with tenants. Once a property is tenant-occupied, it usually needs a dwelling fire or landlord policy instead of a homeowners policy.
Read more about Landlord insurance- Lessor’s risk only (LRO)
Lessor’s risk only is a policy for a building owner who leases the building to others and doesn’t operate a business there. It covers the building, the owner’s liability and lost rents, not the tenants’ operations.
Read more about Lessor’s risk only (LRO)- Liquor liability
Most general liability policies exclude claims from selling or serving alcohol if you’re in the business of doing so. Liquor liability fills that gap for businesses that sell, serve or furnish alcohol.
Read more about Liquor liability- Long-term care insurance
Long-term care insurance covers help with everyday tasks such as bathing, dressing and eating, at home, in assisted living or in a nursing home, when a chronic illness, a disability or cognitive decline makes them hard to manage alone.
Read more about Long-term care insurance- Loss assessment coverage
Loss assessment coverage is the part of a condo unit-owner (HO-6) policy that responds when the association bills every owner for a loss its master policy didn’t fully pay, such as the master policy deductible, damage above its limit or a liability claim against the association.
Read more about Loss assessment coverage- Loss payee
A lender goes on the policy as a loss payee, which lets the insurer pay the lender, or you and the lender jointly, as the lender’s interest may appear.
Read more about Loss payee- Loss runs
A loss run is the report your insurance company keeps on the claims under your policy: each claim, when it happened, what has been paid and what is still reserved. Underwriters ask for it before they quote.
Read more about Loss runs
M
- Manufactured (mobile) home insurance
A manufactured or mobile home can be insured on a manufactured homeowners policy, a package written specifically for manufactured homes, designed to cover the home, your belongings and your liability to others. Most of these policies are written on an actual cash value basis.
Read more about Manufactured (mobile) home insurance- MC number (operating authority)
An MC number, which FMCSA now calls a docket number, is operating authority: permission to haul regulated freight or passengers for hire in interstate commerce, or to arrange that transportation for pay.
Read more about MC number (operating authority)- MCS-90 endorsement
An MCS-90 is a federal endorsement attached to a motor carrier’s auto liability policy. In it, the insurer agrees to pay a final judgment against the carrier for injury, property damage or environmental restoration its negligence causes, up to the limit stated, even when the policy itself would not have paid. It protects the public, not the trucking company.
Read more about MCS-90 endorsement- Medical malpractice insurance
Medical malpractice insurance is professional liability that pays defense costs and settlements when a patient claims your care caused harm. Most policies are claims-made.
Read more about Medical malpractice insurance- Mexico auto insurance
Mexican law requires drivers to carry liability coverage, and most U.S. auto policies don’t satisfy it. Mexico auto insurance provides that liability coverage for a trip, from a single day to a whole season.
Read more about Mexico auto insurance- Motor Carrier Permit (MCP)
California requires a Motor Carrier Permit from carriers operating certain vehicles, private or for-hire, including any motor truck with two or more axles and a GVWR over 10,000 pounds, and any other motor vehicle used to transport property for compensation.
Read more about Motor Carrier Permit (MCP)- Motor truck cargo insurance
Motor truck cargo is an inland marine form for property lost in transit, and depending on the form it can be written for goods on your own vehicles.
Read more about Motor truck cargo insurance
N
- New entrant safety audit
The new entrant safety audit is FMCSA’s records review of a carrier during its first 18 months with a USDOT number, to confirm it has basic safety management controls. Pass, and registration becomes permanent; fail, and FMCSA revokes it unless the problems are fixed on a deadline.
Read more about New entrant safety audit- Non-renewal
A non-renewal is different from a mid-term cancellation: your existing coverage runs to the expiration date. In California a homeowners insurer generally must give at least 75 days’ written notice before non-renewing.
Read more about Non-renewal- Non-standard auto insurance
Non-standard auto is auto insurance for drivers that standard insurance companies treat as higher risk, usually because of a DUI, several tickets or accidents, or a suspension. The coverages are the familiar ones; the companies and prices differ.
Read more about Non-standard auto insurance- Non-trucking liability (bobtail)
Non-trucking liability and bobtail are liability coverage for a leased owner-operator’s truck during the time it isn’t working for the motor carrier it’s leased to, and the two names are often used for the same coverage. A non-trucking form excludes use in the carrier’s business, loaded or empty.
Read more about Non-trucking liability (bobtail)
O
- Occupational accident insurance
Occupational accident insurance is a private policy, usually carried by an independent owner-operator, that pays only the benefits written into the contract. Workers’ comp, by contrast, is a state system that pays benefits set by state law.
Read more about Occupational accident insurance- Occurrence policy
An occurrence policy responds to injury or damage that happens while it is in force, no matter when the claim shows up.
Read more about Occurrence policy- Ongoing operations
Ongoing operations additional insured coverage (CG 20 10) covers the additional insured for claims arising while your work is in progress, such as a worker or visitor injured on site or damage to neighboring property during the job.
Read more about Ongoing operations- Ordinance or law coverage
Ordinance or law coverage pays the extra cost of rebuilding to the building codes and laws in force after a covered loss, including tearing down undamaged parts of the home the code won’t let you keep.
Read more about Ordinance or law coverage- Out-of-service rate
Following FMCSA’s convention, the vehicle out-of-service rate is the share of Level I, II and V inspections with at least one vehicle out-of-service violation, and the driver out-of-service rate is the share of Level I, II and III inspections with at least one driver out-of-service violation.
Read more about Out-of-service rate
P
- Parametric insurance
Parametric insurance pays a pre-agreed amount based on the magnitude of an event rather than on an adjuster’s estimate of your damage. The contract states the amount, the trigger and who verifies the trigger.
Read more about Parametric insurance- Payment bond
A payment bond is a contract bond that guarantees subcontractors and suppliers are paid.
Read more about Payment bond- Per-project aggregate
A per-project aggregate endorsement, such as CG 25 03, gives each designated construction project its own general aggregate; CG 25 04 is the designated-location version.
Read more about Per-project aggregate- Performance bond
A performance bond is a contract bond that guarantees the work gets completed under the contract.
Read more about Performance bond- Physical damage insurance (trucks)
Physical damage insurance pays for damage to your own truck and trailer: collision, plus either comprehensive or a named list of causes such as fire, theft, hail and flood. FMCSA doesn’t require it, but a truck loan usually will.
Read more about Physical damage insurance (trucks)- Pollution liability
Nearly every general liability policy has a pollution exclusion. Pollution liability covers contractors and property owners when work or a site releases mold, asbestos, lead, fuel or chemicals; contractors pollution liability (CPL) fills that gap for your operations.
Read more about Pollution liability- Primary and noncontributory
- Prior acts (nose) coverage
Prior acts, or nose, coverage is when a new claims-made carrier sets its retroactive date back to your original one, so you don’t need a tail from the old carrier.
Read more about Prior acts (nose) coverage- Private flood insurance
Private flood policies are written by insurance companies rather than the National Flood Insurance Program, on their own forms. Some carry higher limits or extras the NFIP doesn’t; some are narrower.
Read more about Private flood insurance- Process agent
A process agent is the person court papers can be served on in a lawsuit against a motor carrier or broker. Process agents are designated on the BOC-3.
Read more about Process agent- Product liability insurance
Product liability covers businesses that make, import, distribute or sell products under their own brand. When a product injures someone or damages property, everyone in the chain can be named.
Read more about Product liability insurance- Products-completed operations aggregate
The products-completed operations aggregate is a separate running total on a commercial general liability policy for injury or damage from your finished work or products.
Read more about Products-completed operations aggregate- Professional liability (E&O)
Professional liability, also called errors and omissions (E&O), answers when your advice, design or work product costs a client money with nobody hurt and nothing broken.
Read more about Professional liability (E&O)
R
- Real estate errors and omissions
Real estate errors and omissions is coverage for real estate brokerages, agents and property managers, for claims over disclosures, advice and transactions.
Read more about Real estate errors and omissions- Recoverable depreciation (holdback)
Recoverable depreciation, or holdback, is the amount a replacement cost policy withholds from the first payment. You get the actual cash value first and the withheld depreciation after you send proof the work is done.
Read more about Recoverable depreciation (holdback)- Reefer breakdown coverage
Reefer breakdown coverage is an endorsement to a motor truck cargo policy designed to pay for temperature-controlled freight that spoils because the refrigeration unit suffers a sudden and accidental mechanical failure or breakdown. It does not pay to repair the unit.
Read more about Reefer breakdown coverage- Renters insurance
Renters insurance covers your belongings, your liability and a place to stay if your rental becomes unlivable. A landlord’s insurance covers the building, not your belongings or your liability.
Read more about Renters insurance- Replacement cost
Replacement cost pays what it takes to repair or replace damaged property with materials of like kind and quality. Many replacement cost policies still pay in two steps: actual cash value first, then the withheld depreciation once the work is done.
Read more about Replacement cost- Retroactive date
A retroactive date is the earliest date a wrongful act can happen and still be covered under a claims-made policy. It is listed in the declarations on most policies and should carry forward unchanged at every renewal.
Read more about Retroactive date- Roadside assistance coverage
Towing and road service is an optional add-on to a personal auto policy. It pays for a tow and labor at the scene when your car is disabled, up to the limit the policy sets.
Read more about Roadside assistance coverage
S
- Safer from Wildfires
Safer from Wildfires is California’s list of wildfire mitigation steps for the house, the ground around it and the neighborhood. Insurers whose rates reflect wildfire risk must give a credit for each step and tell you your wildfire risk score in writing.
Read more about Safer from Wildfires- SB 216 (contractor workers’ comp by 2028)
Under SB 216, as delayed from 2026 by SB 1455, every licensed California contractor must carry workers’ compensation starting January 1, 2028, with limited exceptions, even with no employees.
Read more about SB 216 (contractor workers’ comp by 2028)- Scheduled personal property (floater)
A standard homeowners policy covers valuables only up to category sublimits. Pieces worth more are listed individually, with an appraised value, on an endorsement or a separate floater, each with its own amount of insurance.
Read more about Scheduled personal property (floater)- Self-insured retention (SIR)
A self-insured retention is a dollar amount you pay before an umbrella responds to a claim no underlying policy covers. Unlike a deductible, you pay defense and indemnity yourself until the retention is used up.
Read more about Self-insured retention (SIR)- Short-term rental insurance
Short-term rental insurance covers homes, condos and guest units rented by the night or week, with property, liability and lost booking income set up for paying guests. Many homeowners and landlord policies limit or exclude short-term guests.
Read more about Short-term rental insurance- Special assessment
When a loss runs past the master policy’s limits, the association can levy a special assessment on its owners. Owners cover it on their own HO-6 or homeowners policy with loss assessment coverage.
Read more about Special assessment- Special flood hazard area (SFHA)
A special flood hazard area is land FEMA has designated as having at least a 1 percent chance of flooding in any given year.
Read more about Special flood hazard area (SFHA)- SR-22
An SR-22 is a certificate of financial responsibility: a form your insurance company files with a state motor vehicle agency to certify that you carry the liability coverage the state requires of you. It is the general-purpose version.
Read more about SR-22- Stop order (workers’ comp)
A stop order is an order California issues to an employer without required workers’ comp, barring the use of employee labor until the employer gets coverage.
Read more about Stop order (workers’ comp)- Surety bond
A surety bond is a three-party guarantee: a third party, the surety, promises an owner, a licensing board or a court that you will do what you agreed to, and if it has to pay, you pay it back.
Read more about Surety bond- Surplus lines insurance
Surplus lines carriers are eligible but not licensed in the state, write their own forms and pricing, are reached through a surplus lines broker after the admitted market has been tried, and have no guaranty fund behind them.
Read more about Surplus lines insurance- Sustainable Insurance Strategy
The Sustainable Insurance Strategy is the California Department of Insurance’s reform package, completed in December 2024. It lets insurers use wildfire catastrophe models and an allowed net cost of reinsurance in rates, in exchange for commitments to write more policies in wildfire-distressed areas.
Read more about Sustainable Insurance Strategy
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- Tail coverage (extended reporting period)
Tail coverage is needed whenever a claims-made policy ends without a replacement that honors your retroactive date: you close, retire, switch to an occurrence form, or the new carrier will not match the date.
Read more about Tail coverage (extended reporting period)- Technology errors and omissions (Tech E&O)
Tech E&O covers claims that your software or services caused a client financial loss, such as a failed implementation, downtime or a missed deadline.
Read more about Technology errors and omissions (Tech E&O)- Term life insurance
A term life policy pays its death benefit only if the insured dies during the term, which can be one year, a fixed stretch such as 10, 20 or 30 years, or run to a stated age. If you outlive it, the policy pays nothing.
Read more about Term life insurance- Terrorism coverage (TRIA)
Commercial property and casualty quotes come with a terrorism offer because of the federal Terrorism Risk Insurance Act (TRIA), a program that shares insured losses from a certified act of terrorism with insurance companies. You decide whether to accept or decline it.
Read more about Terrorism coverage (TRIA)- Trailer interchange insurance
Trailer interchange insurance covers your legal liability for loss of or damage to a trailer, container or chassis you don’t own while it’s in your possession under a written interchange agreement.
Read more about Trailer interchange insurance- Truckers general liability
Your primary auto liability covers accidents involving the truck. Truckers general liability covers the rest of the business: someone hurt at your yard or office, damage at a customer’s dock, and products or completed-operations claims tied to your work.
Read more about Truckers general liability
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- Umbrella insurance
Umbrella insurance adds liability limits above your home, auto and rental policies for claims that exceed them. It pays after those limits are used up.
Read more about Umbrella insurance- Unified Carrier Registration (UCR)
Unified Carrier Registration is an annual registration and fee that federal law requires of motor carriers, brokers, freight forwarders and leasing companies operating in interstate commerce. The fee depends on how many commercial motor vehicles you operate.
Read more about Unified Carrier Registration (UCR)- Universal life insurance
In a universal life policy the premium, the death benefit and the cash value are tracked on their own. Once enough has built up, you can pay more, pay less or skip a payment.
Read more about Universal life insurance- USDOT number
A USDOT number is the identification number FMCSA assigns your company when it registers you. The agency keeps your inspections, audits and crash records under it.
Read more about USDOT number
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- Vacant home insurance
Standard homeowners and landlord policies often restrict coverage when a property sits empty or is opened up for a remodel. Vacant home policies are built for that period, and some convert when the work is done.
Read more about Vacant home insurance
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- Waiver of subrogation
A waiver of subrogation is an endorsement in which your insurer agrees not to recover what it paid on a claim from a specific party, usually one your contract names.
Read more about Waiver of subrogation- Water backup coverage
A standard homeowners policy excludes water that backs up through sewers or drains or overflows from a sump. Coverage comes back through a water backup endorsement, which carries its own limit, separate from the dwelling limit.
Read more about Water backup coverage- Whole life insurance
Whole life covers the insured for life. The premium is set level when the policy is issued, and the extra paid in the early years builds cash value that helps carry the policy as you get older.
Read more about Whole life insurance- Wind and hail insurance (wind-only policy)
A wind-only policy covers wind and hail damage and nothing else, bought alongside a home policy that excludes those perils, as some coastal home policies do.
Read more about Wind and hail insurance (wind-only policy)- Workers’ comp exemption (California)
California doesn’t let employers opt out of workers’ comp for employees. Labor Code 3352 lists people who don’t count as employees, and certain owners, officers, partners and LLC managers can sign a waiver that removes only themselves from coverage.
Read more about Workers’ comp exemption (California)- Workers’ compensation
Workers’ comp pays injured employees’ medical care and lost wages. California requires employers to carry it, even with a single employee, including part-time workers.
Read more about Workers’ compensation- Wrap-up (OCIP / CCIP)
A wrap-up, also called a controlled insurance program, is one insurance program bought by a single sponsor to cover the contractors working on a construction project: an OCIP when the owner sponsors it, a CCIP when the general contractor or construction manager does.
Read more about Wrap-up (OCIP / CCIP)
General information, not a quote or a promise of coverage. What a policy pays depends on its own wording, the state and the facts of the claim.
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Social engineering is when a criminal tricks an employee into sending money, such as an email that appears to come from a vendor or executive.
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