Insurance Glossary
Understanding insurance terminology made simple. Your guide to contractor insurance language.
Additional Insured
A person or organization added to an insurance policy that gains coverage under the policy. Commonly used when contractors add general contractors or property owners to their liability policies.
Aggregate Limit
The maximum amount an insurer will pay for all covered losses during a policy period. Once the aggregate is exhausted, no further claims are paid until the policy renews.
Audit
A post-policy review conducted by insurers to verify actual exposures (like payroll or revenue) against estimated amounts. Can result in additional premium due or a refund.
Bid Bond
A surety bond guaranteeing that if awarded a contract, the contractor will enter into the agreement and provide required performance bonds. Typically 5-10% of bid amount.
Certificate of Insurance (COI)
A document proving insurance coverage exists. Shows policy numbers, effective dates, coverage limits, and named insureds. Does not confer coverage itself.
General Liability
Insurance covering third-party bodily injury, property damage, and personal/advertising injury claims. Essential coverage for all contractors.
Performance Bond
A surety bond guaranteeing completion of a construction project according to contract terms. Protects project owners from contractor default.
Workers' Compensation
Insurance providing medical benefits and wage replacement to employees injured on the job. Required in most states for businesses with employees.
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