Understanding the terminology used in these policies is important because insurance documents contain specific definitions that determine how coverage operates. Common policy terms include:
Policyholder: The individual or business named in the insurance policy that holds the insurance coverage.
Insured: A person or organization eligible for protection under the policy provisions.
Bodily Injury: Physical injury, illness, or disease suffered by a third party, including certain related damages.
Property Damage: Physical damage to tangible property or loss of its use.
Occurrence: An accident, including continuous or repeated exposure to substantially similar harmful conditions, as defined by the policy.
Coverage Limit: The maximum amount an insurer will pay for covered claims under specified policy provisions.
Premium: The amount paid to maintain the insurance policy.
Deductible: The amount the policyholder may be required to pay toward a covered loss before insurance payments apply, depending on the policy structure.
These definitions help establish how insurance coverage is interpreted when a third-party claim arises. The exact meaning of each term depends on the wording and definitions included in the individual policy.
General liability insurance policies contain conditions that explain how coverage applies and what responsibilities policyholders must fulfill. These provisions also identify exclusions that restrict or eliminate coverage for certain incidents. Understanding these conditions helps businesses recognize the limitations of their insurance protection.
Common coverage provisions and policy conditions include:
Coverage A Bodily Injury and Property Damage: Addresses covered third-party claims involving physical injuries or damage to tangible property caused by an occurrence.
Coverage B Personal and Advertising Injury: Addresses specified offenses such as certain forms of libel, slander, wrongful eviction, and copyright infringement in advertisements, subject to policy terms.
Coverage C Medical Payments: Covers certain medical expenses resulting from qualifying injuries to third parties, regardless of legal liability, subject to applicable limits and conditions.
Policy Period: Specifies the beginning and ending dates during which the insurance coverage applies.
Notice of Claims: Requires policyholders to notify the insurer about accidents, claims, or legal proceedings within the timeframes and according to the procedures stated in the policy.
Cooperation Requirements: Require insured individuals or businesses to cooperate with the insurer during claim investigations, settlements, and legal proceedings.
Exclusions: Identify circumstances or types of losses that are not covered under the policy.
Cancellation Conditions: Explain the circumstances and procedures under which the insurer or policyholder may cancel the insurance agreement.
Typical exclusions may include employee injuries covered by workers' compensation, professional errors and omissions, intentional damage, certain contractual liabilities, and pollution-related claims. However, exclusions and exceptions vary according to the policy wording and available endorsements.
Policyholders should also understand the distinction between occurrence-based and claims-made coverage. Occurrence-based policies generally cover qualifying incidents that happen during the policy period, even if claims are reported later, subject to applicable conditions. Claims-made policies generally require claims to be made during the specified coverage period and may include additional reporting requirements.
Reviewing these provisions helps businesses understand the scope of general liability insurance, the circumstances affecting claim eligibility, and the responsibilities associated with maintaining coverage.