Insurance Glossary

A person or business (usually a GC or property owner) added to your policy so your coverage also protects them for liability arising from your work. Contracts routinely require it — see our general liability page.

The maximum your policy will pay for all claims combined during the policy period. A $1M/$2M policy pays up to $1M per occurrence and $2M total per year.

A bond guarantees your performance or honesty to a third party (like a license bond or performance bond); insurance protects you from losses. Many contractors need both.

The one-page proof-of-coverage document GCs, landlords, and clients ask for before you start work. Request yours here.

The number that categorizes your work for workers’ comp rating. Misclassification is the most common reason contractors overpay.

Coverage for claims arising from your finished work — critical in the trades, where a problem can surface months after the job. Included in general liability.

Coverage for business-owned vehicles. Personal auto policies exclude business use — see commercial auto.

The summary page of your policy showing who’s insured, limits, deductibles, premium, and policy period. The first thing to check for accuracy.

The amount you pay out of pocket on a covered claim before insurance pays the rest.

A written change to your policy that adds, removes, or modifies coverage — like adding an additional insured or a waiver of subrogation.

Another name for professional liability — covers financial losses from design errors, bad specs, or negligent advice.

Something your policy specifically does not cover. Knowing your exclusions (like pollution on standard GL) matters as much as knowing your coverages.

A multiplier applied to your workers’ comp premium based on your claims history versus similar businesses. Below 1.0 saves you money; above 1.0 costs you.

The foundation of contractor insurance — covers third-party injury, property damage, and completed operations. Learn more.

Liability coverage when employees drive personal or rented vehicles for work — a gap most contractors don’t know they have. Part of commercial auto.

Despite the name, nothing to do with water — it covers your tools and equipment wherever they go: jobsite, truck, storage, and in transit. Learn more.

The maximum your insurer pays — usually shown as per-occurrence / aggregate, like $1M/$2M.

Your official claims history report from your insurer. Carriers request loss runs when quoting your business — usually for the past 3–5 years.

An accident or event that triggers coverage. Occurrence-based policies (standard for contractors) cover incidents that happen during the policy period, even if the claim is filed later.

Covers spills, runoff, and contamination claims that standard policies exclude. Essential for excavation and increasingly required on public work. Learn more.

The insurer’s year-end review of your actual payroll and revenue versus estimates. Accurate estimates up front prevent surprise audit bills.

Your insurer’s right to recover claim costs from whoever was actually at fault.

An endorsement giving up that recovery right against a specific party — a standard GC contract requirement.

An extra layer of limits above your GL, auto, and employer’s liability — how contractors meet $2M–$10M contract requirements. Learn more.

Covers employee medical costs and lost wages for work injuries; required in most states once you have employees. Learn more.