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The Complete Small Business Insurance Glossary

Virtually every business owner will want to take out some form of insurance to protect their assets against threats – that much is a fact of life. But unfortunately, the business insurance world can often be a confusing one, riddled with terms, conditions and technical jargon.

To make sure that you’re getting the cover that’s best suited to your business’s needs, it’s important that you thoroughly understand the insurance jargon included in your policy. To help, we’ve created this business insurance glossary so you can do just that. 

Small business insurance glossary




Accidental damage

Damage that is caused by mistake, and without intent. Also, damage which could not have been foreseen or prevented.

Act of God

An event outside of any reasonable human control, such as a natural disaster. Usually severe or extreme.

All risk

Insurance which provides cover for all instances, except those which are specifically outlined as exclusions  in the policy wording. Usually opposed to peril-specific insurance.


A change that is made to the wording of an insurance policy after it has been taken out. This could be due to a change in business premises or employees, for example. Amendments may sometimes result in price alterations.


Bespoke insurance

Custom-made cover, designed to suit the insurance needs of one business specifically. See also commercial combined insurance.


A (typically intentional) break of the terms of an insurance contract, usually rendering it null. For example, if false information was provided for an insurance policy, then the insurer would likely consider the policy’s terms as breached.


An intermediary between the insured  and the insurer, usually acting in the interests of the insured.

Buildings insurance

Cover that protects a physical structure – e.g. business premises – against risks. Click here  to read more about buildings insurance.

Business interruption insurance

A form of cover that can financially reimburse a business, if it is prevented from operating at full capacity. Click to get more information on business interruption insurance.



When an insurance contract is terminated prior to its stated and agreed end date.


A payment request submitted to an insurance company by the insured party.

Commercial combined insurance

A custom made insurance policy that is shaped to the individual needs of a business, and includes a number of forms of protection. See also bespoke insurance.

Comprehensive cover

An informal term used in reference to an insurance policy that protects against all of the major risks a business faces, as opposed to just some of them.


The act of intentionally withholding relevant information from an insurer, for example to try and affect the price of a policy.

Compulsory insurance

A form of cover that a business is legally obliged to have in place in order to operate – most commonly employers’ liability insurance or professional indemnity insurance.

Contents insurance

Cover that protects items belonging to your business, such as stock  or equipment. See our contents insurance page for more information.

Core policy

A term used to refer to the most common types of cover that a business may take out.


Another word for the protection offered by an insurance policy.


Damage (insured)

Impairment – e.g. to buildings or contents – covered by the terms of a policy. Not all damage will be covered by insurance. See also accidental damage and malicious damage.

Directors and officers insurance (D&O)

Cover designed specially to cover the liability that comes with executive level employees. Read more about D&O insurance here.


Employers’ liability insurance

A form of cover needed to protect against the event that employees are injured in the workplace. It is legally mandatory for many businesses. Click here to read more about employers’ liability insurance.

Event insurance

Cover designed to protect against threats introduced in an event setting, that would otherwise not be covered by a standard policy. For more information on event insurance, click here.


A fixed sum that the insured party pays in the event of a claim.

Exclusion / exception

Specific terms or circumstances that are not covered by a given policy. Exclusions can sometimes be covered with an additional extension to a policy.


Additional protection that is added to cover circumstances that are typically excluded from a policy.


Goods in transit insurance

Insurance that can protect items while they are being transported. See our goods in transit insurance page  for more details.


Indemnity insurance

Usually in reference to contents insurance, replaces what has been damaged with exact substitutes. Not to be confused with professional indemnity insurance. See also new for old insurance.

Insured party

The party who takes out the insurance; the business.


The party who provides the insurance cover; the insurance company.


Landlord insurance

A bespoke policy designed to protect landlords against the specific threats they may face. Read more about landlord insurance here.

Legal costs / defence costs

Costs that the insured may incur as a result of a third party  bringing a legal case against them, typically covered by an insurance policy.

Liability insurance

Insurance that protects against the scenario that the insured is sued by a third party. Different types of liability insurance include employers’, public  and product liability


The maximum amount that can be paid out under one type of cover.


Injury or damage experienced by the insured  as a result of an unexpected event . Can include financial, material and physical loss.


Malicious damage

Avoidable damage caused as a result of an intentional act, for example vandalism or arson.

Marine and cargo insurance

Cover that protects items while they are being transported overseas.



Failure to act in preventing loss  that could have been avoided. 

New for old insurance

Usually used in reference to contents insurance, where items are replaced with newer versions when damaged. See also indemnity insurance.


Over insure

The act of taking out insurance that is superfluous or covers events not relevant to the insured business.



An insurance policy that incorporates a number of different types of cover as one entity.


A hazard that a business may be exposed to, and can insure against. Also referred to as a risk.


Cover that applies only in the event of certain, given perils. Also referred to as a named-peril basis. See also all risk insurance.


The contract between the insured and the insurer, detailing all terms of cover.


The insured  party; the party that takes out the insurance.

Policy wording

The terms and explanation of cover. Any exceptions  and extensions  will be detailed in the policy wording.


The cost of an insurance policy, paid by the insured  party.

Product liability insurance

A form of cover that protects against the possibility of a third party  suffering damage due to a defective product. Click to learn more about product liability insurance.

Professional indemnity insurance

A type of insurance that protects a business in case they are deemed liable for causing injury or damage to a third party . It is legally mandatory for businesses in certain sectors. Visit our professional indemnity insurance page for more information.

Public liability insurance

Cover that provides protection in the event that a third party  suffers injury or damage at the accountability of the insured . For more information, click here



When an insurance policy reaches its agreed expiry date, but is extended for a longer period of time.


A threat that a business may be exposed to, and can insure against. Also referred to as a peril. Some threats are deemed to be higher-risk than others.

Risk assessment

The process of analysing and determining which threats a business is exposed to.

Risk management

Taking steps to minimise the impact of risks and reduce the likelihood of them materialising.



When a third party intentionally steals from the insured  party.

Third party

An involved party other than the insured (the first party) and the insurer (the second party). Often the party suffering damage or injury at the liability of the insured business.  


Under insure

The act of failing to take out comprehensive enough cover to account for the risks likely to affect a business. 

Unexpected/unforeseen event

A risk or threat that could not have been predicted or avoided.