Every insurance policy that you purchased within United States will have within the insurance contract a section entitled definitions. Sometimes there will be specific definitions throughout the contract to make the coverages that weren’t clear in each particular section of the policy more clear. Not all insurance policies are the same and the focal point of determining the differentiation issues lies in the definition of terms and coverages. Most of the newer insurance policy contracts have verbiage for coverages and definitions that have been clearly defined within court cases and case-law throughout all 50 states.
The definition of terms section can appear at the beginning of the policy at the end of the policy or throughout the policy, there is no standard for where to place this particular section or sections. Taking the time to understand some of the key terms in coverages of your insurance policy can help you when making the best decision when purchases for your company.
A simple example with regards to general liability should help in making this point more clear. One insurance carrier might define general liability as bodily injury and property damage that occurs only in United States. If your business typically does business outside of United States this might be a limiting factor for you to consider. Clearly an insurance carrier that defines general liability as worldwide for a premium that is approximately the same as another carrier that defines general liability as only within United States only can obviously be a better bang for your buck.
All general liability policies have to five main components. The first component is coverage for the premises in operations. The second component is for products and completed operations. The some insurance companies put in the fine print that there is no coverage for products and completed operations. They’re only providing premises coverage. So if you happen to be an Internet retailer that works out of your home and you have a general liability policy that only covers premises only, you have major gaps in your insurance portfolio for coverage and protection. Being an internet retailer that is home-base you have almost no exposure for premises liability. You need the products and completed operations coverage.
Your main exposure is from products completed operations that you sell across the Internet. It is prudent for as the insured to clearly ascertain where your biggest liability exposure is. Then make sure that you have coverage to cover that exposure. So in that case that we presented for an example when you receive your proposal for off the internet that is home-based you need to make very sure that you see a proposal that clearly delineates that there are products and completed operations coverages that are being covered.
A third component is the personal Injury coverages that protect you from injuries to the person that are not physical per se. Then the fourth component is that of advertising injury which protects you from marketing advertising losses (not intentional). Lastly there is coverage for premises medical payments from third parties. Knowing all the definitions in your contract and help you in deciding which policy to purchase.