Learn the lingo, remove the mystery, gain some confidence


As a business owner, there’s so much more to know about insurance than premiums (payments in exchange for coverage), losses (incidents that cause financial harm), claims (requests to pay for a loss), and deductibles (the value that an insured party must pay before an insurer will begin paying). It can be an intimidating piece of the business puzzle. But learning the basics – and a few not-so-basics – can remove some of the mystery and help you become a well-informed consumer.

There’s so much more to know about insurance than premiums, losses, claims, and deductibles.

The possibility of a loss occurring.

Risk Management:
Identifying potential hazards and taking action to reduce the likelihood that they will cause a loss.


  1. A legal obligation to pay for damages caused by an insured party to someone else.
  2. A type of insurance that pays for those losses.

Certificate of Insurance:
A document that shows proof of coverage present in an insurance policy. Certificates verify coverages,
limits of insurance, and policy effective and expiration dates, among other facts about a policy.

The process of analyzing risk to determine the insurability prior to taking on the risk.

Workers Compensation:
Insurance that helps cover the costs connected to a work-related injury.

Workers Compensation Experience Modifier:
A number that, based on the frequency and severity of previous losses affects a business’ workers compensation premiums.

A page in an insurance policy that either adds, changes, or removes insurance coverage.

  • Additional Insured Endorsement: Adds coverage for a person or organization to the policy that would not have automatically been covered.
  • Primary and Non-Contributory Endorsement: States that the policy must pay before other insurance for the additional insured.
  • Waiver of Subrogation Endorsement: An endorsement that restricts an insurance carrier from recovering the damages paid on a claim from a negligent party listed in the endorsement.

Aggregate Limit: The maximum amount that will be paid by an insurance company during the annual policy period for a particular coverage.

  • Per-Project Aggregate: The general liability aggregate limit will apply separately to designated construction projects.

Umbrella: A policy that provides additional limits of liability in case a claim exceeds the established policy limits of the primary liability policy.

While these terms are just a small fraction of what there is to know in the insurance industry, they will help you form a foundation of knowledge you can use as you navigate the complexities of running– and protecting – your business.

This article is for general information and risk prevention only and should not be considered legal or other expert advice. The recommendations herein may help JERRY LEEMKUIL reduce, but are not guaranteed to eliminate, any or all risk of loss. The information herein may be subject to and is not a substitute for, any laws or regulations that may apply. Qualified counsel should be sought with questions specific to your circumstances. © 2020 Federated Mutual Insurance Company

JERRY LEEMKUIL is a field manager for Association Risk Management Services, Federated Insurance Company. For information, write to Jerry at jleemkuil@fedins.com or call 1-507- 455-5507.


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