Just when you think being a business owner couldn’t get any harder, you’re introduced to a whole new language: the jargon of insurance. Your business owner’s policy is likely full of technical words and concepts that you’ve never heard before. Here are some terms, defined by the International Risk Management Institute, to help you navigate the pages of your policy and understand the coverage it provides.

Actual Cash Value: the cost to repair or replace damaged property, minus depreciation.

Blanket Coverage: a policy with a single property limit that applies to all the insured’s property at one or multiple locations.

Business Income: insurance that provides financial reimbursement in the event that a business can no longer operate due to damages sustained from a covered loss.

Coinsurance: a policy provision that requires the insured pay a percentage of the payment made against a claim.

Extra Expense: insurance that pays for additional costs (outside of normal operating
expenses) that an organization needs to continue its business while it is being repaired after having been damaged by a covered loss.

Occurrence: an accident, including continuous or repeated exposure to harmful conditions.

Period of Restoration: the period of time in which coverage is in effect, starting at the
occurrence of the direct physical damage and continuing until the damaged property has been rebuilt, restored, or replaced, or until the limit has been exceeded.

Rental Value: Coverage that reimburses the insured for lost rental-income if leased property becomes uninhabitable due to damage from a covered loss.

Replacement Cost: the cost to replace damaged property without any deduction for depreciation.

Tenants Improvements & Betterments: Permanent alterations made to a building by a renter (at his or her own expense) that may not legally be removed.

Understanding insurance terms can be challenging but worthwhile if you ever have to file a claim. For more help understanding your policy and the
coverage it provides, contact your local, independent agent, or log-on to for more helpful insurance tips and videos. At Preferred, we believe in empowering our consumers to make confident, educated choices so they can live assured.

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