Fundamentos de la póliza

Temporary written proof that coverage is in force before the policy is issued.

A binder is a temporary contract of insurance issued by an insurer or an authorized agent confirming that coverage is in effect pending issuance of the formal policy, typically for 30 to 90 days.

Por qué importa: Coverage often needs to start before paperwork can catch up — a closing date, a job start, a lease commencement. A binder is real coverage on the terms it states, which is why it is acceptable evidence for lenders and landlords.

Physical injury, sickness or disease to a person — one of the two things general liability is built to cover.

Bodily injury means physical injury, sickness or disease sustained by a person, including death resulting from any of these. In most general liability forms it also picks up mental anguish that flows from a physical injury, though pure emotional distress without physical injury is often outside the definition.

Por qué importa: Bodily injury and property damage are the two pillars of general liability coverage. Getting the definition right matters because a claim that does not fit either one is not covered by general liability at all, however serious it is.

An exclusion in general liability for damage to property of others that is in your possession or that you are working on.

Care, custody and control is a standard general liability exclusion removing coverage for damage to personal property of others in the insured’s care, custody or control, and to the particular part of real property on which the insured is working.

Por qué importa: This is one of the most consequential exclusions in general liability, and it hits service businesses hardest. A cleaner ruining a client’s floor finish, a repair shop damaging a customer’s equipment, a mover damaging goods in transit, a contractor damaging the wall being worked on — all are exactly what this exclusion removes.

The front page summarizing your policy: named insured, term, limits, deductibles, forms and endorsements. The first thing to read.

The declarations page is the section of a policy stating the named insured, policy period, covered locations or operations, limits of insurance, deductibles, premium and the schedule of forms and endorsements attached.

Por qué importa: Everything you need to check is on it or referenced from it. The named insured must match your operating entity; the limits must match your contract requirements; the deductible must be one you can fund; and the forms schedule tells you which endorsements — including exclusionary ones — are attached.

Policy language stating what is not covered. Exclusions, not limits, decide most denied claims.

An exclusion is a provision removing specified causes of loss, types of damage, activities or property from coverage. Exclusions appear in the base coverage form and are frequently added or broadened by endorsement.

Por qué importa: Business owners compare limits and premiums. Carriers compete on exclusions. Nearly every denied claim traces to an exclusion rather than to an inadequate limit, which is why the exclusion list is the part of the policy worth reading first.

The bargain at the heart of workers’ comp: employees get benefits without proving fault, and give up the right to sue you.

Exclusive remedy is the principle that workers’ compensation benefits are an injured employee’s sole recourse against the employer for a workplace injury, barring most tort claims in exchange for guaranteed no-fault benefits.

Por qué importa: This protection is the reason workers’ compensation is worth buying beyond the legal mandate. Comp caps your exposure to a statutory benefit schedule; without it, a serious injury litigated in tort has no such cap.

A business structure that separates personal and business assets — and does not replace insurance.

A limited liability company is a business entity that provides its members limited personal liability for business debts and obligations while allowing pass-through taxation, formed by filing with a state.

Por qué importa: An LLC protects your personal assets from business debts. It does not pay claims, fund a defense, satisfy a contract requirement, or stop a lawsuit — which is why the "I have an LLC so I do not need insurance" argument fails immediately.

The person or entity the policy is issued to. If your operating entity is not on it, the policy may not respond.

The named insured is the person, partnership, corporation or other entity listed on the declarations page as the party to the insurance contract, holding the rights and obligations under it. The first named insured typically receives notices and premium billing.

Por qué importa: Businesses restructure and forget to tell the carrier. A policy issued to a sole proprietor that continues after an LLC is formed, or a policy naming one LLC when the work is performed by an affiliated one, creates a real coverage argument at claim time.

Occurrence policies cover incidents that happen during the policy period. Claims-made policies cover claims reported during the policy period.

An occurrence policy responds to an incident that took place during its policy period, whenever the claim is reported. A claims-made policy responds only to claims first made during its policy period, and only for work performed after its retroactive date.

Por qué importa: General liability is normally occurrence-based, which is why a 2020 incident reported in 2026 goes back to the 2020 policy. Professional liability, cyber, D&O and employment practices policies are normally claims-made, which behaves completely differently.

The cause of a loss — fire, wind, theft. What a policy covers is defined in terms of perils.

A peril is the specific cause of a loss, such as fire, windstorm, hail, theft, vandalism or water damage. Property policies define coverage by listing covered perils or by excluding specified ones.

Por qué importa: Every property coverage question reduces to a peril question. Named perils forms cover only listed perils; open perils forms cover any peril not excluded. Knowing which form you have tells you where the burden of proof sits.

The general liability coverage for reputational and advertising harms — libel, slander, copyright in ads, wrongful eviction.

Personal and advertising injury is a general liability coverage part responding to specified non-physical offences: libel, slander, disparagement, violation of privacy, wrongful eviction, malicious prosecution, false arrest, and copyright, trade dress or slogan infringement in advertising.

Por qué importa: This is the coverage that responds when your business is sued over what it said rather than what it did. A defamatory reply to an online review, a competitor comparison that crosses a line, or an unlicensed image in an advertisement all land here.

Coverage for work you did before this policy started. Full prior acts means no retroactive date at all.

Prior acts coverage extends a claims-made policy to cover claims arising from professional services performed before the policy’s inception. Full prior acts coverage means there is no retroactive date, so all prior work is within scope.

Por qué importa: Continuity of professional liability coverage is only useful if the new policy reaches back over your history. Prior acts coverage is the mechanism, and full prior acts is the best available outcome.

Physical injury to tangible property, or loss of its use. One of the two pillars of general liability.

Property damage means physical injury to tangible property, including resulting loss of use, and loss of use of tangible property that is not physically injured. Electronic data is expressly excluded from tangible property in most current forms.

Por qué importa: Along with bodily injury, this is what general liability is built to cover. The important boundaries are what counts as tangible and whose property it is.

A life or business change that lets you alter coverage outside the normal enrollment or renewal window.

A qualifying event is a change in circumstances — marriage, birth, loss of other coverage, a change in employment status — that permits enrollment or coverage changes outside an open enrollment period, most commonly in health benefits.

Por qué importa: For small employers offering health benefits, qualifying events drive the special enrollment windows, typically 30 to 60 days from the event. Missing the window means waiting for open enrollment.

The earliest date of work a claims-made policy will cover. Anything before it is excluded, permanently.

The retroactive date on a claims-made policy is the earliest date on which covered work could have been performed. Claims arising from services rendered before that date are excluded regardless of when they are reported.

Por qué importa: This single date is the most consequential number on a professional liability policy and the least understood. If your practice started in 2019 and your policy shows a 2024 retroactive date, five years of work is uninsured.

An extension that lets you report claims after a claims-made policy ends. Essential when you stop, sell or switch without continuity.

Tail coverage — formally an extended reporting period — allows claims arising from work performed before a claims-made policy expired to be reported for a defined period afterward, typically one to three years, sometimes unlimited.

Por qué importa: Claims-made coverage stops responding the moment the policy ends. Tail coverage is what keeps the door open, and it is the only protection for prior work once you stop buying the annual policy.

Only one party makes an enforceable promise. An insurance policy is one — which is why its conditions matter so much.

A unilateral contract is one in which only one party makes a legally enforceable promise. An insurance policy is unilateral: the insurer promises to pay covered claims, while the insured has paid premium and must satisfy conditions rather than promise performance.

Por qué importa: This structure explains why policy conditions carry so much weight. The insurer’s promise is enforceable but conditional — on timely notice, cooperation in defense, submission to audit, no voluntary payments, and accurate representations at application.