Short answer: insurance policies, leases and certificates use a vocabulary of their own — additional insured, aggregate limit, claims-made, waiver of subrogation. This glossary defines each term in one or two sentences, explains why it matters for beauty businesses, and gives a real-world example.

Terms A–Z

• Abuse and Molestation Coverage — Abuse and molestation coverage responds to allegations of abuse or inappropriate contact during a service.
• Actual Cash Value (ACV) — Actual cash value pays the replacement cost of damaged property minus depreciation.
• Additional Insured — An additional insured is a person or company — usually your landlord, salon owner, suite operator or event venue — added to your liability policy so they are protected for claims arising from your work or premises.
• Admitted Carrier — An admitted carrier is licensed by a state insurance department and files its rates and forms there; policyholders typically have state guaranty fund protection.
• Aggregate Limit — The aggregate limit is the most a policy will pay for all covered claims during the policy period.
• Booth Rental Agreement — A booth rental agreement is the contract between a salon and an independent renter setting rent, space, and responsibilities — including insurance requirements.
• Business Income Coverage — Business income coverage replaces lost net income and helps pay continuing expenses like rent and payroll when a covered property loss forces you to close.
• Business Owners Policy (BOP) — A business owners policy bundles general liability, commercial property and business income coverage into one policy for small businesses.
• Certificate of Insurance (COI) — A certificate of insurance is a one-page summary proving you carry specific coverage, limits and policy dates.
• Claims-Made Policy — A claims-made policy covers claims first made while the policy is active, for incidents after the retroactive date.
• Class Code — A class code is the classification a carrier or rating bureau uses to group similar businesses for pricing.
• Cyber Liability — Cyber liability covers costs from data breaches and cyber incidents — notification, credit monitoring, forensics, ransomware and liability claims.
• Deductible — A deductible is the amount you pay toward a covered property loss before the insurer pays.
• Employers’ Liability — Employers’ liability is the part of a workers’ compensation policy that covers lawsuits by employees or their families related to workplace injuries outside the comp system.
• Employment Practices Liability (EPLI) — EPLI covers claims by employees such as wrongful termination, discrimination, harassment and certain wage-related allegations, subject to policy terms.
• Endorsement — An endorsement is a written change to a policy that adds, removes or modifies coverage.
• Equipment Breakdown — Equipment breakdown covers sudden mechanical or electrical failure of equipment such as HVAC, water heaters, dryers, lasers and compressors — failures standard property policies usually exclude.
• Excess and Surplus (E&S) Lines — Excess and surplus lines carriers write risks that standard carriers decline, with more flexible forms and pricing.
• Exclusion — An exclusion is policy language that removes coverage for specific situations, services or causes of loss.
• Experience Modification Rate (EMR) — An experience modification rate adjusts your workers’ comp premium up or down based on your claims history compared with similar businesses.
• Extra Expense — Extra expense coverage pays reasonable additional costs to keep operating or reopen faster after a covered loss, such as renting temporary space or expediting repairs.
• General Liability — General liability covers bodily injury and property damage to others that happen around your business, plus advertising and personal injury claims and the legal defense that goes with them.
• Hired and Non-Owned Auto (HNOA) — Hired and non-owned auto covers your business’s liability when employees drive their own or rented vehicles for work errands.
• Independent Contractor Misclassification — Misclassification happens when a worker treated as an independent contractor — such as a booth renter — actually works like an employee under state law.
• Loss Runs — Loss runs are reports from your insurer listing your claims history over a period, usually three to five years.
• Monopolistic State (Workers’ Comp) — In a monopolistic state, workers’ compensation must be purchased from a state fund rather than private insurers.
• Named-Storm Deductible — A named-storm (or hurricane) deductible is a separate, often percentage-based deductible that applies to damage from a named storm.
• Occurrence Policy — An occurrence policy covers incidents that happen while the policy is active, no matter when the claim is filed — even after the policy ends.
• Per-Occurrence Limit — The per-occurrence limit is the most a policy will pay for a single incident.
• Premium Audit — A premium audit is the carrier’s year-end review of actual payroll or revenue to calculate the final premium for policies rated on those figures.
• Primary and Noncontributory — Primary and noncontributory wording means your policy pays first for a covered claim involving the additional insured, without requiring their own policy to contribute.
• Product Liability — Product liability covers injury or damage caused by products you apply or sell, such as a rash from a retail serum or a reaction to a styling product.
• Products-Completed Operations — Products-completed operations is the part of general liability that covers injuries from products you sold or work you completed, after the product has left your hands or the work is done.
• Professional Liability — Professional liability covers claims that a service you performed caused injury or loss — burns, infections, reactions, cuts or treatment damage.
• Replacement Cost — Replacement cost coverage pays to replace damaged property with new property of like kind and quality, without deducting for depreciation.
• Retroactive Date — On a claims-made policy, the retroactive date is the earliest date an incident can occur and still be covered.
• Sublimit — A sublimit is a smaller limit that applies to a specific type of claim within a larger policy limit.
• Tail Coverage (Extended Reporting Period) — Tail coverage lets you report claims after a claims-made policy ends, for incidents that happened while it was active.
• Tenant Improvements (Betterments) — Tenant improvements are permanent upgrades a tenant pays for in a leased space — plumbing for shampoo bowls, lighting, flooring, built-in stations.
• Umbrella Policy — An umbrella policy adds liability limits above your general liability, employers’ liability and auto policies.
• Waiver of Subrogation — A waiver of subrogation prevents your insurer from recovering what it paid from another party — commonly required in leases.
• Workers’ Compensation — Workers’ compensation pays medical bills and lost wages for employees injured on the job, and is required by law in most states once you have employees.

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