Decoding the Insurance Lingo
Construction insurance isn’t just about signing a policy and hoping you’re covered.
You’re dealing with:
- Contracts
- COIs
- OCIPs
- Indemnity clauses
- …and lots of legal language that actually matters.
This glossary gives general contractors, project managers, and subcontractors plain-English definitions of the 25 most important insurance terms you’ll run into on jobs—plus why each one matters.
💡 Tip: Bookmark this page for your team. It’s a great training tool for admins, supers, and new hires.
The Glossary
Scroll or click through:
1. Certificate of Insurance (COI)
What it is: A document that proves a contractor or sub has active insurance.
Why it matters: Without it, you could be held liable for their accidents.
2. Builder’s Risk Insurance
What it is: Covers buildings under construction against fire, theft, or weather damage.
Why it matters: Essential for protecting jobsite investments before completion.
3. General Liability Insurance (GL)
What it is: Covers third-party injuries or property damage caused by your work.
Why it matters: Almost always required by contracts and owners.
4. Workers’ Compensation Insurance
What it is: Pays medical bills and lost wages for injured workers.
Why it matters: Required by law in most states.
5. Additional Insured
What it is: A person or entity added to another’s policy for protection.
Why it matters: You need to be listed here on your sub’s policy to ensure you’re covered.
6. Waiver of Subrogation
What it is: Prevents your insurer from suing another party involved in a claim.
Why it matters: Common requirement in contracts; helps maintain working relationships.
7. Indemnity Clause
What it is: A contract clause that shifts responsibility for certain damages.
Why it matters: It affects whose insurance responds—and whether you pay out of pocket.
8. Umbrella Policy
What it is: Extra liability coverage beyond your standard policy limits.
Why it matters: Many commercial jobs require $5M+ total liability coverage.
9. OCIP (Owner-Controlled Insurance Program)
What it is: One insurance policy purchased by the owner that covers all contractors.
Why it matters: Used on large or public projects; affects how subs are enrolled.
10. CCIP (Contractor-Controlled Insurance Program)
What it is: Similar to OCIP, but purchased by the GC.
Why it matters: You may be responsible for collecting documents from all subcontractors.
11. Policy Endorsement
What it is: An amendment that changes the terms of your insurance policy.
Why it matters: You’ll need certain endorsements to meet contract requirements (like naming a project owner as additional insured).
12. Exclusion
What it is: A situation or event the policy does not cover.
Why it matters: Don’t assume you’re covered—read the exclusions carefully.
13. Occurrence-Based Policy
What it is: Covers incidents that happen during the policy period, even if the claim is filed later.
Why it matters: Most construction policies are occurrence-based.
14. Claims-Made Policy
What it is: Only covers claims made while the policy is active.
Why it matters: Lapses in coverage = no protection.
15. Subrogation
What it is: When your insurer goes after another party to recover claim costs.
Why it matters: Contracts often waive subrogation to avoid legal messes between partners.
16. Surety Bond
What it is: A bond that guarantees contract completion or payment to suppliers/labor.
Why it matters: Often required on public jobs or large contracts.
17. Errors and Omissions (E&O) Insurance
What it is: Covers design or administrative mistakes.
Why it matters: Important if you’re offering design-build or consulting services.
18. Pollution Liability
What it is: Covers environmental damage or cleanup costs.
Why it matters: May be required for excavation, concrete, or roadwork projects.
19. Incident Report
What it is: A form documenting injuries, damage, or safety violations.
Why it matters: Essential for claims, especially workers’ comp.
20. OSHA 300 Log
What it is: Federal log of jobsite injuries and illnesses.
Why it matters: Required for companies with 10+ employees; insurers often request it.
21. Wrap-Up Insurance
What it is: Collective term for OCIP or CCIP.
Why it matters: Streamlines insurance but requires careful documentation for each sub.
22. Coverage Limit
What it is: Maximum the insurer will pay for a claim.
Why it matters: Your contract may require higher limits than your standard policy provides.
23. Deductible
What it is: Amount you pay out-of-pocket before insurance kicks in.
Why it matters: High deductibles = lower premiums but more risk.
24. Named Insured
What it is: The primary person or company covered under the policy.
Why it matters: You must confirm that all policies show the correct legal entity.
25. Force Majeure Clause
What it is: Contract language protecting both parties in extreme events (e.g., natural disasters).
Why it matters: Affects claim eligibility when projects are disrupted.
Want to Go Deeper?
Check out these related posts:
- How to Read a COI Like a Pro
- What Contract Clauses Affect Your Insurance?
- Voice Search Guide: Ask Insurance Questions That Get Answers
Conclusion – Know the Terms, Avoid the Traps
Insurance isn’t just for your broker to worry about.
If you’re a contractor, PM, or owner, these 25 terms can protect your business—or sink it if you ignore them.