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Insurance Glossary

Listed below is our insurance glossary. Please take the time to read through them.

Business Income

Net income (net profit or loss before income taxes) that would have been earned or incurred, plus continuing, normal operating expenses incurred, including payroll.

Business Interruption

Evaluating the business income loss exposure requires an understanding of how business income losses are measured, how a business interruption affects expenses, and the property and perils that business income losses can involve. Business income and extra expense loss exposures are often overlooked, but is an exposure common to all businesses regardless of type or size. Business Interruption losses can result in monetary losses exceeding the amount of the physical losses that cause them. Part of the service that Atlas professionals provide is educating our clients about the need for this insurance and arranging coverage to meet our client’s specific exposures.

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A captive insurance company which is wholly owned by another organization (generally non-insurance), the main purpose of which is to insure the risks of the parent organization. A pure 'captive' is owned by a single parent, while an association captive is owned by a group of companies usually in the same line of business. A 'captive agent' is an agent who, by contract, represents only one company and its affiliates. Sometimes called an exclusive agent.

Commercial Automobile

Almost every organization has auto exposures, even those that do not own any automobiles. The most commonly used form for insuring commercial autos, the Business Auto Coverage Form, covers auto liability, physical damage and no-fault exposures. Optional coverages can be added to provide other coverages such as uninsured/underinsured motorists.

The types of exposures and coverages available to address your commercial auto insurance needs are many and diverse. Atlas will sift through the options and develop a solution that is right for your business!

Commercial Crime

Commercial crime coverages come in many forms, including Client’s Property coverage that covers the theft of clients’ property by your employees, Employee Theft coverage that applies to employee theft losses involving money, securities and other property. Unfortunately, employee theft remains a relatively common occurrence. That’s why you need Atlas! We will sift through the various exposures your business faces, the many commercial crime coverages out there, and find the solutions you need!

Commercial General Liability (CGL)

Commercial General Liability (CGL) insurance is insurance that covers many of the common liability loss exposures faced by an organization, including its premises, operations, and products. Instead of having to select and group the specific hazards to be insured, which may result in potential gaps in an insurance program, a comprehensive coverage approach is used. The basic areas covered by the CGL include the insured's ownership or use of the premises, coverage for defined contractual agreements, coverage for products manufactured, sold or distributed by the insured, completed operations of the insured, personal and advertising injury liability of the insured, and medical payments coverage.

To be able to identify, analyze, and properly handle an organization’s liability loss exposures, you need an insurance agency that understands the concept of legal liability and the common sources of liability loss exposures. Atlas is here to help!

Commercial Inland Marine

Inland Marine insurance is insurance that covers many different classes of property that typically involve an element of transportation. Commercial Inland Marine coverages come in many forms, such as Builders Risk coverage, Jewelry & Furs coverage, Theatrical Property coverage, and Contractors Equipment coverage.

Determining the coverages you need that effectively cover the exposures your business faces can be tricky. Atlas has the expertise to navigate through the many coverage options and will find the specific solutions you need.

Commercial Property

Whether it is the computers, office furniture, fixtures, equipment, records and office supplies of your small business; the complex machinery of an automated manufacturer; or the office and apartment buildings owned by a large real estate developer, all commercial enterprises use at least some tangible property that is exposed to loss. Commercial Property insurance is a necessity for almost all of these businesses. Commercial Property insurance covers buildings and business personal property against loss caused by a wide range of perils.

It's important to protect your business with one of the most important coverages available, and Atlas will ensure your needs are met!

Commercial Umbrella

Commercial Umbrella coverage provides liability coverage that supplements the limits of an insured's General Liability, Automobile Liability and Employers Liability policies. Umbrellas also protect insureds from exclusions and gaps in their primary liability insurance. Covered causes of loss not normally included in primary policies are subject to a self-insured retention (SIR). The insured is responsible for paying any SIR that applies. SIR amounts of $10,000 or $25,000 are common.

The umbrella policy coverage is triggered when the limits of the underlying insurance are exhausted or when a claim not covered by an underlying policy occurs. Any such loss that qualifies for coverage under the umbrella policy is subject to the insured first paying any applicable SIR.

Cost of Goods Sold

For manufacturing businesses, this means starting inventory (including stock in process) at the beginning of the year plus the cost of raw stock consumed; factory supplies consumed, merchandise sold, and other supplies consumed minus inventory at the end of the year. For non-manufacturing businesses, this means starting inventory at the beginning of the year (at cost) plus purchases; minus inventory (at cost) at the end of the year. Cost of Goods Sold does not include administrative and operating expenses.

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Directors & Officers Liability

Directors & Officers Liability coverage insures corporate directors and officers against claims, usually brought by stockholders, alleging loss due to mismanagement. More individuals owning stock and more stringent standards imposed by the courts indicate a growing risk. An outside directorship liability policy is available as supplementary protection to assure sufficient limits for the exposure created when a company's director, officer or employee serves in an outside director position at its request.

Discounts, Returns, Bad Debts, Prepaid Freight

Some businesses record discounts (e.g. volume purchases or prompt payments) rather than deducting them from sales. Included in this category are allowances for bad debts, uncollectible or doubtful accounts. Collection expense should be deducted if an outside service is used. Prepaid freight normally included in sales could also be deducted. Some of these items might be included in Cost of Goods Sold.

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Employment-Related Practices Liability

Employment-Related Practices coverage is available for the legal costs to defend claims against sexual harassment, wrongful termination and discrimination, and the actual legal liability for such acts. The coverage is known by various titles through a number of insurers, but all lead you to the protection you need. Atlas stands ready to help!

Estimated Period of Shutdown (Period of Restoration)

This estimate should consider the time required to repair or replace the facilities (building, equipment) and stock, including the time needed to get operations (production lines, relations with suppliers, customers) running efficiently. Consider the time necessary for reconstruction and if there are any peak season exposures.

Wording from the coverage form states that this is the period of time that begins with the date of direct physical loss or damage caused by or resulting from any Covered Cause of Loss at the described premises and ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality. (Refer to the actual coverage form working in regard to any Building Ordinance type of exclusion).

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Fidelity Bonds

A Fidelity Bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees, such as employee theft, fraud or misrepresentation. No one can guarantee you have honest employees, so Fidelity Bonds help provide the protection you need for life’s uncertainties.


Flooding is a relatively common and costly natural disaster here in Hawaii, particularly in areas near streams, rivers and beaches. Flood water can destroy walls, floors, equipment, supplies, files, and much more. Flood coverage applies to direct loss or damage by flood to buildings and their contents on either a replacement cost or an actual cash value basis. Coverage is available in standard markets through DIC forms or with other coverage forms developed by individual carriers and written in only selected areas. In areas declared eligible by the Federal Insurance Administrator, agents and brokers may arrange for insurance directly with the National Flood Insurance Program or with participating insurance companies.

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Garage Liability

Garage coverage provides liability, garagekeepers and automobile physical damage coverages, as selected, for garage operations. Liability coverage includes garage operations in a manner similar to a General Liability policy, and the use of covered autos, in a manner similar to a Commercial Auto policy. Physical damage coverage applies to the named insured's owned automobiles, not customers' cars, and applies to cars held for sale and those used in the business.

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Liquor Liability

Liquor Liability coverage is designed for bars, restaurants, hotels, motels, package liquor stores or other places where liquor is sold, distributed or served. It handles claims involving injury or damage caused by patrons served or provided liquor by the covered establishment. Liquor liability coverage fills the gap created by the exclusion in general liability policies applying to businesses directly involved in the sale, distribution, manufacturing or serving of alcoholic beverages.

As an Atlas client, we will evaluate your exposures to loss, recommend appropriate coverage, help mitigate risk by providing risk management services, and help establish firm policies that protect your you, your business, and your assets!

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Multi-Policy Discount

Did you know that by combining your auto and home insurance, you could potentially save up to 20% on your insurance premiums? This combination may also provide you with various coverage benefits and minimization of gaps in insurance coverage. Call or e-mail Atlas today to find out more about packaging your insurance through our agency and take advantage of what a multi-policy discount can save you!

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Net Sales

Gross Sales minus discounts, returns and bad debts.

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Ordinary Payroll

Payroll expenses for ALL employees except officers, executives, department managers and employees under contract.

Other Earnings from your Business Operations

All earnings other than gross sales. Could include interest, commissions, other non-sales income.

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Premium Financing

Premium financing allows the client to finance their insurance premiums over the span of up to 10-months. The client then makes monthly payments to the finance company. This allows the client to spread the expense of the premium(s) over time instead of paying all up front. This gives you more control over your cash so you can manage working capital more effectively by keeping credit lines open, and to use your funds for your primary focus – to build and manage your business!

Payment schedules for premium financing can be flexible and structured to accommodate seasonal business cycles. For qualified companies, Atlas may be able to offer unsecured financing for fully earned policies, audits, bonds, and retrospective rated policies. Companies can obtain up-to-date loan account information on-line, and make payment electronically or set-up a convenient automatic deduction schedule.

Atlas Insurance Agency has partnered with several stable, high quality finance companies in the country that offer value added services with a dedicated team of professionals to provide premium financing. We offer local expertise, fast and responsive services to our customers. Contact us for a premium finance quote today!

Professional Liability

In today’s insurance marketplace, Professional Liability insurance can be more broadly defined as insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services. This coverage is now available for more than just the traditional professions, including analytical chemists to veterinarians, all of which entail liability for the failure to use the degree of skill expected of a person in the particular field. Professional Liability coverage can protect against liability and help defray the cost of defense following a claim for an error, omission, or negligence in the performance of professional services.

Your business needs an insurance agency with a high level of expertise in Professional Liability because these risks can be extensive and complex. Atlas Insurance Agency is here to help!

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Surety Bonds

In its most fundamental form, suretyship represents the promise of one person (called the surety) to answer for the failure of another person (called the principal) to do something as promised. Suretyship is usually conducted by insurers and is evidenced by a written contract called a Surety Bond. Surety Bonds are used to provide a wide-range of guarantees and Atlas has the expertise to help our business navigate through the surety world. In fact, Atlas is one of only a few insurance agencies in Hawaii to have full time Surety staff, dedicated to your unique needs!

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Temporary Disability Income (TDI)

The Hawaii Temporary Disability Income (TDI) law was enacted in 1969 and requires employers to provide partial ‘wage replacement’ insurance coverage to their eligible employees for non-work related sickness or injury (including pregnancy). This means that if an employee is unable to work because of an off-the-job sickness or injury and that employee meets the qualifying conditions of the law, the disabled employee will be paid disability or sick leave benefits to partially replace the wages lost. TDI, however, does not include medical care.


Transportation coverage protects property of the insured while being shipped. Coverage includes both shipments to the insured and shipments from the insured. Coverage is usually provided by one of three forms. The transportation form covers all shipments made during the policy period using transportation companies, carriers for hire, owned vehicles, railroads and airlines. The owner's form covers all shipments made using only the owned vehicles of the insured. The trip transit form is used for a single shipment by a specific mode of conveyance, on a ‘one-shot’ basis.

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Workers Compensation & Employers Liability

Workers Compensation statutes obligate Hawaii employers, regardless of fault, to pay specific medical, disability, rehabilitation, and death benefits for their employees’ job-related injuries and diseases. Workers Compensation and Employers Liability coverage insures against claims for work-related injuries or diseases suffered by employees that are compensable by statute and/or imposed by law as damages. Employers Liability coverage provides coverage for injuries not covered under the law yet excluded under the CGL.


In cases of large construction projects, the interests of the owner, the general contractor, the construction manager, architects, engineers, subcontractors and sub-subcontractors are combined for insurance purposes. A wrap-up insurance program can be controlled by either the project owner or the general contractor. The agents and brokers of beneficiary contractors serve their insureds by modifying their general liability and workers compensation insurance to exclude coverage for the designated project. With large projects, it is important to pay attention to the adequacy of insurance limits.